China’s Counterfeit Industry

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China’s Counterfeit Industry

The global counterfeit trade is worth billions of dollars, and nowhere is it more prevalent than in China. The U.S. Chamber of Commerce Global Intellectual Property Center (GIPC) estimated that China is the source of as much as 86% of all global counterfeits, with the next largest share making up less than half a percent of global counterfeits.



The Counterfeit Industry


The variety of fake products is incredible: luxury goods, pharmaceuticals and dietary supplements, handbags, footwear, watches, cosmetics and many more.


Counterfeits are not all made the same, some are cheap fakes while others look almost identical to the real thing.


Many buyers are in fact unaware that they are purchasing a fake product. This may damage brand reputation, especially if the product is substandard. In some cases, such as in the case of pharmaceuticals, fakes can be a health hazard.


Yet the counterfeit market in China is mostly a market of consumers who enjoy flashing luxury brand names, but don’t want to or cannot pay for the real thing. Many of those consumers believe there is no harm being done, and see it as nothing more than one lost sale for a big, wealthy corporation.


Fake goods and knockoffs are sold both online and offline. As for physical stores and markets, they are abundant in China’s big cities, such as the well-known Silk Road in Beijing. As for the online market of fake items, it is still thriving, in spite of efforts to fight it.


Fake Goods on E-commerce Platforms


In recent years, major Chinese platforms, such as Alibaba, have started fighting fake goods on their platforms. Last year, Pinduoduo had strengthened its management of intellectual property following an investigation by the State Administration for Market Regulation.


Aware of efforts being made to fight counterfeiting, sellers of fake goods find other ways to offer their goods. For example, they may redirect online consumers to a different website, where the consumers can view items and make a purchase. Another way is to display just part of the brand name, knowing the consumers can understand which brand is copied.


Intellectual Property Laws


In 2018, the Chinese State Administration for Market Regulation announced new efforts to ban the illegal manufacture and sale of counterfeit goods in China. China also passed a new e-commerce law that regulates the e-commerce industry. The new law puts more responsibility on e-commerce platforms and on merchants who sell on them, as well as on vendors that have their own websites or sell on social media. As part of this greater responsibility, e-commerce operators are required to protect intellectual property, and are jointly liable with the merchants who sell fake goods on their platforms. See our blog post on China's E-Commerce Law.


Fighting Chinese Counterfeiting


The counterfeit industry hurts brands on many levels. It hurts sales, damages brand reputation and trust, and causes brand dilution. It also requires brands to invest time and money in the protection of intellectual property rights.


Fighting the counterfeit industry in China is complicated, and even more so since consumers are not liable for purchasing counterfeits, which can be easily bought and are often of good quality.


Educating Chinese consumers is one approach. Brands can emphasize Chinese child labor used in manufacturing sweatshops, and the organized crime syndicates involved in the industry or any other aspect of the illicit trade that might change consumers’ attitudes. Another way for brands is to fight fakes in courts.


An easy and cost-effective way to target the Chinese e-commerce counterfeit market and protect your intellectual property online is to use an anti-counterfeit agency. Online brand protection companies, such as Wiser Market, can help brands protect their IP rights online.


Wiser Market offers intellectual property protection to brands of all sizes on Chinese platforms, as well as across multiple other channels, using an advanced algorithm and a team of experts.


Our brand protection services result in over 90% success rate in taking down counterfeits.


Is Your Brand protected? Contact us for a FREE brand review.


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