Alibaba’s Revenues Soar; Counterfeit Criticism Continues

Alibaba's Jack Ma
Alibaba Group Holding Ltd.'s executive chairman, Jack Ma.
Getty Images.

China e-commerce giant Alibaba Group Holding Ltd. continues to see mega increases in sales and profits despite ongoing concerns about its home country’s economic stability.

The firm said its income climbed more 649 percent year-over-year, to $3.57 billion, while its revenues increased 32 percent, to $3.49 billion. Both figures surpassed forecasts for the quarter.

“This was a great quarter for Alibaba Group, with strong growth across the board and particular outperformance in mobile. We continued our efforts to drive healthy growth [of gross merchandise value], deliver an unparalleled consumer experience and help quality merchants do business on our platform,” said Daniel Zhang, CEO of Alibaba Group, in a release. “We are winning in mobile and remain focused on our top strategic priorities, including internationalization, expanding our ecosystem from cities to villages and building a world-class cloud-computing business.”

Alibaba’s gross merchandise value (GMV) — a measure of growth in the e-commerce space — climbed to $112 billion, a year-on-year increase of $25 billion in the quarter according to Alibaba Group CFO Maggie Wu.

Mobile accounted for 62 percent of this growth, contributing $1.7 billion — a year-over-year increase of 183 percent.

“We made significant progress in monetization, and our revenue growth accelerated,” Wu said in a release. “Meanwhile, we generated strong free cash flow of $2.1 billion this quarter. The fundamental strength of our business gives us the confidence to invest in our strategic priorities.”

Over the past few months, the e-tail behemoth has been under increased scrutiny for alleged counterfeit activity on its platforms.

Much of the criticism has come from the American Apparel & Footwear Association (AAFA), which has accused Alibaba of allowing “the rampant proliferation of counterfeit apparel and footwear” on its TaoBao platform.

Just last month, the organization urged the United States Trade Representative’s (USTR) to relist Taobao as a “notorious market” in its 2015 Notorious Markets report.

In remarks at the American Chamber of Commerce in Hong Kong Tuesday, AAFA President Juanita Duggan took the opportunity to address her organization’s “dissatisfaction” with Alibaba’s efforts to combat counterfeit activity.

“We do not take this action hastily. Our recommendation [to USTR to relist Taobao] comes after years of trying to work with Alibaba. And it comes after months of underscoring to Alibaba, as well as to U.S. authorities, the seriousness of this issue to our industry,” Duggan said. “… Even as we continue to encourage members to participate in whatever it is Alibaba offers to take down counterfeits, our brands tell us that they have encountered nightmarish problems when they seek Alibaba’s help in removing items that blatantly rip off their proprietary products.”