Name Brand OEM Factories in China Make Real And Fake Alike

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Name Brand OEM Factories in China Make Real And Fake Alike

 news 2015-03-17 at 10:43:25 am Views: 590
  • #42183

    Name Brand OEM Factories in China Make Real And Fake Alike
    By Zhou Ting 周婷 An Ya 安雅

    Up to 80% of luxury goods sold on China's online platforms are reportedly knockoffs, many of which come from legitimate OEM factories of the brands, reports China's Tencent news outlet.

    An unnamed source told Tencent that many of the luxury goods on online overseas shopping platforms are fake. Zhou Ting, an expert in the field, said that according to a study in 2013, 80% of the luxury items sold online in China are counterfeit. Most of these items cost one-tenth to one-fourth of the real item's tag price.

    China is home to OEM factories for many major luxury brands like Michael Kors, Coach, Prada, Burberry and Gucci, among others. In the coastal cities of Guangzhou, Dongguan and Qingdao, products that do not pass quality inspection are often times smuggled out of the factory and sold. "The management of the factories sell some, even the good ones, if they need the cash," said a former employee of a factory in Qingdao, who added that the items are generally sold for a quarter of the original price.

    In 2015, a batch of Tommy Hilfiger purses manufactured in Qingdao were unable to be shipped due to problems with the contract. The batch subsequently slipped out from the OEM factory without detection.

    Some factories specialize in producing knockoffs. An Ya (alias), an employee at a counterfeit Michael Kors' factory in Dongguan, told the press that her company has access to the fashion brand's suppliers, materials and original designs. "This is a very profitable business," An Ya said. "The leaders of the brands' OEM factories have access to the company's suppliers and original designs and they leak the information to manufacturers like us."

    "Many employees in the OEM factories establish their own factories to make fake items. They are safe as long as they make sure the management gets their share and keep their mouths shut," another source revealed.

    In July 2012, Louis Vuitton sued three large Chinese fake product markets and more than 30 individual sellers in Nanjing and Hefei and claimed compensation of more than 20 million yuan (US$3.2 millon).

    Chinese authorities have also beefed up measures to reign in the knockoff industry. In mid-2014, authorities in Guangzhou raided 23 bases that stored and sold a total of more than 13,000 fake luxury goods items.

    "The luxury brands are aware of the knockoff business but there's nothing much they can do about it," said a source familiar with the industry. As of now, the cost, standard and capacity of China's labor force is still a better alternative for international brands. If measures are taken against the brands' business partners in China, the whole supply chain will be affected. In all likelihood, none of the OEM factories are purely "clean," said the source.