Counterfeiting in China

By The Financial Times
October 12, 2007

After serving for decades as the world's favourite manufacturer of cheap goods, China is struggling to upgrade itself into an "innovation society." But innovation does not always lead to profits. In a country where low prices matter more to consumers than brands or quality, counterfeiting runs rampant and punishment for intellectual property piracy remains toothless.

Some enterprising counterfeiters in China refill brand-name perfume or liquor bottles. Others make extra, unauthorised batches of products at contract manufacturing facilities and sell them on the side. China has pledged to enforce its loose piracy laws more aggressively, and it is cracking down on counterfeiting ahead of the 2008 Olympics. But in a complaint filed with the World Trade Organization and joined by Japan, the EU, Mexico and Australia, the US claims China's inaction is costing its businesses billions of dollars each year.

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