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BABA Battered As Macro Fears & Counterfeit Concerns Trump Singles-Day Celebrations
The headline-making celebrations of the mind-blowing numbers associated with China's Singles-Day sales drove investors to buy BABA ahead of the open in excited 'everything is awesome' anticipation. However, between 'sell the news' profit-takers, weak China macro, and a WSJ story confirming our recent fears on counterfeit goods, BABA is now down over 4% on the day, back below the 200-day moving average.
"Sell the news"
With China admitting that, more than 40% of goods sold online in China last year were either counterfeits or of bad quality, illustrating the extent of a problem that has bogged down the fast-growing online sector, The Wall Street Journal reports, Alibaba's global ambitions face a major challenge...
Alibaba, which dominates e-commerce in China, is going abroad as its home market matures. Alibaba Executive Chairman Jack Ma has said the company plans to serve two billion customers world-wide within a decade. Executives hope to turn China’s Nov. 11 online sales festival, Singles’ Day, into a global event.
But the presence of counterfeit goods presents a problem for these global ambitions. Business groups and brands are increasingly scrutinizing AliExpress, worried it will send counterfeits from Chinese factories straight into consumers’ hands on a global scale.
“There are substantial concerns among brand owners that expanding Alibaba’s AliExpress platform will result in a very significant increase in the sale of counterfeit and otherwise infringing goods” unless more safeguards are imposed, said Paul Kilmer, founder of the Trademark Working Group, a collective of U.S. companies and organizations.
Alibaba says counterfeiting is a problem for all e-commerce companies, and that only a minuscule proportion of transactions lead to consumer complaints about fakes. “Like all global companies in our industry, we must continue to do everything we can to stop these activities,” a spokesman said. He added Alibaba has made it easier for brands and others with a record of legitimate requests for the removal of infringing listings to use a simplified system to expedite such take-down claims.
...
In a September filing with the U.S. Trade Representative over China’s compliance with World Trade Organization commitments, the U.S. Chamber of Commerce cited AliExpress as a source of concern.
“AliExpress is expanding into the U.S. and offering translation services in multiple languages,” the chamber said in its submission, and neither the rights holders nor the government has the resources to stop a flood of counterfeits coming in one small package at a time.
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Or perhaps - it's just because - as China's macro data showed last night, all is not well.
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seriously, you have to be prejudice when doing any business with mainland Chinese .. it's ok. They ranked 2nd to last out of 145 countries on generosity. The culture there has issues. ..for now, maybe next generation will prove better.
With volunatray free market capitalism, immoral businesses will soom go bye bye. Be an honest company in China and you'll be wildly successful.
drugs
you mean under the crap that we have been buying from china for years there is a whole 'nother even more inferior layer of crap? who knew?
Clearly Baba doesn't get it. If Jack Ma wants a higher stawk price he needs to follow the Amazon model and instead of making money, he needs to lose money every quarter.
Amazon "loses money" on paper...BUT...all of the paychecks (Bezos 7 figure check included) always clear...
The more profit, the more taxes...little/no profit = little/no taxes...smart, very smart...
As long as the suckers on Wall Street keep giving them money to sustain cash flow, the ponzi scheme will continue to flourish
Health fears grow as fake drugs flood into Britain
"Counterfeiting gangs based in China are producing sophisticated copies of the world's bestselling pharmaceuticals. In 2008 an estimated 8m of these potentially deadly pills found their way to NHS patients. The health of millions of people is at risk"
http://www.guardian.co.uk/business/2009/jan/04/fake-pharmaceuticals-drugs-china-nhs
”In addition, Chinese authorities arrested 13 people and seized about 400 kilograms (880 pounds) of counterfeit Tamiflu and more than 40 tons of raw chemical materials.”
“Counterfeit and misbranded prescription drugs are pouring into America from China and other countries. We're just beginning to learn how dangerous these drugs can be,” U.S. Attorney Troy Eid.
http://www.usdoj.gov/usao/co/press_releases/archive/2008/April08/4_4_08.html
Just got off the phone with Krugman, and he was jubilant at the news!
Yes – and I'm paraphrasing – perhaps it isn't particularly good news for those individuals who may be adversely affected by the counterfeit drugs, but the associated costs of dealing with the resulting health problems will serve to stimulate the economy into the stratosphere!
Off topic but relevant .... Jack Ma is my bet to runaway win an Ugliest Human Contest.
The ONLY way to do business with China is to take 100% of the goods directly into your warehouse, inspect every piece, and not release the LC unless the shipment is at least 95% good, then reship the stuff out to your clients.
Of course, if you do all of that your cost of business is so high it really negitates the value of doing business there in the first place.
EVERY company that sell you shit from China without checking all of the goods is ripping you off, playing the odds that you "may" get a good piece and remain a customer.
I BUY NOTHING from China anymore, fuck them. If I get goods and find they are from China, they are returned.
While you might deride Chinese made goods, pray tell me what America really does well nowadays? I guess manipulate stocks and other imaginary things? Make tons of corn syrup to fatten/cause diabetes? Of all the many many things that required highly skilled labor to produce, America barely even begins to rank anymore.
The only thing I can think of is military vehicles and other gov. funded specialty products. Electronics, cars, petroleum based products, beauty products, clothing & textiles, lumber, steel & other construction metals, chemical refinement, industrial equipment, even drugs are all produced for the large part overseas. The US manufacturing sector has been in a recession since the late 80's, early 90's when most corporations began to see Asia as free labor. The chinese have had almost 3 decades of US corporate interests pouring money into the country. Most new chinese facilities are gorgeous compared to the US counterpart. This has been largely downplayed by the US media, who always seems to find some shithole basement factory producing poisonous baby food to televise.
Another funny question: do you think, that if America produced all of its own goods, that none would be crap? The only reason why American produced parts are usually better than their Chinese counterpart is because that's the only way that the American company can compete. Most of the crap you see is crap for a reason. That reason is American corporations demanding 'the lowest price'. So when you buy a TV for $200, just know that if that was truly made in America, it would cost $2000.
The American corporations arent dumb. They are anything but. They realized that the true way to massive amounts of money is not the margin of a single item but volume. They got MSM onboard and advertised the crap out of every product, and then lined the shelves of every store with cheap crap. Ingenius actually. So dont blame the Chinese. They simply took advantage of a proposition that, in my mind, has traded the health of their environment for manufacturing prowess.
Remember too that Alibaba is the book keeper for all these Chinese citizens with the Chinese Citizens Score model..how many more in China will be running around with glee sticking their cell phone up in the air to brag about this digital caste system. Be aware some of it is already here.
http://ducknetweb.blogspot.com/2015/10/citizen-score-in-china-huge-warning-for.html
Just try and get your Medication Prediction Adherence Score that's a secret. Pharmacy Benefit Managers create these based on metrics that have nothing to do with taking your prescriptions. The scores are sold to big pharma, like Valeant and many more and to insurers, and you can't find out what your score is, a big secret with proprietary code and calculations..Killer Algorithms.
http://ducknetweb.blogspot.com/2015/06/medication-adherence-predictions-enter.html
@MQ,
Appreciate your posts.
3 scenes from the Stars Wars which may improve your investment skills
http://www.decisiveinvesting.com/blog/general-en/3-scenes-from-the-stars-wars-which-may-improve-your-trading-skills
Buzzsaw99; Oh yes. The trash they sell the mouth-breathers (as distinct from Party members) is toxic, flimsy, short-count, just wrong in every possible way. We were looking to get Burt's Bees products into China. They love the mosquito balm there - they call it "little bee" due to the picture on the lid. Burt's doesn't do business with China. And you can't pipe it in, gets confiscated at the border and resold. Same same our attempts with vitamins.
Well, go to fucking BABA's crap mega site of useless shit and you will find 'Burt's Bees' balm for sale for 1/10 what you pay for it in the US of A. God knows what toxic runoff they are scooping into the jars. Rolling phony labels is the easy part. Voila, instant knockoff and cornered market. "What's a trademark roundeye?"
China mainland is so fucked.
And then there are the outright frauds. There are ~350 offers to sell you a "1 TB flash pen drive" out on Ali at the moment.
Just another example ... Chinese vitamins, if you can call them that, are pablum, placebo, waxen, dead calories. A line of U.S.-originated vitamins would do wonderfully in the mainland; and within a week they will have it knocked off and undercutting you by 90% the following Monday with something that looks identical to yours. Selling it on BABA. And you will have no recourse.
You think those poor bastards in Beijing, Xian, Handan couldn't use some of our vitamins to try to stay healthy? Nonethless you, honest U.S. guy, will be out of business in a fortnight. Forget it.