Alibaba is better at fighting fakes than Amazon is, says CEO of Swatch

  • Swatch Group CEO Nick Hayek told CNBC that Alibaba does better at fighting fakes than its American counterpart, Amazon.
  • "If I look what Alibaba is doing and all these they are trying to make a service to the consumer and to earn money. And they are fighting actively against fakes. This Amazon is not doing," he says.
  • Swatch's watch business has experienced growth everywhere, but what's needed is a middle class that can "really consume." In that, China's political system has done right, he says.

Alibaba is "fighting actively" against fakes, but that isn't something Amazon is doing well, according to Swatch Group CEO Nick Hayek.

Commenting on whether Amazon is delivering added value for consumers, Hayek conceded that "in a way, yes, they deliver a product." But Chinese companies like Alibaba are doing better, he told CNBC's Geoff Cutmore.

"If I look what Alibaba is doing and all these they are trying to make a service to the consumer and to earn money. And they are fighting actively against fakes. This Amazon is not doing," he said.

"They refuse to enter into discussion because they have, I think, 10,000 of lawyers that say, 'Please, we at Amazon, we should not enter into anything that should force us to fight against fakes.' The Chinese are doing it. They fight against it," the CEO said.

Workers pack and ship customer orders at the 750,000-square-foot Amazon fulfillment center in Romeoville, Illinois.
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Workers pack and ship customer orders at the 750,000-square-foot Amazon fulfillment center in Romeoville, Illinois.

CNBC reported in 2016 that Amazon had been facing a counterfeiting problem following the e-commerce giant's effort to openly court Chinese manufacturers. Critics said Amazon hadn't put the necessary checks in place to manage the influx of counterfeits.

In an email to CNBC, an Amazon spokesperson said the company invests "tremendous resources" into systems that protect customers from inauthentic goods.

"We quickly investigate reports of suspected infringement and we hold bad actors accountable. Our efforts are even more effective when brands work collaboratively with us, which happens every day," said the spokesperson, who added that the company "welcomed the opportunity to work with Swatch" in its Brand Registry. That initiative aims to reduce intellectual property violations, and more than 40,000 brands are registered under this scheme, according to the company.

"Brands in Brand Registry, on average, report 99% fewer suspected infringements compared with before the launch of Brand Registry, and Amazon took action on 93% of all notices of potential infringement received from Brand Registry within four hours," the spokesperson said.

Amazon's anti-counterfeiting policy, as stated on its website, maintains that the "sale of counterfeit products is strictly prohibited" and the "failure to abide by this policy may result in loss of selling privileges, funds being withheld, and destruction of inventory in our possession."

"We stand behind the products sold on our site with our A-to-z Guarantee, and we encourage rights owners who have product authenticity concerns to notify us. We will promptly investigate and take all appropriate actions to protect customers, sellers, and rights holders," the company says on its website.

Workers distribute express parcels at a logistics centre of China Post during Alibaba Group's Singles' Day global shopping festival on November 11, 2016 in Ganyu, Jiangsu Province of China.
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But some corners of Alibaba's offerings have long been regarded as a haven for counterfeit products. Its Taobao e-commerce platform was blacklisted by the U.S. Trade Representative for a second consecutive time this year for selling suspected fakes. That move drew protests from Alibaba, which said it did not reflect the company's intellectual property protection efforts. China's commerce ministry had responded with doubts over the "objectivity" of the annual U.S. blacklist.

Chinese politics doing 'the right things'

Swatch's watch business has experienced growth everywhere, but what's needed is a middle class that can "really consume," said Hayek.

In that sense, China's political system has also done right, according to the CEO.

"The politics over there have done the right things, they create a middle class. That's what we need, a middle class that can really consume. And that's what's happening and continues."

"There was never a Chinese consumer that disappeared. He was always there," he said.