Chinese “Super Fakes”
Oct. 3, 2016
Imitation products made in China are becoming more sophisticated as undercover agents try to crack the counterfeit trade. As one of the world's largest hubs for manufacturing, the country has long been blamed for flooding the international market with fake goods.
Data from the Organization for Economic Cooperation and Development (OECD) shows nations hit hardest by imitations are the United States, Italy, France, and Japan which ranks 5th. It is estimated that half a trillion dollars are spent globally each year on importing fake products.
Chinese imitations used to be low quality, but some manufacturers are now producing so-called super fakes: products so good it is hard to determine if they are real or fake.
The bustling industrial hub of Guangzhou in southern China is a major source of high-quality forgeries, but retailers there are afraid to sell fakes openly due to a crackdown. One toyshop that sells Japanese anime merchandise has only boxes on display, with the figures themselves kept out of sight.
While the real thing sells for about $200, super fakes can be sold for less than half that. Authorities are cracking down, and companies are hiring undercover investigators to go after the illicit trade.
An undercover agent employed by Japanese firm Bandai records his activities with devices that include a hidden camera. He calls up a wholesaler he has been monitoring for more than six months to arrange a visit, noting counterfeiters only deal through channels they believe are safe. When the agent enters the store, the manager asks questions.
"Are you in the toy business?,” he is asked. “I plan to open a shop,” the agent replies. The wholesaler handles genuine items as well as half-price knockoffs. The agent finds a figurine that is almost identical to the real article, declaring “this is a super fake.”
Back in Tokyo, employees at toy producer Bandai take a close look at the super fake. The firm finds it difficult to identify copies. “Amazing. There are only slight differences. At a glance, I can't tell,” says one worker.
Three years ago, a fake was made entirely from plastic. Now, half the parts are metal, just like the real deal. The paintwork is also much improved. “We struggled to come up with a way to paint edges like this,” says a Bandai engineer who studied the Chinese copy. “But they've done a really good job on that,” he observes.
“If we can’t stop them, the market could become flooded with super fakes,” warns Takayuki Okazaki from Bandai’s legal department.
A Chinese man who deals in fakes tells NHK counterfeiters are using 3D printers that are available online at increasingly affordable prices. He says China's economic slowdown is putting many skilled workers out of legitimate work, and into jobs with counterfeiters. “Skilled engineers can get jobs at many factories. More and more people are getting into the business,” the man reveals.
Forgers are also taking on bigger challenges by producing smartphones, home appliances, and luxury goods. Increasing complaints from abroad have forced the Chinese government to act.
While Shenzhen used to be a center of the knockoff trade, banners now proclaim a pledge to rid the city of fakes and some entrepreneurs are taking notice. Wu Yebin used to make computers and tablets that looked just like Apple products, but has changed his ways.
“It was easy to get into the market if you copied the popular brands and sold them at lower prices,” says the CEO of MeeGoPad. After an acquaintance was busted for producing fakes, Wu made a clean break to develop his own original product, a tiny computer.
Wu capitalized on the knowhow his company acquired producing copycat equipment, such as circuit boards, and his device is a hit. Now developing another new product, Wu says it has been difficult to leave the knockoff trade behind. “Few factories can come up with original goods. It was a tough transition for us,” he explains.
Some firms are helping other copycats to become inventors, matching them with entrepreneurs. “We can develop a new product here in just three days. Our people have skills gained from copying others,” says HuaQiangBei International Maker Center ‘s Li Nuofu.
Former graphic designer Zhao Jun is launching his own brand of household goods, manufacturing at a factory that used to copy major brands. The resulting joint venture has produced an hourglass-shaped lamp operated by smartphone. “I had no experience in manufacturing. But my idea has become a reality, thanks to this network of factories and technical support,” says Zhao.
Ironically, some new ventures have fallen victim to counterfeiters. One firm that enjoys global sales of its popular self-balancing electric scooters has seen copycats flood the market. “They're selling them online. These must be made in China,” says a company employee.
The manufacturer of the genuine article has launched a campaign to demonstrate the superior durability of its products following accidents involving copycats that have hurt sales.
"The companies making fakes are Chinese. They're hurting other Chinese companies, and their own country,” says Li Lou, legal director at Hangzhou Chic Intelligent Technology.
As the Chinese government stresses the need for an innovation-driven economy, more manufacturers, as well as consumers, will have to get on board.