WASHINGTON — A joint crackdown on counterfeits by Alibaba Group and Chinese authorities earlier this year netted 1.43 billion yuan, or $206 million, worth of bogus products and the take down of 417 counterfeit production sites, the Chinese e-commerce giant said Thursday.
Alibaba announced the results of “Operation Cloud Sword,” a joint effort targeting off-line counterfeiting and criminal rings in conjunction with Chinese law enforcement.
The Chinese e-commerce giant said the operation, which ran from April through July, also led to the arrests of 332 suspects and the detection of more than 30 categories of counterfeit apparel, footwear, glasses and electrical brands such as Adidas, Nike, Converse, Starbucks, Mobil, Bolon and Philips at the counterfeit manufacturing sites or in storage units.
Counterfeit goods production sites were raided in several provinces, including Zhejiang, Guangdong and Fujian.
Alibaba said it provided 402 leads for the operation to Chines law enforcement from its “counterfeit facilities location map” of off-line counterfeit sites across China and other online intelligence.
Alibaba launched the pilot project with the Zhejiang office of the National Leading Group on the Fight Against IPR Infringement and Counterfeiting in the Zhejiang province in 2015.
Zhejiang is the second-largest province in China in terms of online sales, which hit $108.4 billion through October, a 35 percent increase year-over-year, the report said.
According to Chinese authorities, more than 60 percent of counterfeits are sold through online platforms.
“The massive production of fake goods in traditional setups has negatively impacted the growth of home-grown brands, which are providing quality products online,” the report said.
Authorities and Alibaba intend to extend the operation to Shanghai, Anhui, Jiangxi and Jiangsu in the future.
Alibaba said it uses “big data capabilities” to build an advanced monitoring system that provides anticounterfeit intelligence to assist law enforcement agencies in off-line investigations.
Through a “bot” that is developed daily, Alibaba said it scans its platforms, such as Taobao and 1688.com to detect counterfeit goods. It employs 600 data analytics models that the bot analyzes in real-time merchants and product listings though hundreds of millions of data points such as product specification and customer and user reviews.
The model analyzes “relational” data associated with user behavior, merchandise, payment, logistics to detect anomalies and determine suspected counterfeit goods and high risk merchants.
Alibaba said it also added a scoring system to the screening process utilizing more than 100 attributes such as storefront, transaction volume, inventory information, addresses and more. The higher the score out of 100, the riskier the merchant.
“Based on information intercepted from suspected counterfeit goods-related links, we provide these leads to the authorities to determine whether the cases will be further investigated,” the company said.
The company also uses “optical character recognition,” which is a technology allowing it to process text analysis and detect textual information on product images.
“For example some watch counterfeits may put 100,000 RMB in the price field, but they put something like [a] price ranging from 1,000, to 7,800 RMB on the product image, which tells it is potentially a fake product,” the report said.
The operation helped identify and break up a ring of merchants suspected of selling counterfeit Samsung RAM devices. The criminal network was comprised of 58 online shops in 12 provinces and municipalities such as Beijing and Shanghai. After three months of investigation, the police raided 13 manufacturing and sales sites and confiscated more than 15,000 counterfeit “Kingston” Samsung brand RAM devices. Sixteen suspects were arrested.
The company also helped provide data that took down a counterfeit cigarette network and cross-border fake pesticide sales.
Alibaba said it will continue to promote the operation and use it as a model to: “optimize the data model for accurate counterfeit goods intercepting and deletion; second to improve the network source tracing to realize the crack down on counterfeit goods sellers and their entire link from upstream to downstream; third to increase data quality, enhance lead management for cases, production and output capability, and fourth to further increase the collaboration effort with the relevant departments to form a normalized management system covering the entire country.”