Piracy in China only getting worse

A vendor shows a bag based in one of Louis Vuitton's designs at a market in Beijing, April 18, 2006

TEXT OF STORY:

SCOTT JAGOW: An American business group in China said today that piracy in that country is only getting worse. Essentially, the American Chamber of Commerce says repeated government crackdowns haven't accomplished a thing. So companies are starting to take things into their own hands. Jocelyn Ford reports from Beijing.

JOCELYN FORD: For anti-counterfeit investigator Bai Gang, another day, another raid.

Today's target is a tourist shop in a four-star hotel. Bai Gang is one of the hired guns for brands like Kodak, Gillette, and Lacoste. Most of the time, he's asking trademark authorities to investigate a violation. This time, the Beijing authorities tipped him off, so he's joining two government investigators on a raid, to verify the Lacoste shirts they found are indeed fakes.

But when we get to the hotel, the shop is closed so the investigation team hangs for about an hour. Now that department stores have cracked down on fake brands, hotels have become a convenient cover.

Bai Gang says pirates rent retail space in prestigious hotels because shoppers will assume the brands are authentic.

In this shop window, there are dress shirts with a "Luis Vuigin" label, and a couple of "Valentino Ludi" suits. When the shop owner shows up, Bai Gang finds what he's looking for: Lacoste style shirts, except the crocodile is facing the wrong direction and there's a confusing label.

JOCELYN FORD: So it says "French Crocodile Group Hong Kong"

BAI GANG: They pretend to be a French company. That's one tricky way they always did.

JOCELYN FORD: So who is going to be fooled by this?

BAI GANG: I think consumers will easily. Especially for the consumers who know the crocodile is famous brand, but they don't know what exactly.

The authorities confiscate 30 items and tell the store owner to come in for questioning. If the shirts are deemed trade mark infringements, she'll be fined three times the price of each shirt sold, as well as her remaining stock. That'll come to at least $9,000. But, her 50 shirts are only a teeny-tiny drop in the counterfeit bucket.

Recently, China's been cracking down, and is putting more people behind bars. But Bai Gang says counterfeiters are also getting leaner and meaner. They use abandoned factories and work at night.

BAI GANG: They will never have stocks. I think that they did this much better than even the international companies.

Most troubling to his clients, there's an increase in exports. In the past year, Chinese customs discovered 300,000 Lacoste shirts headed for the United States. Total retail value: $15 million. Authorities seized the shirts. After removing the logo, they were donated to charity. The importer is still at large.

In Beijing, I'm Jocelyn Ford for Marketplace.

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