The vast potential of the Chinese e-commerce market is well-known to the readers of these pages. Yet equally well-known are the extensive challenges that brands face as they take advantage of these possibilities.
Counterfeiters deceive consumers and put them at risk, while hurting the designers who create the products we love. Dishonest marketplaces demand brands partner with them as a prerequisite for taking down their fakes. And these same marketplaces crowd their platforms with low-quality products, driving up advertising prices for honest companies.
These practices are bad for brands. They are bad for consumers. But I want to be absolutely clear: These are not Chinese values. Do not allow the misdeeds of the loudest voice in the market to tarnish the reputation of everyone.
A year ago I wrote in these pages why I believe that authenticity matters. When I founded JD.com 14 years ago, I demanded that we always uphold the highest standards, even as competitors were chasing quick and easy profits. I understood that winning the trust of consumers and brands requires effort, time, and yes, often giving up short-term financial gain. Yet, we held our ground. We did this for many reasons, but most importantly, because a quality e-commerce market is a sustainable one, where brands, consumers and platforms all benefit.
A year ago, I said, “The addiction to the easy profits that come from sales of counterfeits has been hard to break.”
And so it has proved. It is becoming clear to all that a business model based on prioritizing profits from the sale of cheap counterfeit products no longer resonates with increasingly sophisticated consumers. Yet breaking away from this deep-rooted addiction to a fundamentally flawed business model has proved difficult for some.
I also do not believe the burden of chasing down thousands of fakes should be placed upon rights holders. Brands should use their scarce resources on growing their businesses. And I believe a “three-strike” rule for counterfeiters effectively gives criminals three chances to reach consumers. There should be no second chance for deceiving your customers.
History is prelude. Do not listen to the promises anyone makes about the future — including me — but rather look at our records. Ours is a history of more than a decade of working with brands openly and honestly. Once a smaller player, today our commitment to quality and our refusal to adopt shady practices have enabled us to earn the trust of 170 million active shoppers in China.
Doing the right thing is always simple, but never easy. Commitments to quality, to protecting consumers and to being an honest and trustworthy partner are long-term efforts. They are not practices of convenience.
Our business model is helping us take the lion’s share of high-quality growth. We see our engagement with brands as an opportunity to collaborate on developing their reach, name recognition and sales in China, not a chance to demand concessions. We believe partnership is not a zero-sum game. There must be respect for the intrinsic value of all parties. This respect must be rooted in shared benefits.
Not everyone shares our view. As our model has taken market share, dozens of brands have told us they have been warned by another e-commerce player not to work with us, or risk retaliation. Many of you reading this have no doubt been shocked to experience this.
As a Chinese entrepreneur, I’m saddened that many international observers believe these shady practices of selling counterfeits and doling out threats represent China. They do not.
The Chinese e-commerce industry is at a crossroads. False profits have ruled for too long. Consumers are turning against the Chinese consumer-to-consumer market — a cesspool for cheap counterfeits that we have shunned.
There is a better way. We have developed a model that stringently vets sellers before they get onto our site. In the rare cases when we do find counterfeiters, we ban them from our site permanently and impose significant fines the first time they are caught.
An open and honest Chinese e-commerce market will benefit consumers and brands. This is not simply my vision for the future of the Chinese e-commerce industry. It is the future of the industry. And we have understood this for years.