The United States Trade Representative (USTR) has identified nine counterfeit and piracy markets in China in a new report.
Overall, China continues to be the number one source of counterfeit goods in the world.
Counterfeit and pirated goods from China, together with goods transshipped from China to Hong Kong, accounted for 83% of the value (measured by manufacturer’s suggested retail price) and 79% of the volume of counterfeit and pirated goods seized by the Bureau of US Customs and Border Protection (CBP) in 2020.
Although foot traffic has decreased in some Chinese physical markets as a result of the growth in online sales of counterfeit goods, sellers of counterfeit goods now often use their physical stores as contact points for customers and for the fulfillment of their online sales. line.
Consequently, the major notorious markets remain key hubs for sales of counterfeit goods in China’s largest cities.
Piracy markets
Although there have been raids and seizures in some of these markets, sellers have changed tactics, such as keeping less inventory on the site and offering a wider range of counterfeit products online.
Many of the piracy markets included in the 2021 Review were repeat offenders, underscoring the ineffectiveness of enforcement efforts to date.
USTR encouraged China to adopt and expand the scope of robust enforcement actions across China to more effectively combat the widespread sale of counterfeit products within its borders, with a special focus on the following key markets.
Anfu Market, Putian, Fujian Province
Right holders report that Anfu Market remains a hub for the wholesale distribution of counterfeit footwear produced by hundreds of factories and workshops surrounding the city of Putian, which is reportedly known nationally as the epicenter of the Chinese counterfeit footwear industry.
Anfu Market allegedly hosts at least one hundred street-level shops, the vast majority of which offer counterfeits of well-known brands.
Although right holders report that authorities have conducted raids and prosecuted some infringers through 2019, enforcement against manufacturers in this area is notably difficult due to close personal connections, including familial ties, that manufacturers of counterfeit products may have with some local officials.
Asia-Pacific Xinyang Clothing & Gifts Plaza, Shanghai
Described by online tourist directories as “an underground maze” connected to a metro station near Shanghai’s popular sights, this market hosts numerous stalls openly offering counterfeit apparel and fashion accessories.
Right holders report that authorities have not conducted any recent raids on the market and that the majority of the goods are counterfeit. Beyond the counterfeit merchandise openly on display, some sellers of counterfeit merchandise allegedly also offer “high end” counterfeits on demand via delivery.
Chenghai District, Shantou, Guangdong Province
Right holders report that the Chenghai District is well‐known for its factories that not only produce counterfeit toys and other consumer goods, but also feature attached showrooms to facilitate sales.
Enforcement in the region is reportedly extremely difficult due to the closed nature of the industry in the district, and the close relations businesses have with local administrative and criminal law enforcement authorities.
Huaqiangbei Electronics Malls, including the Yuan Wang, Huaqiangbei Digital World, Long Sheng Communications Market, and Man Har Digital Plaza Malls, Shenzhen, Guangdong Province
Described by right holders as “the epicenter of the counterfeit electronics trade,” the malls in this area serve as a central distribution hub for counterfeit electronic devices and components, including counterfeit computer chips, wiring, capacitors, and LEDs used by manufacturers of counterfeit consumer electronic devices in China and around the world.
Vendors at these malls also offer counterfeit smartphones, tablets, wireless earbuds, and other peripherals.
Right holders report that, with declining foot traffic, many counterfeit sales have moved online. Many brick-and-mortar stores instead serve as contact points that provide product sample testing, call centers, and customer fulfillment services for online sales via local and international parcel delivery services.
Kindo and Zhanxi Garment Wholesale Markets and Southern Watch Trading Center near Zhanxi Road, Guangzhou, Guangdong Province
These large, mall-sized markets near Zhanxi Road in Guangzhou are located within a mile of each other and offer mainly counterfeit apparel, shoes, and watches.
Right holders report some level of cooperation from the operators of the markets and law enforcement to curb the sale of counterfeits, such as frequent inspections and shop closures, but law enforcement authorities reportedly refrain from taking strong enforcement measures to minimize employment losses. Lower-quality counterfeits are displayed openly, with higher-quality counterfeit goods kept out of view in drawers or upper floors.
Although lower customer foot traffic has led to the closure of many booths, sellers of counterfeit merchandise have nevertheless maintained their businesses through online sales.
Luohu Market, Shenzhen, Guangdong Province
This is a well-known mall located next to the Luohu border crossing between Shenzhen and Hong Kong. Right holders report that its location and size give it a high profile with international appeal, making it a popular destination for tourists and cross-border travelers.
Reportedly half of the merchandise at the market consists of counterfeit or pirated goods.
Sellers of counterfeit merchandise allegedly retain a low amount of inventory at the market while offering a larger range of products online or via nearby warehouses. Law enforcement conducts regular raids at the market and connected warehouses and factories, but the continued prevalence of infringing products requires increased efforts.
Silk Market, Beijing
The Silk Market, listed in the NML since 2011, remains a major hub for counterfeit goods in Beijing. However, it has seen reduced foot traffic due to the decline in tourism caused by the COVID-19 pandemic.
As counterfeit sales shift online, some sellers now offer to ship fake goods to foreign countries. These shipments often evade customs enforcement, making it harder to control the problem.
Right holders report that while raids have occurred at the market, they are too infrequent to create lasting change.
In January 2022, enforcement authorities raided the market, targeting counterfeit sellers. Some sellers were reportedly imprisoned. The USTR plans to monitor the long-term effects of these actions.
Wu’ai Market, Shenyang, Liaoning Province
This market is the largest wholesale and retail hub in Northeastern China. It plays a key role in distributing counterfeit shoes, handbags, luggage, and apparel across the region.
Recently, e-commerce competition has impacted the market. As a result, the watch section has reportedly closed, and sales of high-end counterfeit goods from Guangdong Province have stopped. However, medium- and low-quality counterfeit items remain widespread.
Right holders report some legal actions. A local court held the market jointly liable with vendors for trademark infringement. Yet, the settlement agreement with the market was not effective.
Occasional raids target counterfeit activities in the market. Unfortunately, these efforts have minimal impact, partly because the market’s management company is state-owned.
Yiwu International Merchandise City, Yiwu, Zhejiang Province
This market remains a major hub for small commodities. It connects counterfeit goods manufacturers with large-scale distributors.
Many items sold here are unbranded and lack distinguishing features. However, right holders report that some vendors openly sell counterfeit handbags, shoes, and apparel.
Local authorities have taken steps to address the issue. Regular raids and seizures target shops and warehouses linked to counterfeit products. Authorities have also imposed penalties on offenders.
The market operator has taken some actions as well. These include posting warnings, creating a list of protected brands, and distributing brochures about IP protection.
Despite these efforts, right holders believe more needs to be done. Counterfeit products remain highly visible in this market, making the issue far from resolved.