Four Techniques for
By Bill Quarless
Counterfeit goods are the single greatest
worry of companies that manufacture in
China — and with good reason. They not
only eat away at market share, but can also
hurt a company’s image when consumers fail to make
the distinction between a real product and a poorly
Counterfeiting is a problem everywhere, but China’s outsized share of the world manufacturing market
— and some specific cultural issues — makes it a
First, China’s manufacturers don’t understand
intellectual property rights. They see other factories
shipping a hot product and assume it’s an “open
market” item. Culturally, factory owners do not feel
shame when copying a product. Quite the contrary,
they are proud of their work and like to show off by
having you compare their unit to the original.
Second, China is still in the infant stages of
capitalism. The country does not have the resources,
knowledge or willpower to address this problem. With
events like the Beijing Olympics, there has been more
pressure than ever to fix this. But change will happen
slowly because that is the Chinese way.
Third, corruption is widespread in China. Most
grievances are handled at the local level, where people
with influence over local officials can stretch the law.
Provinces thrive on exports, so the incentive is to ignore anything that might interfere with that trade.
One of the most counterfeited industries in America is the “As Seen on TV” business. The millions of
dollars spent on TV in this industry attract counterfeiters like flies. Nearly every successful product in the
DRTV space manufactured in China has been copied,
sometimes within mere weeks. The primary defense
is speed to market. Get-
ting a product on TV and
into major retail accounts
before counterfeiters can
gain any real ground is
Beyond that, four
techniques have proven
especially effective at countering counterfeits:
1. Monitor buyers and distributors. More and
more, buyers are searching China for cheaper,
royalty-free copies of popular goods. It’s also become common for authorized distributors to look
to increase profits by supplementing real product
with counterfeits. To ensure your buyers and
distributors don’t “cheat” on you, make it clear
that you intend to check up on them. Subtle,
identifying marks placed on molds allow clients
to make random purchases and see if the “real”
product has been sold.
2. Monitor your factory. If you have a great relationship with your factory, you’ll never have to
worry about your products going out the back
door. Check anyway. Frequent and random
inspections of the factory are a great deterrent.
“Trust but verify,” as the saying goes.
3. Maintain a presence in China. If you develop a
reputation for defending your intellectual property rights, most factories will stay away from
your products just because they’re yours. The
rest can often be handled with a simple warning letter. If you don’t have the infrastructure or
personnel to maintain a presence in China, work
with a production management firm that has a
reputation for protecting client interests.
4. Walk the trade shows. Want to nip 80 percent
of knockoffs in the bud? Go to the Canton Fair.
Held twice a year in Guangzhou province, it’s
one of the largest product shows in the world —
and one of the single greatest opportunities for
counterfeiters to sell their wares. It doesn’t take
much effort at this event to find and eliminate
counterfeits. Most exhibitors comply willingly,
out of fear of being blacklisted from future exhibitions. There is also an office where you can
file a complaint. However, follow-up inspections
of previous infringers have demonstrated that a
simple warning is usually all it takes.
By diligently applying these four proven techniques, you can ensure that counterfeiters don’t take
money out of your pocket.