Alibaba Group Holding Ltd. was cited again as a marketplace for fakes on a U.S. blacklist, another sign of increasing tension between the U.S. and China. The Office of the U.S. Trade Representative on Friday included Alibaba’s Taobao online marketplace on its list of “Notorious Markets,” citing a high volume of reported counterfeiting and piracy.
The agency acknowledged steps Alibaba has taken to make it easier for fakes to be removed, but said “the enforcement program reportedly continues to be burdensome and insufficient to end the sale of counterfeit products on the platform.” In response, Alibaba’s President Mike Evans said in a blog post that the company’s presence on the list “is not an accurate representation of Alibaba’s results in protecting brands and IP, and we have no other choice but to conclude that this is a deeply flawed, biased and politicized process.” Trade tension between the U.S. and China is increasing as China’s economy continues to grow quickly and its companies expand overseas.
Chinese acquisitions of U.S. companies have been thwarted by lawmakers recently. Ant Financial, the Chinese financial services giant controlled by Alibaba co-founder Jack Ma, failed to win approval from a key U.S. government panel for its plan to buy MoneyGram International Inc. The decision by the USTR is a blow to Alibaba’s international expansion strategy, which depends on winning the trust of U.S. and global brands.
Alibaba dominates e-commerce in China, with Taobao and the company’s other shopping platforms accounting for the majority of online retail sales, but it’s a bit player in the U.S. still.
Alibaba said more than 230,000 Taobao stores were closed from September 2016 to August 2017.
The company has also provided leads to law enforcement that resulted in more than 1,000 arrests and the closing of nearly 1,000 manufacturing and distribution locations.
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Tencent Holdings Ltd. will buy a stake in Chinese supermarket chain Yonghui Superstores Co. for about 4.22 billion yuan (£638 million), setting up a clash with arch-rival Alibaba Group Holding Ltd. in physical retail. China’s largest internet corporation is acquiring about 5 percent of Yonghui from existing shareholders at 8.81 yuan apiece, Yonghui said in an exchange filing Friday, a 9.9 percent discount to its price before trading was halted on Dec.
8. The investment — a rare foray into traditional retail for a company known for games and messaging service WeChat — may be looking to drive adoption of its digital payments service in stores.
The deal follows Alibaba’s £2.9 billion November purchase of a stake in grocery retailer Sun Art Retail Group Ltd., which operates about 400 hypermarkets under the Auchan and RT-Mart banners. The e-commerce giant is betting it can use technology to overhaul a £4 trillion domestic brick-and-mortar retail industry and drive its next phase of growth. Jack Ma’s company has already spent billions buying into grocers, shopping malls and even department stores across the country.
“The proposed Tencent-Yonghui deal suggests more tie-ups between Chinese grocery retailers and leading internet platforms are likely,” Shen Li and Vey-Sern Ling, Hong Kong-based Bloomberg Intelligence analysts, wrote in a note Wednesday. “Investment in groceries, a high-frequency purchase category for consumers, will expand the reach of Tencent’s mobile payment system WeChat Pay, which has been gaining market share from Alibaba’s Alipay over the past few years.” Yonghui, which operates supermarket franchises and has more than 580 stores in China, plans to resume trading on Dec.
18, according to the filing. China’s fourth-biggest hypermarket operator by market share already has a tech-industry investor in e-commerce player JD.com Inc., according to Bloomberg Intelligence.
Sun Art is the market leader, followed by China Resources and Wal-Mart Stores Inc. Online commerce companies are expanding in physical retail in their bid to prop up sales and transform old-school shopping. Alibaba is deploying technology to better manage inventory and customer data to gain market share and win more rural consumers.
Wal-Mart, meanwhile, has been focusing on turning around a sluggish Chinese operation through a partnership with JD, and by expanding its network of Sam’s Club stores targeted at consumers looking for premium and imported goods. For Tencent, the investment in Yonghui may help propagate the use of its WeChat Pay service, which has steadily gained market share from Alipay, a rival offering from Alibaba-affiliate Ant Financial. Wider adoption of payments is key to building data on users and helps Tencent and Alibaba better target advertising.
The rapid growth of Tencent’s digital wallet — along with hit games such as Honor of Kings and advertising across its platforms — helped fuel a 61 percent rise in third-quarter sales.
Alibaba Group Holding Ltd.’s video streaming service, Youku Tudou, has signed content licensing deals with NBCUniversal and Sony Pictures Television, marking a deeper foray into entertainment for the Chinese e-commerce giant. The multiyear agreements gives Youku subscribers access to hundreds of films from the studios, the service said Thursday in a statement. Users will also have faster access to new and recently released movies, including “Blade Runner 2049” and “Jumanji: Welcome to the Jungle,” Youku said.
The deal comes as China’s tech giants are spending aggressively to acquire entertainment content and create original programming. Youku is competing with Baidu Inc.’s iQiyi streaming platform — which recently teamed up with Netflix Inc. — and Tencent Holdings Ltd.’s video service. Rising content costs are weighing on the tech companies’ bottom lines, as they pursue user and subscription growth.
“I am confident that expanding our relationships with more international studios will further enhance our platform’s penetration into the home entertainment business and push the online video” and over-the-top businesses to greater heights, Yang Weidong, president of Youku, Alibaba Digital Media and Entertainment Group, said in the statement. In recent years Alibaba has spent billions of dollars on entertainment media assets as the company seeks growth outside of its main e-commerce business. The company has increased its profile in Hollywood, backing movies like the latest “Mission Impossible” film.
Alibaba bought a stake in Amblin Partners, the production outfit backed by Steven Spielberg, in October 2016 to work together to produce and finance films globally and in China. “The Fate of the Furious,” a new installment in the Universal series, had strong demand in China, taking in £393 million there earlier this year.
The licensing deal also helps NBCUniversal and Sony make further inroads in the Chinese market as the domestic home video sales decline.
Universal Pictures and Sony Pictures are among several U.S. studios that have deals with Chinese entities to fund their films and help market movies in China.