Alibaba’s Jack Ma: Fake Brands Are ‘Better’ Than the Real Thing

Alibaba’s Jack Ma: Fake Brands Are ‘Better’ Than the Real Thing World Economic Forum, 2008. CC BY-SA 3.0.

Jack Ma is being mocked for suggesting that "fake" products from China are often better than the "real" brands. But he makes an important point.

Facebook’s “trending” news section currently includes a statement by Alibaba founder and CEO Jack Ma. The soundbite is going viral.

Ma suggested, much to the dismay of business leaders around the planet, that fake goods from China are actually better than the real products.

Most are laughing at Ma, but I think he’s making a great point and it’s part of a multi-trillion dollar disruption going on in manufacturing and physical product marketing.

What Jack Ma Actually Said

Jack Ma was being questioned about all of the endless fake and counterfeit and “knock off” products that are for sale in bulk on Alibaba.com, a website that is essentially an Amazon.com for people looking to buy products to sell through repackaging.

Here’s what Ma actually said:

“The problem is that the fake products today, they make better quality, better prices than the real products, the real names. It’s not the fake products that destroy them, it’s the new business models.”

This isn’t nearly as bad as it’s being made out to be. It’s also not wrong, in many cases. Let’s do a quick review of some facts most people don’t understand.

2 Facts to Keep in Mind

Jack Ma has a front-seat view of some massive economic shifts going on right now. He understands two very important facts:

  • “Knock off” brands are from the same factories.

If you buy a knock off watch, there’s a fairly good chance it’s made at the same factory as the big name brands – it just doesn’t have the same brand.

This is especially true for easy to make products. Private labeling as an industry is changing how people view products.

That’s why some companies, like the app Wish, are based on getting cheap private labeled products into the hands of consumers – they can be just a fraction of the cost, but have the same qualities as the name brand.

  • Branding and quality are often an illusion.

The above point touches on something that is difficult to wrap one’s mind around at first: branding is largely an illusion.

If a small firm makes a product with identical quality as Apple, most people will think the apple product is higher quality because they believe in the illusion of the brand.

This isn’t necessarily a bad thing. It can make decision making simpler and more efficient. But if you’re spending more for a same-quality brand, then you might be missing the point.

This illusion is starting to crumble. It probably won’t fully go away, but people are deconstructing what “name brand” means in the first place. This is incredibly interesting, and a sign of things to come, especially in ecommerce.

The Future of Manufacturing and Branding

As things progress, we’re going to see more and more “same quality” products that will rival top brands.

Amazon recently started launching more of their own “branded” products that just slap on the Amazon label to a high-quality no-brand (previously, at least) product. This is making huge changes for all sorts of industries, especially in fitness and tech.

This trend is only going to get stronger. If you sell a fairly benign product and make money from your brand value, you’ll still have many options for huge profits – but you’ll want to make sure you pick the right product.

Generic products like “lase mouse” or “keyboard” are going to run into problems. Specific products like “gaming mouse” and “programmer keyboard” will likely be more promising, but we’ll see how it plays out.

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