Can blacklisting Taobao help bring manufacturing back to the United States?

In its quest to attract manufacturing back to China, the US government has taken another controversial step. On December 21, the Office of the US Trade Representative released a list of "notorious markets" for intellectual property rights, with 40 companies on the list, a quarter of which are Chinese companies, including four online markets such as Taobao and six offline markets such as Beijing Xiushui Street.

As soon as the list was released, it drew strong protests from Alibaba Group.

Alibaba Group President Bethune immediately made it clear: "Alibaba Group is very disappointed with the decision of the US Trade Representative's Office to include Taobao on the list of 'notorious markets'. Four years ago, it was the office that removed us from the list. Over the past four years, we have carried out a series of practical actions with brand rights holders and law enforcement agencies to bring counterfeiters to justice, and have carried out intellectual property protection work more effectively and advanced. The US Trade Representative's Office has put us back on the list of 'notorious markets' at this time. We highly doubt whether this decision is realistic or influenced by the current political atmosphere."

In an internal letter released on the 22nd, Alibaba Group CEO Zhang Yong also expressed indignation: "However, what I want to tell you is that if others don't care about our efforts, we don't have to care about their opinions. What we really care about is whether we have done our best? Has the consumer experience improved? Are the counterfeiters nervous and afraid of us? ... Our past efforts have never been based on any list; our future anti-counterfeiting efforts will not stop because of any list."

Bethune and Zhang Yong's disappointment and anger are indeed justified. The "Notorious Markets" report released by the Office of the United States Trade Representative reviews each of the listed companies, with the most attention paid to Taobao.com, and its comments are divided into two parts: it affirms Taobao's efforts in combating counterfeiting, including the establishment of a special office and the upgrading of anti-counterfeiting policies, while also emphasizing that "the current number of counterfeit and imitation products reported is still unacceptable." It also cited the example of a large automobile manufacturer, saying that at least 95% of the products listed under its company name and trademark on the Alibaba platform are suspected to be counterfeit.

However, in its comments, the Office of the United States Trade Representative failed to provide a specific percentage of counterfeit goods and merchants selling counterfeit goods on Taobao's "more than 1 billion items and 434 million annual active buyers" each year, which greatly reduced the persuasiveness of the report.

In contrast to the subjective and vague assessment of the Office of the United States Trade Representative, Alibaba officially listed a detailed data response. On the one hand, between September 2015 and August 2016, relying on Alibaba's "big data anti-counterfeiting new weapon", law enforcement agencies closed about 675 counterfeit production, inventory and sales points. At the same time, Alibaba also carried out anti-counterfeiting cooperation with more than 18,000 international brands including Apple, Burberry, LV, Cartier, Nike, etc.; on the other hand, behind every complaint from a brand owner requesting the removal of a product, Alibaba's big data anti-counterfeiting system discovered and proactively removed 16 items.

This notorious market list not only caused Alibaba to strongly protest, but was also not recognized by the Chinese government. As early as 2011, when the US announced this list, Shen Danyang, a spokesperson for the Ministry of Commerce, responded that the US used ambiguous terms such as "allegedly" or "according to the right holder" to describe relevant Chinese companies in the notorious market list, lacking solid evidence and sufficient analysis, which was irresponsible and subjective. In December of the same year, Xinhua News Agency also published a commentary, saying that the US launched a so-called "rights protection" action in the name of protecting intellectual property rights and unilaterally released a "notorious market" list based on "US standards", which was unfair.

The list of notorious markets reflects the US government's concerns about job losses overseas. The report of the US Trade Representative's Office does not shy away from this: "Fake and counterfeit goods not only pose a serious threat to the US creative and innovative industries, but also reduce the status of US legal goods in the Chinese and world markets."

In fact, the products sold on Taobao have the biggest impact not on the creative and innovative industries in the United States, but on traditional manufacturing. According to the data from the U.S. Department of Labor, when the U.S. manufacturing industry reached its peak in 1979, there were 19 million people employed. Since then, it has been declining. From 2000 to 2016 alone, 5 million jobs in the U.S. manufacturing industry evaporated, and the number of manufacturing employees accounted for only 8% of the total employment. Compared with high-tech industries, manufacturing can quickly drive employment. Therefore, from Obama to Trump, they have emphasized the re-industrialization of the United States, especially the return of manufacturing jobs.

During his 2012 campaign, Obama vowed to create 1 million new manufacturing jobs by 2016. In his State of the Union address, Obama determined that manufacturing was the key to U.S. economic development and job growth, but so far this KPI has only been halfway achieved. In his 2012 State of the Union address, Obama further determined that manufacturing was the key to U.S. economic development and job growth. This is obviously not easy. Obama proposed this suggestion during a dinner with Steve Jobs in 2011, but Jobs flatly rejected it. Now, Trump has begun to ask Apple to move its production lines back to the United States.

But blocking Taobao will not bring back the jobs that have been lost overseas to the United States.

First, the degree of automation in the manufacturing industry is beyond imagination. Industrial robots are rapidly replacing assembly line workers, and their ability to create jobs is declining. Take Foxconn, the world's largest technology OEM, as an example. From 2010 to 2015, Foxconn invested 300 million yuan in the automation transformation of the workshop in Kunshan plant, and more than 2,000 self-developed robotic arms were put into use. During the same period, the number of employees in Foxconn Kunshan plant decreased by 54%. According to the data of the "2014 China Blue-collar Supply White Paper", since 2013, the number of new blue-collar workers in my country has been declining sharply. The situation in China is still like this, and the difficulty of the United States' expectation to boost employment through the return of manufacturing can be imagined.

Secondly, the industrial chain of IT, automobile and other manufacturing industries cannot be moved from the Asia-Pacific region to North America in the short term. Although recent research and calculations by the Oxford Economics Institute show that China's unit labor cost is only 4% lower than that of the United States, the advantage of Chinese manufacturing lies in the comprehensive advantages of manpower, policies and industrial supporting facilities. China is the only country in the world that has built all industrial categories defined by the United Nations. The Economist once published an article analyzing that China's rapid rise in global manufacturing has created a supply chain deep into Southeast Asia: some low-cost manufacturing activities are indeed leaving China, but as Samsung, Microsoft, Toyota and other multinational companies cut production in China and move to countries such as Malaysia and the Philippines, they have in fact strengthened a regional supply chain with China as the core.

A few days ago, Trump once again drew his sword on Twitter: "My government will pursue two simple principles: Buy American, Hire American." Whether the sword of trade protection can really help the United States carve out a path in the employment jungle, the answer will soon be revealed.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.