What should you do if you suspect IP theft or counterfeiting of your products in China?

China has been identified as the epicenter of the counterfeit electronics trade. But it impacts other products, including toys, healthcare supplies, apparel, footwear, to name a few, as well as brand theft. Find out how Pamir Consulting LLC can perform due diligence for your business to collect the facts and formulate an effective strategy – and protect your interests while enabling you to maximize opportunities.

The risks posed to national security by counterfeit products were vividly highlighted on 1 May 2024, when Onur Aksoy, a Florida resident and dual citizen of the United States and Turkey was sentenced to six years and six months in prison for running a large operation that trafficked fraudulent and counterfeit Cisco networking equipment.

The equipment ended up in U.S. hospitals, schools, government agencies, classified information systems, and in combat and non-combat operations of the U.S. Navy, U.S. Air Force, and U.S. Army. The Cisco-labelled types of equipment were older, lower-model products that had been modified to appear to be genuine versions of new, enhanced, more expensive Cisco devices. The devices had been loaded with pirate Cisco software and contained components to circumvent authentication and security procedures.

2023 Review of Notorious Markets for Counterfeiting and Piracy

Of course, this is a large-scale example of counterfeiting but for U.S. companies, counterfeiting and IP theft are real, costly threats – not just financially, but reputationally too. The latest ‘2023 Review of Notorious Markets for Counterfeiting and Piracy’ identifies 39 online markets and 33 physical markets that are reported to engage in or facilitate substantial trademark counterfeiting or copyright piracy^[1]. 

It notes China as the number one source of counterfeit and pirated goods in the world – including goods trans-shipped from China to Hong Kong – accounting for 60% of the value of counterfeit and pirated goods seized by U.S. Customs and Border Protection (CBP) in 2022.

The report highlights China-based online sales sites such as Taobao, WeChat, DHGate, and Pinduoduo as particular platforms for the sale of counterfeit goods. It also identifies Huaqiangbei Electronics Malls – which includes the Yuan Wang, Huaqiangbei Digital World, Long Sheng Communications Market and Man Har Digital Plaza Malls in Shenzhen, Guangdong Province – as the “epicenter of the counterfeit electronics trade.”

Comprising over 30 malls, it supplies electronic devices and components from manufacturers in Shenzhen and surrounding cities to the world. Posted notices about respecting intellectual property (IP) rights are widely ignored.

The challenge of identifying counterfeiting and IP theft in China

But counterfeit goods cover almost every sector, not just electronics, including children’s toys, pharmaceutical and medical products, personal care goods, and apparel and footwear, to name just a few. Many businesses exist online, with malls just representing a small proportion of the distribution chain, which makes it very difficult for U.S. companies to identify and enforce IP theft in China.

But that’s where Pamir Consulting can help. We provide strategic consulting and advisory services centered on market risk assessment – including Brand Protection & Monitoring and Anti-Counterfeiting Assessment – for U.S. companies operating, investing, or entering Chinese markets. Unlike most consultancy firms we specialize in China and Southeast Asia, and have on-the-ground, local connections and expertise which we have built up over decades. We are specialists in performing pro-active risk monitoring and management.

For example, what do you do when you suspect potential counterfeiting of your copyrighted products, brand theft, or IP theft? Pamir can perform fact-finding and evidence collection activities to establish the facts and formulate an effective response, including working with local enforcement to raid counterfeit establishments – all of this of course is performed in full compliance with all local, regional, and national laws and regulations.

We can identify and understand threats to your business, and provide strategic mitigation services that eliminate negative impact, save costs, and protect your IP, brand, and reputation. Get in touch with us today if you need advice.

^[1]https://ustr.gov/sites/default/files/2023_Review_of_Notorious_Markets_for_Counterfeiting_and_Piracy_Notorious_Markets_List_final.pdf