Interesting article today from
https://www.worldtrademarkreview.com...ories-in-china
Copied below in full.
“Nothing has changed” – concern over stalled efforts to close counterfeit factories in China
- Social media reports point to recent counterfeits crackdown in China
- Experts tells WTR they’ve seen little evidence of an increase in factory closures
- Guangdong and Zhejiang provinces most likely to see enforcement action
Despite reports of increased police raids of factories producing counterfeit goods in China, experts on the ground have told
WTR that there is little sign of a recent rise in legal enforcement. However, there’s some positive news, including product developments that are causing “bother” for counterfeiters.
Last month, a leaked message from WuWatch (a China-based website outlet for fake watches) was published
on Reddit claiming there have been “more police raids in China”. In the message, a WuWatch representative claimed that legal authorities “always raid recently”, and revealed that a factory operated by ‘Noob’, a notorious producer of fake watches, had been shut down. In further conversations, the WuWatch rep reportedly claimed “more raids are shutting down rep factories”.
Unsurprisingly, there is concern and outcry in communities dedicated to ‘rep culture’, especially those who regularly buy fake luxury watches. Some are speculating on the reasons for a crackdown, with one claim that Chinese authorities have been ordered to “clean up shop” prior to the upcoming Winter Olympics in February 2022. Others are not worried, claiming that raids are usually a temporary measure until counterfeiters move to another site. “For people worrying about the future of replica watches, there's nothing to worry about,” one user claimed. “Everybody in China knows about the rep industry, and the government doesn't have an initiative to stop this booming industry.”
While the ‘rep community’ is reporting a significant increase in police raids, experts on the ground are more sceptical. A representative from Chinese IP law firm
Ferrante IP says they “have not seen any significant increase in the number of counterfeit-related factories being closed over the past year”, adding: “Indeed, quite a few small factories involved in counterfeiting have been closed, but it is more due to the economic and social challenges caused by pandemic, rather than additional attention from the enforcement officials specifically.”
That is not to say that there’s been a step
back in enforcement activity from Chinese enforcement agencies, the firm representative clarified. What helps, they note, is “continuously enhanced new laws and specific regulations pertaining to enforcements” that have been enacted in the last few years. In general, they’ve further noticed that “small-scale unnamed factories” are more likely to be permanently closed, most of which are located in Guangdong and Zhejiang provinces.
In another conversation, a prominent counterfeiting expert in China (who preferred not to be named for safety reasons) clarified that, despite rumours of a recent crackdown, “nothing has changed”. Indeed, they have noticed that counterfeit factory raids in China “are somewhat cyclical in nature” and “tend to take place in the run up to Chinese New Year, where rep production ramps up due to everything in China closing down for over a month”. From their perspective, the legal authorities in China
could do more, but there’s little evidence that it is being done. “Factory raids seem to be more of a ‘box ticker’ for the higher-ups than an actual concerted effort,” the expert adds. “They clearly have the manpower to shut these places down should they so wish. However, given the scale of the business and the tax revenue, I’ve wondered if that would be in anyone’s interest.”
Of course, the mass closure of counterfeit factories would be in the interest of international brand owners, especially those in the fashion, luxury and pharmaceutical sectors.
In more positive news for rights holders, the expert tells us a recent popular product has been causing problems for manufacturers of fake goods. “With the introduction of the new ‘Air Jordan 1’ silhouette, the factories in Quanzhou – where the vast majority of Alibaba ‘customs’ originate – are in a bit of bother,” he reveals. “These factories predominantly worked on ‘Air Jordan 1 Highs’ and ‘SB Dunks’. Previously, they were able to play with the silhouette and only avoid using Nike’s Swoosh, but now they must change at least 30% of the shoe’s overall design – they are very wary of being shut down in that city. That is unlike neighboring city Putian, where the straight up replicas are produced, where the factories are more brazen.”
It’s clear from recent reports that the production of counterfeits in China has not been dented by the covid-19 pandemic or any other recent events. For brand owners, then, the fight continues.