Help Us Fight Fakes, Alibaba's Impassioned Plea to Global Brands

Jack Ma Alibaba Founder pic: Bloomberg News

Alibaba's head of internet security Ni Liang makes an impassioned plea for help to stop fakes to Global brands in an exclusive interview today with John Ruwitch, Reuters.

"HANGZHOU, China (Reuters) - When it comes to fighting fakes, Alibaba's head of internet security says cooperation beats the courtroom any day.

Ni Liang, who runs the Hangzhou, China-based company's anti-counterfeiting operations, was speaking to Reuters days after Gucci, Yves Saint Laurent and other luxury brands owned by Paris-based Kering SA sued Alibaba in New York, alleging the e-commerce giant had knowingly made it possible for counterfeiters to sell fakes.

Ni said brands had a better chance of succeeding in clamping down on the pervasive counterfeit trade if they talked to Alibaba, instead of suing it.

The company has been dogged for years by accusations that it doesn't do enough to fight intellectual property rights violations and also listed counterfeits as a risk before its record-breaking $25 billion IPO in September.

"I strongly believe that spending money on lawsuits could result in a completely different outcome than cooperating with us," Ni said in an interview during a rare visit by the media to Alibaba's internet security headquarters.

"If a brand doesn't cooperate with us we'll still fight fakes for them... But when we cooperate we can fight better."

Alibaba employs some 2,000 employees to battle counterfeits. At its internet security command centre, a computer screen covering an entire wall tallies in real-time attempts by vendors to list suspected counterfeits and shows which brands they were trying to sell. Vendors known to have attempted to sell fakes are also tracked.

Another 5,000 "volunteers" around the country, including sellers and buyers, help identify vendors of phony goods, Ni said, adding that Alibaba spent about 100 million yuan ($16 million) last year to covertly buy products and check their authenticity.

Ni said this figure could rise to 150 million this year. "I believe we spend more than any platform or company in the world on anti-counterfeit efforts," he added.

REAL-TIME

Alibaba's two popular platforms are Taobao, on which consumers buy and sell goods to each other much like they do on the marketplace run by U.S.-based eBay Inc , and Tmall, an online shopping mall that vendors use to sell their products, similar to Amazon.com Inc .

The company, founded by Jack Ma, controls 80 percent of all online retail in China, handling goods worth about $97 billion in the quarter ended March 31.

Alibaba has so far signed more than 1,300 memoranda of understanding on cooperation with brands, including Microsoft , Apple and Louis Vuitton , to fight fakes, Ni said.

Overall, Alibaba's platforms have seen a drop in the number of counterfeits as a percentage of goods traded, Ni said, but added the number of fake products discovered by the company rose two-thirds to 130 million last year from 80 million in 2012.

Counterfeit goods can be found on all Chinese e-commerce platforms, despite efforts to fight them, because of the sheer scale of the problem and the huge demand for these products.

No pictures of the internet security war room are allowed. An Alibaba spokeswoman told Reuters they could not name any of the brands being targeted by fraudsters but data on the tracking screen showed more than 5,000 attempted listings of suspected fake products had been detected and removed by noon.

A search for "Gucci" and "Guggi" on Alibaba's eBay-like Taobao site also highlights the complexity of the problem.

Ads appear for products that look like genuine articles as well as clear knock-offs. Ni said determining authenticity from photos is notoriously difficult, and products that bear a likeness to the real deal may not infringe upon intellectual property rights.

Brands and industry groups have complained that Alibaba makes it difficult to remove suspect product listings. Ni said last year his team removed 12 million listings after receiving complaints involving about 20 million, but the process can be lengthy.

About 40 percent of all items flagged were either genuine or it was impossible to conclude that they were fake, he said.

"We have to have an audit mechanism for complaints made by brand holders, and this audit mechanism increases the time it takes to get fake products pulled down," he said, adding that Alibaba intends to double the number of cases it sends to the police for prosecution this year."

(Additional reporting by Jane Lee in SHANGHAI; Editing by Miral Fahmy)

Read the original article on Reuters.


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Italian police seize £40m Bvlgari assets

Italian police have seized €46m worth of Bvlgari assets, including the jeweller’s flagship Roman store, in a tax evasion probe.

Police said their investigations focused on Paolo and Nicola Bvlgari, grandsons of the founder of the jeweller,

Italian Police seized assets worth €46m (£40m) from the upmarket jeweller Bvlgari today in a tax evasion inquiry.

The investigation centres on Paolo and Nicola Bvlgari, sons of the founder of the brand, and Francesco Trapani, the brothers’ nephew and chief executive of the group, as well as their lawyer Maurizio Valentini.

The men are accused of making “fraudulent declarations” in relation to €3bn worth of revenues.

Nicola Bulgari

The police allege the four men made “fraudulent declarations” related to €3bn worth of revenues from 2006 to 2011, before LVMH bought Bvlgari for €3.7bn. The focus of their investigations is the use of holding companies in the Netherlands and Ireland through which the group funnelled revenues, according to the police. No arrests have been made.

A statement from the Bvlgari holding company said it was “extremely surprised” by the allegations. “Bvlgari will take all the necessary steps to clarify its position,” it added.

“The investigations have brought to light a true ‘escape strategy’ to avoid Italian taxes and in particular tougher rules that were introduced from January 1 2006 related to the taxation of dividends,” the police said in a statement.

Bulgari is not the first luxury goods group to come into the sights of the Italian tax police.
Italian police in November confiscated €65m of assets, including a 15th century castle, from the Marzotto family and its business associates over suspected tax evasion connected to the 2007 sale of the Valentino luxury brand.

The Bvlgari family members sold their controlling stake in the Roman house to LVMH in March 2011 in an all-share deal.

LVMH’s offer put about a 60 per cent premium on the company making the deal, which was 10 years in the making, one of the sector’s most expensive.

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Thieves Arrested For Armani Robbery

Giorgio Armani

GIORGIO ARMANI December last, had 1,378 garments stolen from a trading post in Verona, Italy. The update now is the Romanian police tracked down and arrested 10 Romanian citizens in Bucharest for stealing and smuggling 2 million Euros worth of clothing from the Italian designer's spring 2013 collection. 

When on the 29/01/20§2 in BUCHAREST, Romanian Police announced five Romanians were being questioned in the theft of €2 million ($2.68 million) worth of clothing from Italian designer Giorgio Armani's spring 2013 collection.

Police spokeswoman Raluca Seucan said then that Romanian authorities had searched the suspects' homes and barred them from leaving Romania for one month.
She says an Armani representative had recovered 1,378 items of clothing from police on Monday.

Prosecutors say thieves broke into a Verona, Italy, warehouse in mid-December and stole more than 1,400 items in the Armani collection, which they then sent to Romania in seven shipments.Seucan says two Romanians were earlier arrested in Italy.

But it's not the first time burglars have targeted fashion collections while en route to showrooms, stockists, and runway shows. In 2011, the entire spring/summer Marc Jacobs went missing when it was traveling by train from Paris to London. In 2009, thieves nabbed 75 dresses from a van in NYC that was carrying Victoria Beckham's collection. And in 2007, Christopher Kane's London studio was broken into and 23 pieces went missing. 

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Tory Burch Lawsuit Ends

Tory Burch

TORY BURCH and former husband, Chris Burch, have finally come to an agreement over their heated legal battle concerning his stake in the brand. Although few details have been disclosed, the pair - who founded the label in 2003, before their split in 2007 - have resolved all pending claims. Additionally, two minority investors have been brought on board - Capital Partners and General Atlantic.

The lawsuit was first filed by Chris Burch in October 2012, claiming that the American designer was trying to interfere with his attempts to sell part of his 28 per cent stake in the brand. She responded by arguing that the businessman's new brand, C Wonder - founded after their divorce, was too similar to her own.

Chris Burch - who called the deal a "milestone transaction" - has retained a stake in the label, although it is not known how much he now owns, WWD reports.

Tory Burch Fall 2011

The fashion names rallied around the Tory Burch and have not been slow in showing their support during this testing time for the luxury designer, including Anna Wintour.

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Counterfeit goods fund violent gang activity

 

LOS ANGELES (KABC) -- LAPD investigations show that gangs are deep into the counterfeit goods business, enabling gang members to fund illegal activities.

It takes low risk but yields high reward.

"They're using every single penny of that to fund their criminal activity," explained an undercover police officer.

For Los Angeles street gangs, counterfeit goods make for big business.

"They're making more money selling pirated CDs and DVDs than they would selling narcotics," said LAPD Senior Lead Officer Randy McCain. "They make a lot of money and they make the money faster."

Investigators say it's important for people to understand that buying those cheap counterfeit purses, sunglasses or shoes is not a victimless crime.

"We've found it tied to murder, extortion, human trafficking, insurance fraud," listed Kris Buckner, a former L.A. County Sheriff's deputy. Buckner now trains law enforcement personnel on how to spot and investigate counterfeit goods.

"In the past couple of years, we've seen a huge surge in gang members, 18th Street, MS-13, 42nd Street Little Gangsters," said Buckner.

Why? It's all about economics.

"They're now trying to run their organizations like Fortune 500 companies. They need to raise revenue, but if they're out there shooting each other, doing drug sales, their potential to make higher revenues is actually lower," explained Buckner.

So every time you buy a fake Fendi or a knock-off Chanel, you could be putting cash in the pockets of some of L.A.'s most dangerous gangs, including the Mexican Mafia.

"What does the Mexican Mafia do with that money? Smuggles drugs into the prison system, kills people, all sorts of things," said Buckner.

Investigators say cutting off demand from shoppers will cut down on crime as a whole.

"They come here and sell DVDs for super cheap, make a lot of money to fund buying guns that could either take someone off the street or a fellow officer," explained LAPD Officer Matt Shafer.

An undercover LAPD officer who could not reveal his identity said that gang members also use the money from counterfeit goods to buy cars.

"Escalades, Lexus and Mercedes," lists the officer.

In one case, he testified against two Compton gangsters caught selling counterfeit Nike shoes.

"They are Compton Crips with extensive rap sheets, weapons charges, murder, attempted murder," described the undercover officer.

Also, it's not just a matter of safety. A 2005 study found that the sale of counterfeit goods cost L.A. County alone $483 million in lost tax revenue and 106,000 jobs. That's just for one year.

And it's not just bags and shoes.

"Airplane parts, brake pads, medicine, dog food," lists Buckner.

Shafer describes it as a "turf war" among rival gang members.

"One gang member or crew will be territorial over their turf, and if another comes over, fights ensue," Shafer said.

Home video seized from a Carnales gang member shows a gang initiation, but earlier on the tape, footage shows the gang members staking out a corner of a parking lot to sell their counterfeit DVDs.

"So basically what they're doing is, they're up here selling their DVDs and smoking marijuana and just acting like the little fools they are," said McCain.

In another incident, the LAPD set up a sting where an undercover officer rolled up to a gang-infested neighborhood with a car full of counterfeit cigarettes. The officer left the car door open with the music blaring. In less than a minute, a man jumped into the car and attempted to steal it. Unfortunately for him, the engine was cut off by police. One more gang member trying to profit off counterfeit goods was taken off the streets.

(Copyright ©2011 KABC-TV/DT. All Rights Reserved.)

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