The International Anti-Counterfeit Coalition (IACC) suspended Alibaba's membership recently after several IACC companies quit the organization to protest at the inclusion of this Chinese e-commerce giant.

The suspension, which came only one month after the company joined the group, is reportedly linked to Alibaba's "ignominious history of failing to exterminate the inflow of counterfeit products on its subsidiary B2B and B2C platforms." The scandal has triggered a public uproar over the copycat problem, which is particularly prominent in China.

An editor of yours claimed last week that Alibaba's problem is not theirs alone, and other international e-commerce tycoons including eBay and Amazon have been struggling with counterfeits for years. The author argued that "China is walking on the same path most established economic powerhouses once chose," and counterfeiting-to-innovation pattern is the "nature of the economy." The editor seems to be finding excuses for Alibaba's counterfeiting problem.

The knockoff economy will not drive the nation toward creativity, but will dry up investment in innovation. This logic is straightforward: copying harms innovators and thus dampens their enthusiasm for innovation. The pervasiveness of imitators in China means customers are "gifted" easy access to high-imitated bags, smart phones, fashionable dresses, and so forth, which cost much less than the genuine ones.

Admittedly, the results of imitation are affordable products and services, but copying is at the cost of the profits of well-established quality brands. To win in the cut-throat competitions against counterfeiters, the quality brands have to cut their investments in innovation. The deficiencies of the knockoff economy are massively expanded on e-commerce platforms such as Taobao.

More importantly, cheating customers and selling counterfeit products will bring irreparable damages to the company's reputation. As a result, the company will lose its customers in the end. I can still remember how disappointed I was at an e-commerce company after having bought a counterfeit suitcase there. Even though I received a refund in the end, I lost my trust in the platform the moment I found the suitcase was a fake.

The pervasiveness of copying is also a key reason why many foreign customers are prejudiced against "Made in China" products even if the goods are supposedly high-quality.

Undeniably, selling counterfeit products brings more harm than benefits to China's economy and reputation in the long run. Winning customers' trust carries more weight in the end than obtaining instant profits for the long-term development of a company.

Given the significant deficiencies of the knockoff economy, effective measures to tackle the copycat problem are urgently needed.

First of all, China fails to innovate because it lacks protections for intellectual property. Intellectual property rights ensure the economic rewards of innovation go for originators. More efforts should be put to improve intellectual property laws. Otherwise, copycats will outrun and undercut innovators.

The author argued that "rigid directives, orders and punishments will probably reinforce the knockoff economy, and push counterfeiters to figure out more crafty ways of producing and selling fake goods," and thus "harsher penalties" may not helpful. I disagree. Heavy punishments deter counterfeiters. The copycat problem will run rampant on e-commerce platforms without appropriate punishments.

The government should do more to change the status quo. China introduced the policy of "indigenous innovation" in 2006, which includes "enhancing original innovation through co-innovation and re-innovation based on the assimilation of imported technologies." For many observers, the policy is "an official green light for piracy."

Happy Spring, a freelance writer based in Beijing