Chinese analysts refute US 'notorious markets' report

HANGZHOU -- Chinese analysts disagree with a US report that describes China's top search engine, Baidu and e-commerce giant Taobao as "notorious markets" for counterfeit and pirated goods.

The Office of the US Trade Representative (USTR) said on February 28 that the two Chinese companies are among 33 websites or public markets in China, Russia, India and other countries that facilitate trade in fake or unauthorized goods such as music and clothing.

Fang Xingdong, the founder of blogchina.com and an analyst for Internet-related issues, said that trading of unauthorized goods is a problem which should be solved through lawsuits, instead of political accusation.

"The release of the report by a government agency politicizes the market issue and is against the principles of a market economy, which have long been advocated by the US itself," Fang said.

Fang argued that US e-commerce websites such as eBay also have problems with piracy and counterfeiting and the US is applying double standards in evaluating websites.

Fang Yingzhi, a researcher for the China e-Business Research Center, said that China's e-business and the country's Internet service have seen an explosive growth in recent years that might have put some pressure on the US

The two Fangs are not related.

"The move taken by the Office of USTR this time could not be ruled out the possibility of a deliberate act meant to deal a blow so as to slow down the booming on-line industry in China," said the researcher.

The US Trade Representative's office said in the report that Baidu, China's most-visited website, was the most prominent example of online services that use "deep linking" to steer buyers to "allegedly infringing materials that are often stored on third-party hosting sites."

Search results could take a user directly to a page for a pirated download, rather than to the website's home page.

Taobao has a "long way to go" to stamp out the availability of fraudulent goods on its website, though the company is making "significant efforts" to resolve the problem, according to the report.

Other websites cited by the report include Canada-based Isohunt, Russia-based Rutracker, China's 91.com and Demonoid in Ukraine. Ten Chinese markets have been blacklisted.

Tao Ran, the public relations director of Taobao, said that the company has always been strengthening the protection of intellectual property and has adopted a series of measures to combat piracy and counterfeiting.

Last year, Taobao eliminated 14 million bogus and counterfeit goods and saved up to 169 million yuan ($25.71 million) for consumers by successfully solving on-line business transaction disputes, according to statistics released by Taobao.com.

Taobao announced on February 28 that it had added 200 million yuan to its "Consumers Protection Fund," which was set up last year with an initial reserve of 100 million yuan to reimburse consumers for transaction disputes.

Fang Yingzhi, the e-business researcher, called for the establishment of laws and regulations by the government to formalize the rights and obligations of e-business transaction platform providers and users.

Early this year, China's Ministry of Industry and Information Technology (MIIT) proposed new measures be designed to regulate competition between internet information service providers and enhance supervision of the internet information service market.

The Ministry of Commerce published a proposal last week seeking public opinions to regulate the third party payment platform.

"Obviously, the Chinese government has been striving to install stronger supervision over e-commerce, which would be beneficial to both domestic and foreign consumers," said Fang, the e-business researcher.

Hu Yanping, the director of Data Center of the China Internet (DCCI), said that e-commerce is now facing a credibility crisis which means that people are expecting higher standards to regulate the maturation of the online marketplace.

"This does not necessarily mean a sharp increase of infringement violations on the Internet," said Hu, "The credibility crisis with the Internet is a global issue which should be addressed by all countries together."