Overwhelmed and outnumbered by counterfeiters, China's JD.com, an online direct sales company, is throwing in the towel and will shut down its online customer-to-customer (C2C) marketplace Paipai.com in three months.

The decision comes just a year and a half since JD.com acquired Paipai from Tencent for $215 million. But in that time, the company determined that the C2C platform, which is essentially an online flea market with unregulated and unlicensed sellers, was simply too risky in China.

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"We are closing Paipai.com because we believe the C2C e-commerce model in China is incompatible with our commitment to providing only authentic, high quality goods," said the company in a statement. "Even though the site was not part of the JD.com core business, we felt this was an important move if the site could not match our standards for authenticity and quality."

JD.com said that the challenges posed by counterfeiting in China's e-commerce market can be addressed through "a commitment to upholding the highest business standards, prioritizing long-term success over short-term gains."

JD.com said it has stopped accepting merchant applications to open stores on Paipai and its contracts with existing merchants will terminate on the last day of the year.

Contributing to the ease of selling counterfeit merchandise was the fact that merchants who open stores on C2C marketplaces in China do not need to file with the country's industry and commerce watchdogs, which means they are not obligated to follow regulatory oversight.

In addition to fighting counterfeiters in online marketplaces, JD.com has invited more brands to open stores on its B2C platform.

TagsDefeated By Counterfeiters, JD.Com Shutters Paipai, JD.com, customer-to-customer marketplace, C2C, Paipai.com