Breaking Into China’s Counterfeit Supply Chains

Photo by Matt via Flickr (CC BY 2.0)

When tourists buy Gucci purses in Manhattan’s Chinatown, most of them understand that the bags are fakes. That’s why they shop in Chinatown; all the prestige of the brand at a fraction of the price. But scores of other counterfeit items make it into the world economy without any of us consumers knowing it: phones, pharmaceuticals, clothes, car parts, circuit breakers. The bulk of these come from China.

For California Sunday Magazine, reporter Joshua Hunt shadows one of the private detectives that Western corporations pay to protect their intellectual property by cracking down on Chinese counterfeiters. In China, knockoffs are a $400 billion dollar industry. The black- and gray-markets fill domestic stores with fake wine and fake food, and detectives have to be able to distinguish the quality fakes from the cheap ones to do their job well. This detective can, because he used to make his living in the underground market.

On a hot afternoon last summer, Azim led me through the vast under­ground market beneath Shang­hai’s Science and Technology Mu­se­um. His boss, Angelo Krizmanic, joined us, posing as a foreign businessman interested in some luggage for his girlfriend. “Most of these stores cater to Western tourists who come here specifically to buy knock­offs,” Angelo told me. “Tourists don’t know how to spot a quality fake, so the stuff on the shelves in these shops is garbage. But if you know the difference between a shit knockoff and a really shit knockoff, you can get yourself invited into a shop’s backroom. That’s where the real business goes down.”

We approached an upscale shop selling luxury handbags that Angelo visited, undercover, semiregularly. A salesman in shorts and a navy T-shirt named Kevin bounded toward us, gold chains bouncing off his chest. He spoke to Angelo like an old friend. Kevin led us into the store and pushed against a part of the wall that gave way to reveal a hidden room, roughly 8 feet by 10 feet, with deep shelves that overflowed with counterfeit Dolce & Gabbana, Gucci, and Louis Vuitton luggage, purses, and wallets.

Kevin said the market gets raided weekly, but he isn’t concerned. “I pay every month, so no trouble.” He used to be able to bribe police with counterfeit Louis Vuitton, but since China’s president, Xi Jinping, intensified anti-corruption measures in 2012, bribes are increasingly cash only.

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