Alibaba may face trouble in US as fakes abound

Analysts agreed that it is important for Alibaba to continue its battle to eliminate fake goods to maintain its dominance of the lucrative Chinese e-commerce market and its reputation abroad.

Neil Shah, research director at market research firm Counterpoint Technology Market Research, said: "Alibaba will have to identify and take action against the notorious counterfeits, which are not only hurting other brands but Alibaba's platform and reputation as well. Trust is the cornerstone for any e-commerce platform to grow and succeed."

The company is aware that it is the subject of increasing international scrutiny since its listing in the US last year. Concerns over the authenticity of products sold on its platforms have been a recurring issue raised by investors and consumer associations.

In January, the State Administration for Industry and Commerce said the company had failed to protect consumer rights as it did little to tackle unlicensed merchants. The regulator said it found many products on sale on Alibaba's online platforms that infringed on trademarks

"Alibaba is not the only firm to have issues with counterfeit products, as every firm in the industry does. But Alibaba is often singled out because it is significantly larger than its rivals. Investors should be aware that this problem is endemic to the industry as a whole," said Flynn.

Alibaba's size is a key reason why it has struggled to prevent small vendors from selling fake goods on its Taobao platform.

"Taobao has more than 7 million merchants. The size of the platform is so huge that it makes it extremely difficult to tackle the glaring issue of fake products.

"It's still early days and Alibaba could face even more challenges as the platform expands cross-border and more consumers shop on the platform," said Shah.