A joint operation between police forces in China and the United Arab Emirates has solved a case of cross-border production and sales of counterfeit goods worth 1.79 billion yuan (US$255 million).
Nearly 100 Chinese law enforcement officers from Shanghai and Guangdong worked with their counterparts in Dubai, UAE, on cracking the case, Yicai Global reported.
Some 37 suspects were detained and more than 7,000 counterfeit items of clothing, bags and suitcases have been seized in China so far. The UAE police busted 10 groups, arrested 20 suspects and seized over 21,000 fake goods, the report said.
Dubai police had repeatedly taken action against a counterfeit goods gang but failed to break the criminal chain completely. Recently, they seized a counterfeiting warehouse in which they found the slogan and address of a Chinese firm called Guangzhou Small Camel on a customs declaration form.
Shanghai police conducted an investigation based on that, discovering a trading firm called Guangzhou Sikelu at the address of Guangzhou Small Camel.
The police found that Hong Kong Small Camel Trading was the sole shareholder of Guangzhou Sikelu, while the Hong Kong firm’s director Khalil was the registered owner of the warehouse seized by UAE police.
The Hong Kong firm’s general manager Mansour had made more than 80 visits to Guangzhou in recent years.
Further probing showed that prime suspects Mansour and Khalil organized local gangs in Dubai, who recruited brick-and-mortar store distributors to accept large-scale orders for various kinds of counterfeit Louis Vuitton, Hermes, and Chanel brand bags, suitcases, shoes and watches.
In China, the two suspects controlled Hong Kong Small Camel Trading and Guangzhou Sikelu. The companies, under the cover of foreign trade, recruited staff, including a person surnamed Lin, instructing them to buy knockoff goods based on overseas orders provided by Mansour.
According to Du Yan, deputy director at the Ministry of Public Security’s Food and Drug Crime Investigation Bureau, this was a typical transnational intellectual property rights infringement case with a complete criminal chain and huge amounts of money involved.
According to US Chamber of Commerce estimates, Greater China is the source of 86% of the world’s counterfeit goods, a portion valued at a staggering US$397 billion, Business of Fashion online reported.
Even e-commerce giant Alibaba, itself a major target of anti-counterfeit critics worldwide, has called on the Chinese government to do more to fix its “ambiguous” efforts.
A statement released in 2017 by the company appealed to the government to step up its approach: “Counterfeiting is damaging, not only to consumers and legitimate merchants, but also to innovation and the long-term economic development of our nation, hindering China’s growth as a responsible economic power,” read the statement.
Prompted perhaps by these attacks on its record as well as the prospect of driving more tax revenue by encouraging legitimate luxury spending in China, the government finally seems to have made its anti-counterfeiting drive a focus of more attention and energy, the report said.
At the 13th National People’s Congress in 2018, Premier Li Keqiang said that law enforcement had been playing, and would continue to play, a bigger role in cracking down on counterfeits, adding that making or selling fake goods was “the enemy of fairness and innovation, and [goes] against social ethics.”
Major brands have largely welcomed the recent wave of policies emanating from Beijing, sounding optimistic about the future of long-standing issues, such as intellectual property (IP) infringement and enforcement, the report said.
China has created a “much improved environment for brands” compared with a decade ago, said Valerie Sonnier, global intellectual property director at Louis Vuitton Malletier, speaking at the China International Import Expo in Shanghai. “Much more than some other countries,” she added.
A crackdown on counterfeits is expected to buoy China’s economy as domestic consumption accounts for a bigger slice of the 1 trillion yuan (US$145.37 billion) that Chinese shoppers are expected to spend on luxury by 2025, according to data from McKinsey & Company. But winning the trust of consumers is critical.