POINTING FINGERS: A customer picks up festive gifts at a shop in the Yiwu Petty Commodities Market. The market was criticized by the USTR for "wholesaling of IPR infringing goods" (TAN JIN)

On March 1, the Office of the U.S. Trade Representative (USTR) released the first-ever Out-of-Cycle Review of Notorious Markets, identifying more than 17 websites and physical markets that enable the illegal sale of goods protected by copyright or patents. China led the list, with 10 markets, and among them are Taobao.com, China's largest C2C auction site operated by the e-commerce giant Alibaba, the search engine Baidu.com, Beijing's Silk Street Market, Beijing Hailong Electronics Mall and the Petty Commodities Market in Yiwu, Zhejiang Province.

China should enhance efforts to protect intellectual property rights (IPRs), Xie Mingdun, a professor at the Beijing University of Posts and Telecommunications said. But it is also necessary to protest the U.S. accusations and take countermeasures.

"The Chinese Government must take action to refute this malicious blame. Otherwise our enterprises will fall victim to aggressive U.S. trade policies," he said.

Cleaning up

In response, Taobao dismissed the blame that its online market is flooded with knock-off or shoddy products. "We are dedicated to protecting IPRs and have fully honored the social responsibility as a reliable enterprise," said Zhang Yong, CFO of Taobao. "Now millions of sellers put up more than 800 million products on our website."

In a bid to ensure a clean market environment, the company has taken a string of measures, including automatic and manual detection, he said.

In a recent report, Taobao said it received more than 6,000 complaints last year and dealt with more than 14 million IPR-infringing products. Moreover, the website has built an online anti-counterfeit team of 2,400 volunteers who dealt with 530,000 fake products in the latter half of 2010.

In another move, on March 15 Taobao joined efforts with the nine ministries and commissions under the State Council to kick start a national campaign to wipe out online piracy. Meanwhile, the website also announced to inject another 200 million yuan into a special fund built to safeguard consumers' interests.

The Yiwu Petty Commodities Market also showed doubts about the USTR list. Since the 1990s, the Yiwu City Government has taken steps to regulate the market, including building the country's first trademark database and a training school for businessmen, said the management committee of the market.

Between July 2009 and February 2011, Yiwu Customs cracked more than 500 cases of IPR infringements involving 30 million goods. This has protected many world-renowned brands like Nike, Louis Vuitton and Armani.

In the Yiwu market, there are currently 1.7 million items on sale, but only a few were found to be pirated products, the committee added.

Behind the list

The U.S. accusation was not unwarranted—complaints have surrounded the 10 markets in questions concerning pirated or knock-off products. The problem is that China's determination to cure the ailment was completely overlooked.