Tuesday, June 5, 2007

It's not just China faking stuff.

Seen in Irbil, Iraq (Source):

And this was in Siem Reap, Cambodia (Source):

More Counterfeiting Tales from China

Y'all know those fake Prada and Fendi goods are from China, right? Those Louis Vuitton and Gucci bags and purses, those Rolexes sold off street tables in many big cities - all from the Middle Kingdom, no?

Counterfeiting is big business there. But designer goods are just the tip of the iceberg. Think pirated DVDs and CD - all the way up to laptops and cellphones.

In these cases, manufacturers and those who hold the patents are the main losers. But Chinese counterfeiting has expanded into areas that cause harm, and even death. Fake brake pads that fail in an emergency. Fake formula with barely any protein - babies fed this stuff were seriously malnourished, and some died. (See this earlier post) Cheap diethylene glycol sold under the guise of glycerin syrup for use in cough syrup, fever medication, injectable drugs - these caused permanent damage to some people and killed others. (Read this earlier post).

At the heart of this massive problem is this question: why are these fraudulent practices so widespread in China, and why aren't their authorities getting it under control?

The New York Times tackles that issue in the article, When Fakery Turns Fatal.

According to the story, "cutting corners or producing fake goods is not just a legacy of China’s initial rush toward the free market three decades ago but still woven into the fabric of the nation’s thriving industrial economy. It is driven by entrepreneurs who are taking advantage of a weak legal system, lax regulations and a business culture where bribery and corruption are rampant."

After living in deprivation under decades of Communism, are some Chinese willing to go to any lengths to turn a bigger profit? Seems that way, doesn't it?

"For decades," writes David Barboza, "small entrepreneurs have started out counterfeiting in emerging industries in China, seeking an early advantage and their first pot of gold.

"Often, they try to get around regulations, or simply believe small-time cheating that involves adding cheap substitutes or low-grade ingredients will not cause much harm.

Barboza notes:

"Dozens of Chinese cities have risen to prominence over the last two decades by first specializing in fake goods, like Wenzhou, which was once known for selling counterfeit Procter & Gamble products, and Kaihua in Zhejiang province, which specialized in fake Philips light bulbs."

One of those counterfeiting capitals is Wudi, home of the company that sold melamine-contaminated wheat gluten to American pet food manufacturers. Some pets fed with those products were sickened, and some died.

Did the buyers of the contaminated wheat gluten and other products visit the manufacturing plant to observe production practices and note their standards? No - and if they had tried, they might have found ramshackle outbuildings or shuttered facilities instead of the modern factories pictured on these companies' websites.

As Barboza says, corruption - at many levels of Chinese government - only serves to make the deception easier.

The wheat gluten company, Binzhou Futian, "shared a building with the county government’s cereal and grains bureau, an indication of its close ties to the government. "Futian didn’t have any actual factory here,” said a guard who works at the Binzhou headquarters. “They hung a banner here because they wanted to look good in front of visitors. They had countless suppliers from the countryside.”


Just how far can this fraud go?

"Last year....pirates were caught faking an entire company, setting up a “branch” of the NEC Corporation of Japan, including 18 factories and warehouses in China and Taiwan."

It's a scary thought. These guys could easily fake a "Made in the USA" label if they wish, if they haven't done it already.

Here again, is the NY Times story.

NPR's Louisa Lim reported last year that Chinese authorities tried to crack down on counterfeiter, but that failed to stem the tide of knockoffs.

Read my post, Is ANYTHING from China Safe These Days? (And how do we know what's from China, anyway?)

Want to flaunt a purse with a Coach logo at a fraction of the price? Here's a story on the hidden costs of buying counterfeit goods.