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 user 2007-11-26 at 12:34:00 pm Views: 82
  • #21232

    Thailand’s counterfeit pipeline
    Porous borders, government inaction allow bogus goods to travel the world
    Thailand — If not for the deep-fried scorpions on the dusty food
    court’s menu, you might think you were at Easton Town Center.The
    sprawling, open-air Rong Kluea market has all of the familiar clothing
    brands found at any top-flight U.S. mall: Abercrombie & Fitch,
    Aeropostale, American Eagle, Gap, Hollister, J.Crew, Justice,
    Victoria’s Secret Pink and more.But take a good look, because what you
    see is rarely what you get in this backwater bazaar along Thailand’s
    border with Cambodia.Over there, twisting on a hanger in a shop with
    folding tables on a dirt floor, is a green Abercrombie hoodie. From a
    distance, it’s unremarkable. But up close, it’s clear the garment has
    no sewn-in labels and is finished with a Puma-brand zipper.”In this
    whole market, there’s nothing legal,” says a woman hawking rack upon
    rack of questionable Abercrombie & Fitch merchandise. As if to
    prove the point, she’s wearing a baggy Gap T-shirt, an obvious no-no
    for a real Abercrombie salesperson.

    To lend an air of
    authenticity to her wares, she keeps a loose-leaf binder with color
    images printed from the Abercrombie Web site. They look good. Through
    an interpreter, she says her merchandise is the real thing, stolen from
    authorized Abercrombie factories in Cambodia.She could be telling the
    truth, but none of these customers — a combination of Asians and
    Western tourists — seems to know, or care.What’s undeniable is that
    Thailand is awash in counterfeit goods, the production and sale of
    which cost legitimate companies $600 billion a year in lost
    sales.Experts consider Thailand, a country of 65 million, to be the
    primary staging point for counterfeit goods produced in China, where up
    to 90 percent of the world’s knockoffs are made. Organized gangs with
    financial ties to Hong Kong and Taiwan are behind much of Asia’s trade
    in fakes.Before communist China opened its borders to extensive trade
    with the outside world, Thailand was a regional center in the
    production of counterfeit goods, especially clothing. But
    counterfeiters are subject to the same market forces that draw
    legitimate manufacturers to China — low wages, a huge work force and
    undervalued currency.With a central location and modern ports and
    airports, Thailand remains an ideal transit hub for black-market goods.
    It also helps that Thailand shares borders with countries that don’t
    place a premium on intellectual property rights: Cambodia, Laos,
    Malaysia and Myanmar, formerly Burma.

    Observers said that
    officials in Thailand’s military-led government are looking the other
    way.”Stopping counterfeiting is a difficult proposition in any case,
    but adding in corruption makes some producers virtually untouchable,”
    said a Western diplomatic source in Thailand who asked not to be named
    for fear of political retribution.Rong Kluea and similar markets in the
    capital, Bangkok, cater to tourists and middlemen from Europe, Asia,
    North America and elsewhere. What’s not purchased in Thailand is
    shipped to distributors in third countries or sold piecemeal to
    consumers over the Internet.Abercrombie & Fitch, which has no
    stores in Asia and only one in Europe, is blatantly knocked off here.
    The New Albany company, whose brands include Hollister and Ruehl, says
    eight of the top 10 resellers of its goods on eBay are likely based in
    Thailand, peddling fakes made in China.Thailand’s central role in the
    fakes trade earned it a place of dishonor on the U.S. government’s 2007
    survey of intellectual property-rights violators worldwide. After 14
    years off the list, Thailand was labeled one of the world’s worst
    offenders last spring, joining perennial pirates China and Russia, and
    nine other nations.”We agree that we have a problem with intellectual
    property; if you walk the streets, you can see it,” said Woranuj
    Maneerungsee, a reporter with the Bangkok Post. Her newspaper
    editorialized last spring that Thailand deserved its ranking and needed
    to clean up the counterfeit markets.In Thailand’s huge open-air
    markets, knockoffs aren’t even being swept under the rug, let alone
    cleaned up.Rong Kluea rivals a state fair in scale, with hundreds of
    vendors in semi-permanent stalls hawking clothes and household goods.
    Farm animals and wooden pushcarts add ambience and serve as the primary
    means for moving illicit goods in and out.There’s little pretense or
    effort to create the illusion of legitimacy. In one vendor’s pushcart,
    phony Rolex and Omega watches compete for space with dried mushrooms
    and Thai spices.Ever wonder where a knockoff Burberry purse might come
    from? Quite possibly this market, in stalls with tarps for walls, where
    children eat lunch off mats on the ground while women sew copies of the
    designer brand’s distinctive plaid fabric onto generic Chinese-made
    bags.Prices are less than a fourth of what legitimate designer goods
    would cost in the States. Tour buses from all over Thailand and
    Cambodia — adorned with unlicensed Disney characters Mickey, Donald
    and Piglet — ply the dusty parking lots on both sides of the border,
    unloading eager bargain hunters.There’s no sign of Jiminy Cricket. He
    could be among the bucketfuls of insects and small reptiles destined
    for the food court’s deep fryer.

    Dangerous products
    does more than rob companies of sales and support organized crime,
    child labor and terrorism.Knockoffs also can damage brand images and
    hurt consumers.Fakes sold as real products frequently are made from
    outdated, dangerous, leftover or stolen components that convey just
    enough legitimacy to fool unwary — or indifferent — consumers.And
    while it’s one thing for a pair of fake Nike shoes to fall apart
    prematurely, the stakes are much higher when products can harm
    consumers.”It’s a real problem when you’re talking about safety,” said
    Robert Crane, lead enforcement specialist of anti-counterfeiting
    operations for Underwriters Laboratories Inc. in Chapel Hill, N.C.”You
    can be electrocuted or your house can burn down,” he said. “You can
    die.”Underwriters Laboratories, a nonprofit testing service known by
    its UL mark on a variety of electrical products, maintains a force of
    1,800 inspectors who do nothing but monitor factories around the
    world.Their weapon of choice is a high-tech tag, and all Chinese-made
    lighting products sold in the United States, including extension cords
    and holiday light strands, must have one affixed to the product
    itself.The tags are made in one secure U.S. location, display a
    hologram and have other internal security features, said Brian Monks,
    UL’s vice president of anti-counterfeiting operations.Even so,
    counterfeiters slap phony UL labels on electrical products made with
    insufficient amounts of copper. Fake circuit breakers look like the
    real thing but may not trip when overloaded. All of these products can
    and have burst into flames, Crane said.While consumers may not be able
    to tell a real label or product from a fake, he said, be wary of:
    • Any product that mentions UL on the carton or product but gives no company name or address.
    • Any product with UL on the packaging but not the product itself.
    • Shoddy workmanship or cheap packaging.
    • Any electrical product significantly marked down and sold by street vendors or at flea markets and deep discount stores.

    also knock off millions of batteries in China for export around the
    world, said Donna Frazier Schmitt, senior trademark counsel for
    Energizer, based in St. Louis.They frequently contain high levels of
    mercury, and many don’t have the built-in ventilation that keeps
    branded batteries from overheating or exploding, she said.The logo on
    Energizer’s popular Eveready brand is a black cat jumping through a 9.
    The company has been fighting a Chinese imitator using the Everpower
    name. Its batteries feature a skinny black jaguar jumping through an
    8.A busy consumer might not notice the difference.Most Everpowers are
    sold in Asia and the Middle East, but some reach the United States
    every year.”It can be really hard to tell a real from a fake, but we
    pursue counterfeits wherever we find them,” Frazier Schmitt said.
    “Consumers can be disappointed with counterfeits, and that translates
    to disappointment with our brand.”

    Wild West of fakes
    Lerner is one of Southeast Asia’s top private eyes and an expert on
    counterfeiting. The former Houston resident, who has an Asian studies
    degree from Yale, has lived in Bangkok for 18 years. Today, he runs
    Quantico Ltd., one of the largest private investigation shops in the
    region.With 35 employees, his business is booming.”China has taken over
    most of the manufacturing (of legitimate and illicit goods) because the
    labor there is just so cheap,” he said.While Cambodia, Laos and Myanmar
    have plenty of factories, those countries increasingly serve as
    conduits for Chinese-made goods pouring into Thailand.Ray Tai, a Hong
    Kong-based lawyer responsible for policing adidas brands in Asia, can
    attest to the recent change. “They all have their counterfeit goods,
    but in the past couple of years, the Chinese counterfeiting machine has
    basically wiped them off the map.”Lax border controls and little or no
    enforcement of intellectual property rights by Thailand’s neighbors
    ensure a steady supply of goods. Lerner says dozens of rural villages
    make their living from the counterfeit trade.

    Quantico advises
    companies with factories in the region on “supply-chain management.” It
    involves knowing who makes your product, their suppliers and anyone
    involved in distribution. Mattel’s recent problems with lead paint on
    Chinese-made toys underscored the need for strict controls of supply
    chains.In addition to apparel, Quantico tracks fake food products, cell
    phones, printer components and auto parts.Criminals
    throughout Asia fool consumers by filling used Ink cartridges with
    generic ink and putting them in Hewlett-Packard boxes.”The profit
    margin on ink cartridges is better than heroin,”
    Lerner said.And
    they’re a safer bet for criminals. Counterfeiters in Thailand, China
    and other parts of Asia rarely get jail time.”The penalty is often
    death for narcotics, whereas if you’re a counterfeiter, people say,
    ‘OK, you’re just a businessman,’ ” said Daniel C.K. Chow, an Ohio State
    University law professor and a counterfeiting expert. The lack of
    enforcement is the main reason the trade flourishes as never before, he
    said.In an effort to boost tourism, Thailand has liberalized visa
    procedures, allowing foreign nationals from 154 countries to easily
    enter the country without a visa or to obtain one on arrival.

    certainly come and go with ease along the Thai-Cambodian border, and
    they know how to work the system.”It’s like a flow of ants,” Lerner
    says. “People cross the border all day with two fake cell phones at a
    time. Two phones are considered personal use.”For those who want to
    minimize trips, it’s not hard to slip through holes in the border
    fence. Conveniently, border guards patrol the area just twice a
    day.”People know when that is,” he said, “and they just go back and
    forth.”Lerner can make the drive from his office in Bangkok to the Rong
    Kluea market in just over three hours. On one recent visit, he was
    flagged down for speeding and solicited for a bribe by the police
    officer. Lerner declined to pay. After some back and forth, he was
    allowed to proceed without a ticket.”He didn’t want to do the
    paperwork,” Lerner said.That attitude is typical of what Western
    companies face in the fight to protect intellectual property in a
    country where law enforcement can be sporadic and arbitrary.”We don’t
    expect piracy to be wiped out overnight; however, we would like the
    Thai government to have a plan for how to better protect intellectual
    property and make a greater effort to enforce their laws,” the Western
    diplomatic official said.

    On the return trip from Rong Kluea to
    Bangkok, Lerner pulled off the highway to see what two smiling boys
    were cooking up in their pushcart: grilled field rat.”It tastes better
    than chicken,” one said. Lerner politely passed.Not far from the boys,
    in the middle of rice paddies and forests in Thailand, he happened upon
    a little restaurant in the courtyard of a private home. On the other
    side of a dirt road, two oxen lounged in a bog.A waitress approached,
    wearing a Louis Vuitton fanny pack. Either tips are quite good in this
    remote outpost, or it’s a fake.Abercrombie & Fitch, which has no
    stores in Asia and only one in Europe, is blatantly knocked off in
    Asia. The New Albany company, whose brands include Hollister and Ruehl,
    says eight of the top 10 resellers of its goods on eBay are likely
    based in Thailand, peddling fakes made in China.