Exploding E-Commerce and Counterfeit Goods Problem for China

Nov. 5, 2015

Exploding E-Commerce and Counterfeit Goods Problem for China An increasing number of U.S. consumers will turn to Chinese e-commerce sites for their holiday shopping this season, but, according to a report from China’s official news agency, more than 40 percent of those goods sold last year were fake. Xinhua said it delivered results of a report to Chinese lawmakers this week that said only 59 percent of items sold online in China were “genuine or of good quality.”

The report said customer complaints about online sellers grew more than 350 percent from 2013 to 2014 and called on government officials to provide “accelerated legislation in e-commerce, improved supervision and clarification of consumers’ rights and sellers’ responsibilities.” While Chinese consumers are not protected when using credit cards online like U.S. consumers are, part of the reason Alibaba has become such a force in Chinese retail is its escrow payment system, which holds buyers’ funds in an escrow account until both parties are satisfied.

The Xinhua report noted that government intervention is needed because of the explosive growth in Chinese e-commerce, which exceeded $440 billion in 2014 and is poised to grow this year to $672 billion and is on its way to more than $1 trillion by 2017, according to research firm eMarketer.