Chinese e-commerce giant Alibaba has recently announced partnerships with major logistics and transportation firms to help small Chinese merchants on its business-to-business marketplace to export their goods overseas, highlighting growing cooperation between the e-commerce and logistics sectors.

However, intellectual property experts warn that the boom of e-commerce has increased the risk of logistics services being misused by counterfeiters, and brand owners should keep a close watch on Alibaba’s expansion of its global logistics capabilities. Transport operators should also step up their efforts to crack down on cross-border counterfeiting.

In a press release, Steve Su, the group’s senior logistics expert, said that Alibaba.com is beefing up the wholesale platform to provide optimal, one-stop, door logistics solutions that connect China and the world. “We are offering digital solutions that streamline and simplify the process, cut costs, and enable small and medium-sized exporters to enjoy the same service and price as big exporters do,” he said.

One example is its partnership with Maersk, the world’s largest container-shipping line, to allow small shippers to book space for goods on container vessels through Alibaba’s OneTouch service, reducing reliance on the freight forwarders which are traditionally middlemen between merchants and shipping lines.

The platform has started offering guaranteed cargo space on select routes between five Chinese ports and eight overseas destination ports since late December last year. Acquired by Alibaba in 2010, OneTouch also offers export-related services such as customs clearance, logistics, cargo insurance, as well as air freight and express booking for small and medium-sized Chinese exporters.

In the past year, Alibaba.com has also revealed plans to work with UPS and FedEx for express delivery and DHL and Kuehne + Nagel for air freight to boost cross-border logistics options available on its B2B site.

“Through Alibaba’s growing network of third-party logistics providers, China exporters can shop online and order services such as express delivery, air cargo delivery, rail delivery, and maritime delivery online, and arrange to have cargo delivered direct to buyers’ doors,” the company said.

The latest string of announcements came amid the decision of the US Office of the Trade Representative (USTR) last December to restore Alibaba’s Taobao to its list of “notorious markets” for counterfeit goods, after removing it four years ago.

The US trade agency annually releases the list as part of its Special 301 Report to highlight virtual and physical markets outside of the country where large scale copyright infringement takes place. In the latest report, it said that current levels of reported counterfeiting and piracy on the consumer-to-consumer platform are “unacceptably high.”

Dan Plane, a director at Simone IP Services in Hong Kong, tells Asia Cargo News that brand owners should be concerned about the nature of the cooperation between Alibaba and the logistics companies, if the partnerships only make it easier for shippers to export products, without imposing tight rules to prevent the services from being misused by counterfeiters.

“When reputable companies like DHL, FedEx and Maersk add an additional level of trustworthiness to counterfeit shipments, any brand owner should be concerned. They need to provide a clear insight of what check and balance were in place to look out for brand owners and prevent shipments of fakes,” he says.

The rise of e-commerce has revolutionized cross-border sale and transportation of counterfeit goods, Plane says. In the past, counterfeits were traditionally manufactured by factories and then shipped in bulk to wholesalers and retailers overseas. When such shipments were detected and seized, the monetary loss to the exporter was significant.

“If an end-user customer wanted a fake product, he or she had to go down to a physical market. That has completely changed with e-commerce. Counterfeiters are able to reach directly into consumers’ homes. Counterfeiters can now send just one product in one overnight delivery box to a customer in another country, particularly where, for example, the possession of counterfeit for personal use is not illegal.

“A shipment of 5,000 pieces would have been stopped by customs because the counterfeit goods were clearly intended for retail sale. Now, one or two bags going to end-user customers are, first, probably not seizable under the laws of a lot of countries, and second,  almost impossible to detect because of its sheer volume,” says Plane.

Voicing similar concerns, Robert Youill, senior managing partner at business advisory firm FTI Consulting in Hong Kong, says that counterfeiters have long made use of the poorly regulated freight forwarding industry and the plethora of small industry players that populate the marketplace.

“Counterfeiters in China are well aware of the thresholds that are required to move an enforcement action from administrative to criminal and have for a number of years sought to reduce the volume and /or value of fake goods that will be seized on their premises following an enforcement raid action,” he says.

“This is why counterfeiting syndicates are more and more utilizing small parcels – overnight delivery companies – to move their goods to the market.”

The situation in China is exasperated by the increasing number of home-grown parcel delivery companies and the deregulation of the commercial freight aviation sector, which has witnessed an explosion in the number of low-budget carriers that need to fill the cargo spaces of their passenger aircraft with freight, he adds.

According to USTR’s 2016 Special 301 Report, online sales of counterfeit goods have the potential to surpass the volume of sales through traditional channels such as street vendors and other physical markets, while China remains the largest producer of fakes.

A study conducted by the Organization for Economic Cooperation and Development and the European Union Intellectual Property Office last year found that counterfeiters are taking advantage of the growth in online shopping to improve their logistics networks. Between 2011 and 2013, postal parcels were the top method of shipping counterfeit goods, accounting for an estimated 62% of seizures.

By Simon Lee

Asia Cargo News | Hong Kong