China and the World

Bags of trouble

Huge haul in Dubai, as shanzhai culture lives on

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The fakes were worth $257 million

WiC’s first mention of China’s shanzhai culture was in its inaugural issue in early 2009 – coming a few weeks after the state broadcaster CCTV became the first of the mainstream media to acknowledge the same phenomenon.

Translated literally as ‘mountain stronghold’, the original Chinese meaning had connotations of ruggedness and rebellion, implying communities beyond the reach of the imperial court.

Many of the world’s leading brands were complaining of a similar sense of lawlessness a decade ago, when shanzhai was slang for the fake goods pouring off production lines in cities like Shenzhen.

Of course, at governmental level there’s no denying the disapproval of counterfeit goods or the promises to clamp down when the law is breached. It was the same again this week when the State Council published another directive promising “intensified protection” of intellectual property rights. Punishment for infringements of patents and trademarks would be toughened up, it said, and more efforts would be made to work with other countries in prosecuting cross-border cases.

Yet while the worst practices are clearly frowned upon, the spirit behind shanzhai is spoken about in a more nuanced way. In fact, the meaning has morphed again into something a little more respectable, implying a spirit of nimbleness and adaptation. In this newer guise shanzhai is more about what it symbolises in the manufacturing ecosystem: less about imitation and ironically, more about innovation.

Most commentators agree that the government is doing more to protect patents and trademarks, not least because Chinese firms are generating more intellectual property of their own. Flagrant cases of copycatting are being dealt with in the courts as well, although plaintiffs have complained that legal action is painfully slow and that the final judgments often aren’t punitive enough.

Nor has the knock-off culture disappeared completely, especially in cases where some of the counterfeiters are so skilled that the best shanzhai is hard to tell apart from the real goods.

That was apparent again this month when the authorities arrested 57 people in a counterfeiting ring based in Guangzhou. Fake luxury brands from factories in that city were being shipped to the Middle East and sold through distributors. It was a major commercial operation: 10 locations were raided in Dubai, with seizures of clothing, perfume and handbags with a street value of as much as Rmb1.8 billion ($257 million).

Three main themes stand out in the media coverage of the case. The first is the craftsmanship of the counterfeiters, who would no doubt be described as artisans if they were making coffee or craft beer.

Alongside the careful cutting and stitching to replicate brands like Louis Vuitton and Chanel, they were painstaking in reproducing authentic-looking packaging and ownership certificates registering purchases, the Chinese press reported, almost admiringly. (Some of the factories had even produced ‘limited edition’ ranges of the very best goods in an attempt to boost their credibility.)

Second, the profits on offer from shanzhai sales can still be substantial, perhaps reflecting the quality of many of the goods.

That was apparent in the commercial value claimed for the goods in the depots in Dubai, although the workers in Guangzhou don’t seem to have been aware of how much money was being made.

“I was astonished when I was told that the handbags could be sold for several thousand yuan overseas as I only got Rmb100-200 a bag,” one of the copycat factory bosses complained to Xinhua, the state news outlet.

Thirdly, many of the customers for counterfeit goods are complicit in the trade, knowing that they aren’t buying the real thing. “Foreigners love shanzhai bags – even when they know they are being cheated,” one of the ringleaders in the scam told Chinese television this month. “Even rich women own bags that aren’t real ones: out of 10 maybe three are genuine and seven are shanzhai, but because the women are wealthy, people never think their bags are fakes.”


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