E-COMMERCE: Piracy Dogs Apple’s New China HQ, Tops Alibaba Agenda

Bottom line: Apple should put out a short statement to answer online chatter that its new China headquarters looks like an older software park in Shandong, while Alibaba’s latest high-profile hire is its own move to tackle piracy on its sites.

Alibaba prioritizes piracy in 2016

A trio of piracy-related stories are in the headlines as we head into year-end, reflecting the recent focus that Beijing has put on an issue that is likely to get big attention in 2016. Leading the news are online observations by some web surfers that Apple’s (Nasdaq: AAPL) new China headquarters building bears a striking resemblance to a much older software park in northeastern Shandong province.

Next there’s the announcement of a major new anti-piracy hire by e-commerce juggernaut Alibaba (NYSE: BABA), which dodged a bullet last week by keeping its name off an annual US list naming the world’s most notorious markets for pirated goods. Alibaba’s new announcement has seen it name a former top Apple investigator to lead a renewed campaign to rid its online marketplaces of trafficking in pirated goods.

Last but not least there’s high-flyer Vipshop (NYSE: VIPS), an e-commerce specialist that rose to prominence by providing bargains for online shoppers. Given that reputation and focus, it should come as no surprise that new reports say a recent promotion on the company’s site found the sale of fake bottles of Moutai, China’s most famous liquor that typically starts at 1,000 yuan per bottle and often costs much more.

The larger theme to these 3 stories is that Beijing is working overtime these days to push piracy into the spotlight, following years of giving the issue only secondary attention. Part of the shift is due to international pressure. But an equally big part is Beijing’s more recent realization that rampant piracy is stifling the kinds of innovation it will need to power China’s economy in the future.

Let’s begin with the Apple news, not because it’s that serious but because it involves yet a new potential scandal in China for the world’s most successful tech brand. The reports are rather straightforward, saying simply that netizens noticed many similarities between Apple’s new China headquarters and a 20-year-old software complex in the Shandong city of Qilu. (Chinese article)

The reports say both buildings are round with a large, green interior courtyards, though the exterior of the Shandong complex is white and Apple’s is made of glass. I would normally say that Apple should ignore the chatter and get on with more important things. But the company used such a tactic a few years ago after CCTV released a report critical of its after-sales practices, and the case ultimately became a major scandal. This particular case is a bit different because it only involves online chatter, but Apple might still be well advised to be a bit more proactive and put out a short statement to quell the talk.

Alibaba’s High-Profile Hire

Next there’s the Alibaba personnel move, which has the company hiring former Apple investigator Matthew Bassiur to oversee intellectual property protection at the company. (English article) Bassiur certainly has a strong resume for this particular job, including stints at drug giant Pfizer and work as a prosecutor for the US Department of Justice.

His appointment is just the latest in a string of high-level executive hires for Alibaba, many of them Americans with strong ties to Washington. That hiring campaign was partly designed to help the company convince Washington that Alibaba is working hard to stamp out trade in pirated goods on its online marketplaces.

Alibaba scored a major success in that campaign when its name was excluded from the annual “Notorious Markets” list published by the US Trade Representative’s office last week. (previous post) But that victory was only partial because Alibaba also got a stern warning to clean up its act in the report. Accordingly, this latest appointment is part of its new effort to show it’s becoming more serious on the issue.

Last there’s Vipshop, which was a former e-commerce superstar but lately has stumbled a bit on an inevitable slowdown in its breakneck growth. The latest reports center on a recent liquor-related promotion that Vipshop held, in which most or all of the Moutai on offer is suspected of being fake. (Chinese article)

Vipshop and Moutai say they’re both looking into the matter, which apparently arose due to a large number of complaints by people who purchased bottles of Moutai during the promotion. But given the lax state of quality control on many Chinese e-commerce sites, it certainly wouldn’t come as a huge surprise if Vipshop was inadvertently selling fake Moutai in the promotion.

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