IPR Update: Counterfeiting arrests

Sam Engutsamy, February 11 2010

Markets such as the Silk market, the Pearl market, and Yashow are famous amongst foreign visitors to Beijing looking for a deal on fake goods. At any of the above places counterfeit watches, bags, shoes, wallets and much more can be haggled down to an impressive and affordable price. However, in light of recent arrests how long is this all likely to last for?

I recently read a Chinese news article announcing that the once general manager of Beijing¡¯s Silk Market, Wang Zili, had been detained by police for allowing the sale of counterfeit products and bribe taking. Wang Zili, who resigned from his post in July 2009, faces allegations that he supported, and even encouraged retailers to sell illegal goods.

The article also outlined that a Silk Market vendor had been sentenced by the courts to three and a half years for selling counterfeit bags, including brands such as Louis Vuitton and Gucci. As well as imposing a custodial sentence on the individual, the courts fined him 10 000 RMB (approximately 1500 USD)

Intellectually property right protection has long been seen as a serious issue for many foreign corporations looking to enter the China market. Progress is however being made. Recently, Strix, a company established on the Isle of Man, successful won a patent infringement case against two domestic Chinese corporations, who were fined in total 9.1 million RMB.

During my nine month sprint in Beijing, I have come across a number of obvious and blatant fakes such as Paul Smith trainers, Ray Ban sunglasses, and Armani watches. The demand for such products is extremely high. A pair of genuine Ray Ban sunglasses which may cost 195 USD for example, will set you back (if you¡¯re a good bargainer) around 25 RMB in one of the above markets, which is approximately 3.65 USD, around a 98% mark down in usual RRP. The price may be great, however you are loosing out on the high quality production standards, uncomfortable fits, and likely breakable within a matter of days.

Article 9 of China¡¯s National IP Strategy states the following:

The intellectual property law enforcement and administration systems need to be strengthened. The judicial protection and administrative law-enforcement systems need to be strengthened, while judicial protection of IPRs should play its leading role. The efficiency and level of law-enforcement need to be improved and public services need to be strengthened.

Source: http://www.gov.cn/english/2008-06/21/content_1023471.htm

From recent IPR developments, it appears that this is in fact what is happening. The judiciary are leading the way in protecting IPR, and stories as the one above highlight that enforcement is in fact taking place. The steps being made are positive; however an incrementing policy of enforcement and higher deterrents are likely to be necessary to make a mark upon the counterfeiting industry in China.

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