Chinese Crackdown Fails to Stem Counterfeit Goods

Local shoppers examine fake Nike merchandise in Shanghai's famous Xiangyang market. i i

hide captionLocal shoppers examine fake Nike merchandise in Shanghai's famous Xiangyang market, just hours before it was closed down. Official statistics estimated that 80 percent of goods sold at the market was counterfeit.

Louisa Lim, NPR
Local shoppers examine fake Nike merchandise in Shanghai's famous Xiangyang market.

Local shoppers examine fake Nike merchandise in Shanghai's famous Xiangyang market, just hours before it was closed down. Official statistics estimated that 80 percent of goods sold at the market was counterfeit.

Louisa Lim, NPR

The Impact of Fake Goods

Counterfeit cases brought in China in 2005: 39,107

 

Number of counterfeit goods seized in first six months of 2006: 39 million pieces, valued at $8.5 million

 

Estimated losses by the Chinese film industry due to counterfeiting: $2.7 billion (2005)

 

DVDs sold in China that are fake: 93 percent

 

Percentage of international businessmen who think intellectual-property protection is improving in China: 17 percent

 

Percentage of international businessmen who say weak intellectual-property enforcement could slow foreign research in China: 55 percent

 

Sources: China state trademark office, Motion Picture Association of America, Quality Brand Protection Committee

Pirated DVDs for sale i i

hide captionFake DVDs of some of the latest Hollywood releases, including Superman Returns and Garfield: A Tail of Two Kitties are offered for sale in Shanghai. The pirated versions are on sale on most street corners in Chinese cities for about 60 cents a copy.

Louisa Lim, NPR
Pirated DVDs for sale

Fake DVDs of some of the latest Hollywood releases, including Superman Returns and Garfield: A Tail of Two Kitties are offered for sale in Shanghai. The pirated versions are on sale on most street corners in Chinese cities for about 60 cents a copy.

Louisa Lim, NPR

About the Series

China's economic boom has also created challenges inside China. We'll look at how to persuade a billion people to buy something new; the perils and the rewards of doing business in China; how soaring property prices are causing heartache; who's profiting from the thriving trade in fakes; and whether economic reform is really bringing democracy to the communist nation.

Karen Cao poses with legal copies of 'The Da Vinci Code.' i i

hide captionKaren Cao of Horizon Media, the Chinese publisher of Dan Brown's The Da Vinci Code, poses with legal copies of the bestseller. The company launched a publicity drive offering readers the chance to swap counterfeit copies of the book for the genuine article.

Louisa Lim, NPR
Karen Cao poses with legal copies of 'The Da Vinci Code.'

Karen Cao of Horizon Media, the Chinese publisher of Dan Brown's The Da Vinci Code, poses with legal copies of the bestseller. The company launched a publicity drive offering readers the chance to swap counterfeit copies of the book for the genuine article.

Louisa Lim, NPR

On just about any busy city street in China, nothing seems as real as a fake name-brand bargain. Foreigners and other shoppers quickly get used to hearing counterfeiters chant, "Gucci, Prada, Chanel."

Intellectual-property rights are the single largest irritant in Sino-U.S. ties. The Chinese government says it's cracking down, reportedly seizing 39 million fake products in the first half of 2006. But China's battle against copyright pirates has a long way to go.

In Shanghai, the local government claimed a victory when it recently shut a famous market, where 80 percent of goods sold were said to be fake. But for tourists like Jenny Jones from California, the market's closure represented just another shopping opportunity.

Asked if she feels bad about buying fake brands at hundreds or even thousands of dollars off their U.S. retail price, Jones says, "No, not at all. When I see the price difference, I don't really care."

Stallholder Huang Xiaoyu had been selling fake Cartier watches, among other things, for the past 10 years. She wasn't sure what she'd do, but thought she'd probably move her stall elsewhere.

"I don't feel guilty," she says. "The more demand there is, the more we sell. We're not forcing anyone to buy these things."

It seems there's an inexhaustible demand for fake just-about-everything. Local newspapers have reported on fake roller coasters, fake Canadian wine — even the faking of an entire orchestra. (Second-rate performers posed as a famous orchestra at a concert in Shanghai.)

And, increasingly, China is becoming a production and export base for counterfeit goods, as homegrown crime networks build up their own international distribution channels. Last year, almost 70 percent of counterfeit goods seized were made in China, according to U.S. Customs figures.

"I personally call counterfeiting, piracy, the cancer of the century," says Jack Chang, a lawyer who heads the intellectual property committee of the American Chamber of Commerce in Shanghai. "We need to cut it as soon as possible."

Tackling piracy, Chang says, means educating — or shaming — the public into doing the right thing. Counterfeit drugs and auto parts can kill, he says. Even pirated luxury goods and DVDs are bad because the money goes "into the bad guys' pockets," he adds.

"When you buy counterfeit goods, you'll actually be viewed as a supporter of child labor and violent crimes. Do you still buy it?" Chang says.

Copyright pirates are always one step ahead of the government, he says.

"I personally call it firefighting," he says. The government "[puts] out the fire but cannot track the arsonist. Effective criminal enforcement is the key."

Other experts doubt whether China can — or even wants to — enforce its own piracy laws. After all, the industry of knockoffs generates income and employment for local governments.

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