SHANGHAI — The tide may be turning against forgers of fakes operating in China.
In an unprecedented collaboration, authorities from the U.S. and China together shut down a major counterfeiting operation in the southern Guangdong province.
A total of 73 people were arrested as part of the sting, code named “Blue Plan,” which resulted in the shutdown of 37 sites involved in the manufacture of low-quality copies of handbags from designer brands such as Louis Vuitton, Coach and Hermès.
According to a statement released by China’s Ministry of Public Security, 20,000 counterfeit bags were seized, along with machinery and enough raw materials to construct an additional 50,000 bags. In total, the entire counterfeiting operation was estimated to be worth $802 million at current exchange rates. RELATED STORY: Report Finds Online Shoppers Often Duped Into Buying Fakes >>
Local authorities identified the kingpin of the operation as Jun Qian, who was arrested along with his wife, Xiao Qin, as well as his brother, brother-in-law and other relatives and friends.
Chinese media were told at a press conference on Sunday that Jun Qian admitted to the counterfeit of 960,000 bags intended for sale in the U.S. and Middle East. Jun Qian claimed he began counterfeiting when his leather-goods business hit hard times in the wake of the global financial crisis in 2009.
“This criminal production of fake and shoddy products results in huge profits,” Guangzhou-based investigator, Chen Hongbo, told reporters.
Bob Barchiesi, president of the International Anticounterfeiting Coalition, said the crackdown by the Chinese government was unprecedented related to the luxury goods market and the number of arrests made.
“We’ve always believed that China could do far more [in counterfeit enforcement] and obviously this is a great step in the right direction,” Barchiesi said. “I believe there is a lot of pressure from the U.S. government now on China to step up to the plate to protect the IPR of U.S. companies.”
Although there are no exact numbers of the total losses to trademark owners from all counterfeited products globally, the most recent figure available in an Organization for Economic Cooperation & Development report covering 2008 to 2009 estimated the loss at $650 billion. That estimate only focused on cross-border sales of counterfeits and did not include online sales of counterfeits or in-country sales of bogus goods.
Barchiesi estimated that between 75 to 80 percent of counterfeit goods seized by U.S. Customs and Border Protection are manufactured and imported from China.
“It is the counterfeit workshop of the world,” he said.
“It is still rampant and much more challenging now because the counterfeiters have changed the way they have done business on the Internet and with virtual warehouses, shipping many more and smaller shipments to the U.S., which makes it more difficult for Customs officials to intercept the shipments.”
U.S. federal authorities made 7,392 seizures of counterfeit apparel in the year ended Sept. 30, 2011, the most recent government data available, accounting for 25 percent of the total and up from 4,338 a year earlier.
China maintained its status as the number-one source of counterfeit products and pirated goods confiscated, accounting for 62 percent, or $109.9 million, of the total domestic value. The number of seizures from China rose to 13,592 from 12,200 a year earlier.
After emphasizing the importance of joint operations with foreign authorities in cracking major China-based counterfeit rings, Chen Hongbo also said foreign countries where counterfeit goods from China often end up need to take some responsibility for these cases of intellectual property theft.
“If there was no market demand for these counterfeit products, people would not risk producing them and facing the harsh criminal punishments that result,” he said.
Chinese counterfeits are a hot-button topic on Capitol Hill and have been a top priority for the Obama administration. Government trade agencies monitor and report on the rampant spread of counterfeits from China as well as its efforts to increase enforcement of counterfeiting and pirated products.
The Chinese government launched a “Special IPR Enforcement Campaign” in 2010, which was made permanent by Chinese Premier Wen Jiabao in November 2011 and “resulted in some improvements in targeted sectors,” according to the U.S. Trade Representative’s office.
In its “Special 301” report in April, USTR said China had made some improvements during the campaign in 2011 in the enforcement of counterfeit hard goods, including apparel, cosmetics, audio-visual products and pharmaceuticals.
“In summary, U.S. rights holders in the trademark and copyright sectors have reported that enforcement agencies in China were markedly more active in conducting raids, seizures and arrests during the Special Campaign,” USTR said in its report. “It also appears that during the Special Campaign the Chinese government focused its efforts with respect to infringement that occurs online in a manner that was meant to ensure that online entities were more responsive to requests from rights holders to remove infringing materials. At least one industry submission commented positively that the Chinese Government’s efforts during the Special Campaign ‘generated goodwill’ among rights holders and sparked some hope that a recognition of the need for IPR protection and enforcement in China may finally be starting to take root.”
However, USTR said “significant concerns persist in light of continuing high levels of trademark counterfeiting and copyright piracy, including over the Internet, the persistence of notorious physical and online markets selling IPR-infringing goods, the manufacture and availability of counterfeit pharmaceuticals…and the export of counterfeit goods of all sorts.”
Louis Vuitton and Hermès were contacted for comment but had not responded as of press time. Coach was pleased with the effort.
“Coach is extremely pleased with today’s announcement,” said Nancy Axilrod, vice president and deputy general counsel of Coach Inc., to WWD. “It was through the hard work and dedication of the Chinese government that thousands of counterfeit goods were seized. The illegal activity of counterfeiting is a serious problem, which Coach works hard to deter. Actions taken by governments such as China and the United States provide invaluable help in our common goal of putting an end to counterfeiting.”
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)
Breaking News: @hedislimane joins @celine as its new artistic, creative and image director. One of fashion’s preeminent image-makers and trendsetters, Slimane is to join the LVMH brand on Feb. 1 and unveil his first fashion proposition for men and women next September during Paris Fashion Week. It marks a major homecoming for Slimane, who cemented his reputation – and influenced men’s tailoring for more than a decade – as the designer of Dior Homme between 2000 and 2007. He went on to reinvent and ignite the house of Yves Saint Laurent, which he rechristened Saint Laurent, between 2012 and 2016 – all the while maintaining a close relationship with the Arnault family, which controls LVMH and Dior. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
“Personally I believe the Eighties have been the richest and more vivacious period for international fashion,” Giorgio Armani said when asked what his favorite decade of fashion is. It was a moment of disruption and experimentation and only thinking back to the first years of that decade is always an emotion for me, for what they have meant to me and my work.” The influence is clear in @giorgioarmani spring 2018 collection, pictured here, which was full of bright colors and unexpected prints. Read more about which decades designers loved most on WWD.com #wwdfashion #wwddecades (📷: @aitorrosasphoto)
For Lady Gaga’s only Italian show on her “Joanne World Tour,” the singer wore a range of @versace_official outfits. The standout piece: this custom-made bodysuit inspired by the brand’s spring 2018 collection. #wwdfashion (RG: @ladygaga)
@_camillaruth_ is expanding on the wellness-craze concept with @westbourne – a new NYC restaurant that’s both a healthy-minded café as well as a business that gives back to the community. Marcus works with the Robin Hood foundation to give back to The Door, a non-profit providing youth development services, and also hires employees through The Door. Read our full interview with Marcus on giving back through food on WWD.com. #wwdeye (📷: @lexieblacklock)