- The Washington Times - Tuesday, April 23, 2002

CHENGDE, China As it welcomes the access to global markets that World Trade Organization membership brings, China's government is grappling with a torrent of its own fake goods some well-made, some with major problems, all selling briskly in a nation of appetites whetted for famous brand names available cheap.
With 200 vendors and four floors of merchandise, the cavernous Chengde Shopping City has it all. There's Snoopy bedding straight from Peanuts, hailed as "the World-Famous Comic Strip," as well as Swoosh-festooned duffels straight from the "Nikey" factory.
Best of all, for about $7 there's the children's jacket featuring those oh-so-familiar golden arches and the burger behemoth they represent: "EcDlncnd."
"OK, OK, it's not really McDonald's," the jacket's hawker, a woman in an Adidas parka, reluctantly acknowledges in Chinese. Then she grins. "But it's close, isn't it?"
Adidas, Colgate, MGM, North Face From soap to software, purses to parkas, Chinese cities are end points of a vast market of fake goods. Cultivating its image as a worthy global trade partner, the government is now working to reduce the flow or at least look like it's trying.
"Every time such instances come to my attention, I am filled with a strong sense of indignation and I cannot sleep well," Premier Zhu Rongji said last year.
Counterfeiting from China costs Western businesses an estimated $16 billion in sales each year, trade groups say. The problem has so vexed American manufacturers that it almost led to trade sanctions against China in the 1990s. And U.S. Assistant Trade Representative Joseph Papovich says the situation is not getting much better.
For legions of Chinese who cannot afford genuine products, however, fakes satisfy a hunger to join the international craze for brand names. It is a syndrome especially acute in China, home to the factories where many world-renowned consumer goods are made.
"Famous brands are what everybody wants," said a woman surnamed Yu. She was buying a pinstriped Polo oxford shirt for her brother in Beijing's Silk Alley Market, where name-brand labels sell for prices far below normal. Coveted Kipling bags, $75 in lower Manhattan, N.Y., can be had here for as low as $10.
"Fake or real, who cares?" Miss Yu says.
The government frames the anti-counterfeiting effort as a "struggle" a word invoked by Communist officials to blend patriotism, duty and now good economic sense. State TV often airs reports like one in February in which a camera crew stormed a southern Chinese supermarket looking for fake shampoo.
China has just finished a 100-day "war against fake products," which involved a quality inspection with rewards for whistle-blowers and coordination across the country's labyrinthine bureaucracy. Its results were not announced.
Winning such a war will be difficult, though.
Less than 1 percent of all counterfeiting cases reported are prosecuted, reports Bill Thompson, senior managing director of Pinkerton China, which investigates product fraud across the country. In Yiwu, a town near Shanghai, experts estimate that 90 percent of consumer products like shampoo and soap are fake.
While foreign governments and companies praise Beijing for tougher laws and enforcement training, they also say penalties remain insufficient to discourage repeat offenders.
The main issue deterring sterner enforcement by the central government is local protectionism. In places where fakery feeds families, a nationwide crackdown could decimate local economies.
"If you go into a small backwater and walk into a station house and say, 'Raid this pants factory,' and it's the only factory for 30 miles and their wife and daughters are working in there, they may say, 'Come back after lunch.' And that's code for, 'We'll make a few phone calls and it'll be clean as a whistle when you get there,'" Mr. Thompson said.
Last year, people in the village of Teng surrounded 100 law officers seizing counterfeit cigarettes and equipment. One woman set the tobacco afire, and a man vandalized a bridge to impede the speed of the authorities.
But Long Yongtu, China's vice minister of foreign trade and chief WTO negotiator, said stamping out counterfeit goods is critical to China's economy.
"We need to establish an orderly market environment, so we must adopt international practices," he said. "But that's not enough. We need the surveillance of the general public. We need people watching."
The government's vigilance has led to some high-profile busts, which state media duly showcase.
The list is long: Pharmaceutical giant Glaxo SmithKline asked authorities to investigate a hospital suspected of selling medicines falsely labeled as Glaxo products; fake Viagra has been reported in Shanghai sex shops; thousands of fake boxes of Kodak film were seized in the north; and phony brand-name rice and soy sauce was confiscated in the south.
Copied companies are also fighting back. Pinkerton helps dozens of multinationals enforce trademarks here, and in December, a new trademark law strengthened corporations' legal recourse.
Two anti-counterfeiting coalitions begun in recent years and including such members as Gillette, Unilever and Microsoft now represent nearly 100 companies.
Such progress may attack the supply in places, but it doesn't stem the appetite for logos in a consumer landscape that, until recent years, was a drab place filled with citizens who wore communist-era uniforms and bought state-made products.
"It's more intense in China because of the absence for so long of competitive brand names," says Daniel C.K. Chow, an Ohio State University law professor and former secretary of the China Anti-Counterfeiting Coalition.
"The obsession is really with the brand name and the prestige more than it is with the product," he said. "And with counterfeits, you get the same brand name."

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