FAKES, LIES AND VIDEOTAPE

Kevin Harris, Chairman of BEAMAInstallation's Anti-Counterfeiting Group presents another of his diaries following his most recent mission in China, as the counter-attack of counterfeiters continues ...

BEAMA's Anti-Counterfeit Group, with its team of investigators, is heading for the Canton Fair in Guangzhou. The aim is to gain further intelligence for future factory raids and to ensure our brands were not openly on show.

We identified 27 stands we could take action against through the 'on site' Administration of Industry and Commerce office (AIC).
We were successful in 23 of them.
The others had already moved the product as word spread about the raids taking place.

The raids during the fair are in full public view so we were fortunate that so many were successful.
Quantities taken are small, but it involved 10 brands of electrical installation products.

All exhibitors who infringe our Intellectual Property Rights (IPR) get a fine and warnings about their future involvement at the fair.
But, as the fine is so small it does not act as a deterrent.
However, it does serve as a warning to others and educates those saying they don't understand the issues!

Grass roots
I keep reading about various IPR laws being introduced in China (a recent one specifically aimed at trade fairs), and the WTO being satisfied with China's progress but, at grass roots level, I don't see much real improvement.

We have raided this fair eight times during the past five years.
Only the stupid exhibitors still have branded products on display. Or maybe, they are just so arrogant, they totally disregard the law and the penalties - they know they are ineffective and inadequate.

When our investigators bring IPR violations in China to the local authorities at administrative level, we do get co-operation.
They do take whatever action is required within the law.
Yet, full legal action is still problematic - excessive costs, unacceptable delays and, if you are lucky, punitive fines which don't even cover your costs. Administrative actions are still typical.

Since 2000, we have seen far less branded counterfeit products on display. Though the amount of look-a-likes has certainly not reduced.
We are fighting an insidious 'culture', endemic within China.

Sinister
The government blames ignorance and lack of education, but I believe it is far more sinister.
The current practise in China is to produce unbranded, unlabelled products, send them to customers worldwide, and separately airmail the labels.

Genuine manufacturers and rights holders who continue producing products with sticky labels, with no brand embossed into the product, fall into the hands of the illegal counterfeiters.
You may as well give them your company's bank account - it's theft from your company.

The genuine manufacturer and rights holder must mould-in their brand and must print - or preferably etch - the information, rather than use stick-on labels.
It's a very simple, effective anti-counterfeiting device.

You can try holograms and security labels, but remember, any label can be copied in varying qualities.
However, the counterfeiters don't like to mould-in your brand name - there is more chance they can get caught. It also means tooling can be confiscated and destroyed.

Day two
Genuine manufacturers who outsource from China need to have control. It's easy to say you have it, but another thing actually achieving it.
Lack of control is all around you.

For example, after the fair on a flight to the Zhejiang province, in the check-in queue just in front of us, was a young man with a large box. Inside was a full size model of an AK47 automatic rifle.
We thought no way was he going to be allowed to take that onboard as hand luggage.
Yet, he was!

Day three
In the Zhejiang province we visited a large international wholesale market complex. Here you can see any brand of any product, including electrical installation items. All labelled up, on show.
The vast majority being counterfeits.

Little action has been taken. There is plenty of work to be done by us in the future.
Later, we conducted a raid with the Trading Standards Bureau (TSB) on one of the shop's warehouses.
We find 42,000 counterfeit wiring accessories covering six brands.
The quality is very poor.
Many would not operate.

Timing of a raid is most important.
If we had arrived a day earlier, we could have doubled that haul, but unfortunately the goods had been moved out.

Someone in the world is going to receive those products we missed.
Potentially, that could be highly dangerous, affording little protection, and could easily cause a fire or injury.
Let's hope you are not that customer!

Day five
While we were travelling around South East China, we hear of many IPR violation stories.
Like the copy Dalmatian Dogs ...

There's a high value to these pedigrees. Except, that when the unsuspecting owners get them home, the spots come off in the rain!
They are just white dogs with black spots dyed into the fur.

Or what about the counterfeit policemen who go round giving fines and then pocket the money?
They are members of the public openly wearing copy uniforms.

Then there's counterfeit baby milk.
Scarily, this was just white powder to be mixed with water.
Many Chinese babies that were fed this died through malnutrition.

There's also fake pharmaceuticals, car/aircraft spares.
It's frightening.

Day seven
We move on to Wenzhou and Luishi, the hub of the counterfeit manufacturing industry.

We witness destruction of counterfeit products by the TSB, amassed over the last six months, and stored at our warehouse.

BEAMA is funding a warehouse in Wenzhou to store the goods, because the TSB warehouse has been full for a year. It's the only way we can ensure the products seized are under control until they are destroyed.

Five large trucks carried the goods to the site, which turned out to be a recycling plant.
Plastics, metals, packaging were separated before going through the crusher.

It confirms why counterfeits are so cheap, why the materials used are so substandard.
We were told that the recycled materials would then be sold on the open market for a pittance.
Guess who probably buys them?
Yes, the counterfeiters.
Many of them illegal and unlicensed.

Dangerous
Despite the government and WTO, this dangerous, illegal industry goes on with few controls. The Chinese government and its departments have the laws - but are they applied, are they effective?

We video the raids and destruction of counterfeits as evidence of our work and for our new DVD on anti-counterfeiting.

We even heard of raw materials like copper being illegally mined and processed.
In the local press, daily articles report IPR violations.
The problem is so bad, there's even a national IPR day!

At the trade fair and markets (mainly for export), there are constant discussions on a large percentage of the stands about supplying copies, knock-offs, look-a-likes.

Could you imagine this going on in European exhibitions?
Definitely not - so why in China?

Let's hope that if you are dealing with China, you really do have control - that you are not infringing someone else's Intellectual Property Rights covering trademark, designs, copyrights, passing off and patents. You could be in trouble with your local authorities and defending yourself in court.

Issues
Our visit highlights crucial issues requiring action:

Health and safety
I personally believe the Chinese government generally turns a blind eye to this counterfeiting industry. Mainly, because it helps to find work for the millions who come on to the employment market. It also brings in much needed foreign currency.

They are paying lip service in the fight against this illegal business.
If China sees itself as an innovative country supplying the world with acceptable products, it must sort out these key IPR issues. Otherwise it will never gain credibility.

In my IPR role, China means cheap substandard knock-offs, not a low cost provider of good quality products as it surely wishes - and needs - to be.

The counterfeits of electrical installation products raise serious issues of health and safety too,
let alone cheating customers and the public.
The issue must be taken more seriously by China, the WTO and any affected countries.

Generally, the goods are not tested.
They frequently do not conform to the standards or certification marks with which they profess complying.

Countries in the Middle East, Asian and African markets are swamped with these dangerous products - and now they are coming to Europe and North America.

Act now before we have serious issues in Europe and the UK. The counterfeit industry is based on lies and we have the video evidence in DVD format of our raids.

Don't let your country become a dumping ground for these products

No action is not an option

Protect yourself - Counterfeit Kills!