Even by the standards of China’s billion-dollar piracy industry, it was a remarkable gaffe. The Guangzhou No. 11 Rubber Factory had opened its doors to London International Group executives, hoping to produce Durex condoms in China. As they moved from the latex dippers to the packaging lines, that something for the weekend looked a little too familiar until factory staff, red with embarrassment, hurriedly removed the fake Durex and hustled the British visitors away.
If imitation is the sincerest form of flattery, Western companies can feel complimented. Pirates’ efforts to copy everything from Durex condoms to Duracell batteries have made China the counterfeit center of the world. With total annual losses to counterfeiting now running at tens of billions of dollars, some of the biggest global brand names united earlier this month in a coalition to fight the fakes.
“China’s unprecedented economic growth has led to a surge in counterfeiting that in terms of size, scope and severity appears to have no parallels in history,” claimed the new Quality Brands Protection Committee March 3. This coalition of 28 multinationals, including Chinese household names like Coca-Cola, Gillette and Phillips, estimate sales losses at over 20 percent a year. For firms with a combined $6 billion-plus invested in China, and little if no profits to date, the pirates’ share is becoming hard to endure.
“Counterfeiting is one of the reasons why our members would be struggling in China,” said Committee Chairman Joseph Johnson, Chairman of Bestfoods China. Johnson recently joined a raid in southern Guangdong Province on a “filthy workshop” pirating Bestfoods’ Skippy peanut butter. Such backstreet operations turn out an astonishing portfolio of products, from fake Audis pieced together from spare parts to Teletubbie dolls and computer software.
Viruses may strike buyers of fake CD-ROMs, but other counterfeits threaten more personal injury, such as cosmetics that burn the face and methanol-laced liquor that kills. “Counterfeiting presents health and safety risks, as well as financial losses for consumers,” admitted Xie Shusheng, chairman of the new committee’s parent body. “Ultimately it undermines the creation of a healthy investment climate.” Official concern at declining foreign investment has emboldened the new coalition to suggest improvements to anticounterfeiting enforcement.
Hidden by China’s vast size and overt local protectionism, counterfeiters enjoy considerable leeway. Responsibility for catching them falls between too many organizations, while current regulations make convictions hard to secure — the Skippy copycats escaped with only a small fine.
As China looks to enter the World Trade Organization and commit to respect for the rule of law, Johnson says he is encouraged by signs the government is taking the issue more seriously. As for London International, the Guangzhou factory was persuaded to stop ripping off Durex, and the group found a reputable partner elsewhere. A few months later, another counterfeit factory filled the gap. Genuine or counterfeit, condom makers can at least expect healthy side-effects from the booming China sales of fake Viagra pills, rendered into Chinese as “Weige” or “Big Brother.”
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