A Mind-Blowing Number Of Counterfeit Goods Come From China
Amidst ongoing concerns about an undervalued yuan, growing Chinese military presence in the Pacific, and suspicions about Beijing-sponsored hacking into western computer networks, add this one to the list: China has been confirmed in its position as the world’s leading counterfeiting superpower.
According to a report recently released by the UN Office on Drugs and Crime entitled “Transnational Organized Crime in East Asia and the Pacific,” from 2008 to 2010 almost 70% of all counterfeits seized globally come from China.
For the US, the figure is higher: US Customs say that in the same period 87% of the value of counterfeits seized originated in China. Since the WTO estimates that 2% of all world trade is incounterfeit goods, the value of counterfeit goods imported into the US and EU from East Asia (the bulk of which come from China) is thought to be on the order of $120 billion annually.
China's Piracy & Counterfeiting Problems
On April 9, 2007, U.S. Trade Representative Susan Schwab announced that the United States will begin World Trade Organization (WTO) dispute settlement consultations with the People’s Republic of China over 1) deficiencies in China’s legal regime for protecting and enforcing copyrights and trademarks on a wide range of products, and 2) over China’s barriers to trade in books, music, videos and movies.
The WTO consultation request focuses on provisions of Chinese law that create a “safe harbor” for wholesalers and retailers who distribute or sell pirated and counterfeit products in China below a certain quantity. These safe harbors seem to allow sales of sufficient quantities of counterfeit goods that many large-scale wholesalers and distributors can operate below high thresholds without criminal liability, thus permitting large-scale piracy and counterfeiting. The U.S. also seeks that China destroy seized counterfeit goods, rather than allowing them to be sold into the marketplace after removal of their label. And that China protect foreign copyrights while such works are being reviewed by Chinese censors; and allow a greater importation of foreign media, such as movies.
A request for consultations is the first step in a WTO dispute. Under WTO rules, if the parties do not resolve a matter within a 60-day consultation period, then the complaining party may refer the matter to a WTO dispute settlement panel. Ultimately, this could trigger a trade war between the U.S. and China. See U.S. – China Trade Dispute
Damage to Brand Names
The U.S. Commerce Department estimates that, on average, twenty percent of all consumer products in the Chinese market are counterfeit. When counterfeit products fail, it can impact the real brand’s reputation as well. In China and around the world, counterfeit Chinese medicines have injured and killed hundreds of thousands, ranging from toothpaste and cold medicine in Panama to diet pills in Japan. Chinese authorities estimated that nearly 200,000 people were killed in China in 2001 due to counterfeit medicines. In a recent raid on a printing factory in the southern Chinese province of Guangdong, police seized bogus packaging and labels for Coca Cola bottles, Wrigley's chewing gum, General Mills'Trix breakfast cereal, and Nestle's Purina cat food. In order to prevent a scare similar to the Tylenol-tampering episode in the U.S. many years ago, foreign companies need shift into publicity overdrive to discredit and distinguish dangerous or shoddy counterfeit goods, lest their own products be tarred.
Similarly, counterfeit products impinge on the ability of Western companies to select and control their own distribution channels. Thus, even though Starbucks (SBUX) invested heavily in training its Chinese workers, it had to rush to court in 2003 to stop a copycat rival from misappropriating its logo and store look under the name “Xingbake” in 2003. "Xing" means "star" in Mandarin and "bake" sounds like "bucks" when pronounced in Chinese. (Extraced from China's Piracy & Counterfeiting Problems pls click HERE to read the whole article. )
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