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.
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
Listed in the NML since 2011, Silk Market remains one of the biggest markets for counterfeit goods in Beijing, but has lost foot traffic with the decline of tourism due to the COVID19 pandemic.
As counterfeit goods sales have moved online, some sellers reportedly offer to ship counterfeit goods to foreign countries and manage to evade detection by customs enforcement authorities. Right holders reported that although some raids have been conducted at the market, they happened too infrequently to result in any lasting changes.
In January 2022, enforcement authorities conducted a raid against sellers of counterfeit goods, with some sellers reportedly being put in prison. USTR will continue to monitor the long-term impact of the raids.
Wu’ai Market, Shenyang, Liaoning Province
This market remains the largest wholesale and retail market in Northeastern China, and is a hub for the distribution of counterfeit shoes, handbags, luggage, and apparel throughout the region.
With the loss of sales to e-commerce markets, the watch area of the market reportedly has closed down, and sales of high-end counterfeit products made in Guangdong Province reportedly have ceased. However, medium- to low-quality counterfeit goods remain highly visible.
Right holders report that a local court held the market jointly liable with the shops for trademark infringement, but the settlement agreement into which the right holders subsequently entered with the market did not prove to be effective.
Right holders also report that raids against the market occur from time to time, but have minimal effect because the management company for the market is state-owned.
Yiwu International Merchandise City, Yiwu, Zhejiang Province
This market remains one of the biggest small-commodities venues that links manufacturers of counterfeit goods with large-scale distributors.
Many of the goods sold in this market are unbranded and non-differentiable, but right holders report that some vendors openly display and sell infringing handbags, shoes, and apparel to consumers. Right holders also report that local authorities have conducted regular raids and seizures against shops and related warehouses associated with infringing products and have levied penalties against infringers.
The operator of the market has also cooperated with right holders by posting warnings against counterfeiters, creating a list of protected brands, and distributing IP protection brochures. Nevertheless, right holders report that these efforts have been inadequate at reducing the visibility of infringing products at this market.