Associated Press recently came up with an interesting report (see China's counterfeiters aided by Western firms' weak response):
Alex Theil lost his innocence the day an envelope landed on his desk. It was filled with money from a counterfeiter of Toyota auto parts he'd busted, mistakenly delivered to him by a lawyer hired to help with the raid.
Theil was running the office of the Pinkerton detective agency in Guangzhou, China. With the arrival of the bribe — meant to ensure against future raids — his faith in an ordered universe in which investigators fight crime instead of committing it began to unwind. Fifteen years and thousands of anti-counterfeiting raids later, he concluded that the envelope he received was not an exception: It was the norm.
"I thought we were all the good guys working against the bad guys," he said. "It's not that simple."
An Associated Press investigation published last week uncovered systemic fraud in China's anti-counterfeiting industry. Major multinational companies, blind to problems on the ground, unwittingly paid investigators who themselves manufactured or sold counterfeit goods. In other cases, investigators colluded with the very counterfeiters they were supposed to expose.
Does it sound familiar?
Factories that, with the help of "consultants", prepare 5 sets of books to satisfy 5 different retailers that each has its own social compliance standard?
Entire QC inspection teams that systematically extract money from suppliers?
Purchasers and buying agents who collect a few percentage points on every transaction?
And, in this case, IP rights investigators who collude with counterfeiters?
Welcome to China's dirty underbelly.
In every case, the local government is not willing to, or capable of, stop the damage. As the journalist wrote:
When the local government officials offered cash rewards for whistleblowers, he said some people refused to bite, worried that the officials themselves were secretly working with counterfeiters.
As often, solutions that work in other places don't work very well in China. As soon as a lot of money is at stake, it is crucial to devise a different system.
For example, investigators should be rotated. Just like purchasers, they WILL get dirty if they remain on the job for too long. There is just too much money to be made. In the Chinese mindset, they would be stupid not to enjoy this "natural benefit deriving from their position".
We listed similar pieces of advice in a previous article about the corruption of purchasers.
