Glass of Benfords? Chinese Marketplace told to “Stick to Law”

Pinduoduo is a Chinese tech startup with a seemingly impressive back story. The online shopping platform raised US $1.63 billion in a US IPO last month and reached a valuation of about $US24 billion ($32.6 billion) in its first day of trading on the Nasdaq. Its valuation in a funding round only a few months earlier in April was reportedly US$15 billion.

The bargain site offers group deals, requiring shoppers to spread the word on social media, recruiting one another in order to purchase. It appeals to China’s lower-tier cities, a target audience that has previously been overlooked.

But the online marketplace is now gaining publicity not for its trading success or for cementing its position as a rival to Alibaba or JD.com, but for reports of counterfeit products, fakes and law suits.

Last month, Skyworth, a Chinese manufacturer of audiovisual equipment, demanded the platform remove counterfeit Skyworth products for the platform and reserved its right to sue over the matter. On 19 July, US nappy manufacturer Daddy’s Choice filed a trademark infringement lawsuit against Pinduoduo in New York Federal Court.

Penfolds PinduoduoPhilips PinduoduoPinduoduo Samsung

The site lists products that bear a striking resemblance to other established companies, including Chinese smartphone maker Vivo (with Vivi available to purchase Pinduoduo) and Samsung (with Shaasuivg available to purchase via the platform). Australian companies aren’t immune from copycat labels, with Pinduoduo selling Benfords Hyland wine, bearing a striking resemblance to Penfolds.

China’s market regulator said they would investigate the company after repeated reports of counterfeiting. Shares fell roughly 14 percent since the 27 July debut amid market unease.

After meeting with Pinduoduo, the State Administration for Market Regulation said that the company has agreed to step up vetting of the products listed on its platform. A statement by the regulator said that it should “strengthen platform management, regulate business activities of third-party vendors, stick to law and maintain a healthy, fast and sustainable development.” Pinduoduo has also said in a statement on online news portal Netease that it was working hard to crack down on counterfeits.

Chinese platforms are no strangers to counterfeiting, with Alibaba facing continuous criticism amongst claims that fake products are being sold on its online marketplaces.

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