For U.S., a Counterfeiting Problem in China Is Old and Very Real

September 4, 2005 For U.S., a Counterfeiting Problem in China Is Old and Very Real By HOWARD W. FRENCH SHANGHAI, Aug. 30 - New problems come and go between China and the United States, but when leaders of the two countries meet in Washington shortly, protection of intellectual property will be on the agenda - as it has been for years. Joining DVD's and cheap knockoffs of brand-name clothing and computer software are new, upscale lines of counterfeit goods. Shoppers can find "Callaway Big Bertha" golf clubs, and "Ikea" furniture. Shanghai bar and nightclub operators say they are often sold fake bottles of Chivas Regal or Johnnie Walker Scotch, which are slipped in among bottles of the genuine item in the cases they buy from wholesalers. Pharmacies and drug makers say copies of Western medicines - far beyond just Viagra clones - are common. Garages say fake auto parts are widespread. There are even knockoff cars. General Motors says the Shanghai-based Chery Automobile Company's QQ model is a copy of a model it produces in South Korea. A newer Chery sport utility vehicle, the Tiggo, is a dead ringer for Toyota's RAV4. The industry is so vigorous that in prosperous Shanghai there is a consumer backlash, with some shoppers considering it beneath them to use fake shampoos, toothpastes and other cheap consumer goods. "Counterfeits can be found in Shanghai in small shops, but hardly in any formal shops," said Xing Dongsheng, director of trademark protection for the city. "It's a lot better here than in other places in China. Production is almost nonexistent here, and of the thousand or so cases we found, all were minor." Sales of counterfeits were once a chief draw at the city's huge downtown open-air market where customers, many of them Westerners, prowled for "Ralph Lauren" shirts and "Rolex" watches. Mr. Xing contended that the city had successfully cracked down on counterfeits there, but acknowledged a new problem. "We've stopped the stalls inside the market, but now the touts circulate in the surrounding streets," Mr. Xing said. "These people go into residential homes that we cannot enter because we are not the police." A visit confirmed that there was a new problem. Offers from a sidewalk sales force were thick near the market and on most other busy commercial streets in central Shanghai. These unofficial vendors wield slick catalogs of goods - designer bags, perfumes, watches - and lead interested shoppers into nearby apartments where the items are displayed. But the market itself seemed to have just as wide a selection of knockoffs as ever. Chinese officials generally say that it is foreign customers, not Chinese, who keep the trade in counterfeits alive. Some say that they lack the authority to make arrests and enforce the law. Others say that other countries, with Japan being the most often cited, also rose to industrial powerhouse status only after years of outright copying. There is one last argument: that the international trading system is somehow unjust, and that the producers of brand-name merchandise should make their products more affordable to Chinese consumers. "We must make sure that prices are reasonable, that the whole family of mankind can enjoy the fruits of production," said Tao Xinliang, dean of the School of Intellectual Property at Shanghai University. "Things should operate in such a way as to make rich people richer and poor people richer, too, as opposed to making rich people richer and poor people poorer."