The impact is being felt of China's new e-commerce law, which places tighter restrictions on would-be counterfeiters. These reforms couple with initiatives such as the current "Net Sword Campaign", an online market crack-down by eight ministries in China, and President Xi's July endorsement of a comprehensive and coordinated approach to protecting intellectual property rights (IPR). Combined, this is good news for brand owners.
The problem of fake goods channelled through e-commerce is far from exclusive to China. However, the country is widely perceived as a hotbed of copying with common belief there is little by way of effective enforcement. Much of this stems from the fact that before the mid-1980s, China had essentially no intellectual property laws.
Since then, the advancement of protection for brand owners has arguably been more rapid in China than anywhere else in the world. New laws have been introduced, as have specialist intellectual property courts with some high-profile rulings in favour of Western companies.
In little more than 10 years, China’s share of the world e-commerce market has jumped from 1% to approaching 50%. As recently as 2014, though, a survey reported by China’s State Administration for Industry and Commerce (AIC) found a 60% incidence of fake goods in online sales, with other reports suggesting 60% of the world’s knockoffs originate in China (eg OECD report).
China’s government has persevered to address this problem, the new regulations representing China’s first-ever e-commerce specific law which holds online retailers accountable for the sale of fake goods. Likewise, the larger Chinese e-commerce sites, most notably Alibaba, have been taking their own effective steps to improve protection for the owners of genuine brands.
The new law can only be good news for global brands doing business in China. In addition to stemming the tide of counterfeits and stimulating the market in genuine goods, it also builds up the confidence of both the brand owner and the consumer in the reliability of the market. It further provides evidence that Beijing is continuing to address the problem, hand-in-hand with the improved voluntary mechanisms provided by the likes of Alibaba. This has the potential to be a virtuous circle, with IPR protection in China’s online shopping market heading solely in a positive direction.