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Product Piracy and Fraud in China

On January 12, 2004, the outgoing secretary of commerce Don Evans made a visit to China.  Among other things, one of his major issues was asking China to stop product piracy, which is estimated to cost U.S. companies 3 billion dollars a year.

The number sounds alarmingly serious, but the reality is even far crueler.  Product piracy and fraud in China is so widespread that it can be found almost everywhere, and in nearly all categories.  As a popular saying describes, “everything is fake in China, only swindlers are true.”

The poster is meant as a joke, but sadly it also happens in real life. On January 15, China’s Quality News Network ( exposed the “Big Ten product quality frauds in 2004 (in China).” Below are some highlights:

Fuyang “Milk” Powder

The protein content of the so-called “milk” power found in the countryside of Fuyang, Anhui Province was as low as 0.37%.  Newborn babies who had been using the milk developed huge heads because of severe malnutrition. As of April 2004, 229 babies suffered from malnutrition as a result of drinking the milk. Among them, 189 suffered from minor or medium-level malnutrition. Twelve babies died from malnutrition.

Sausages Made of Sick Pigs

Meat processors in Ji County, Tianjin made hams and sausages with pork of dead pigs and sold them in Beijing and Tianjin.  A person in charge of one of the meat processing facilities admitted to having used pork from sick pigs. They mixed them with regular pork when making sausages. The dead pigs were from individual peddlers who collected them from various sources.  Those pigs mostly died from various infectious diseases such as meningitis, diarrhea and flu, according to the peddlers.  The packages were all labeled with quality certificate by Health Department.

Sports Shoes Faked with Famous Brands

Two businessmen were caught when they shipped seventy-million-yuan worth of sports shoes bearing fake logos to Urumuqi city, Xinjinag. The batch of 20,942 boxes of shoes was counterfeited as Adidas, Reebok, Nike, etc., supposedly made in Korea. One hundred eighty thousand people could have bought fake shoes if the two men hadn’t been caught.

Fake Fertilizer Made of Soil

Some fertilizer makers in Liangyungang packed soils with color, labeled the packages as ammonium fertilizer imported from the U.S., and sold it at 2000 yuan (US$241)/ton (1 ton=2240 pounds). An unregistered Lubao Fertilizer distributor was suspected to have distributed a large amount of such “fertilizer” to seven provinces.

Tests showed the total content of nutrition in the fake fertilizer is 0.3% with no phosphorus at all. If used, it will not only reduce the crop output by 40% to 50%, but also spoil the land by salinization of the soil.

Pesticide Kills Rice Plant

In 2004, local farmers in Ningbo, Zhejiang Province, used a pesticide called “Daojuanning,” which was manufactured by the Dongbao company. To their surprise—and shock—the pesticide killed the rice plants when applied. Large areas of rice field suffered from this unexpected disaster.

According to statistics, 5400 farmers in sixteen villages were hit.  Eleven thousand acres of rice field were involved.  The total loss was tens of millions of yuan.

The So-Called “Best Seeds” Yield Bitter Pill

On the packages of so-called Nationally Certified “Handan 284” cottonseeds (Note: National certification is the highest standard for seed quality in China.) carried the seals of seed-experts as well as a claim that the seeds were pest-proof.  However, farmers in Yongji, Shanxi Province said the seeds they bought from a seed company in Henan had barely started to bloom at first frost, when harvest was supposed to end.  The company claimed that these seeds would yield more and the cotton balls would be larger.  In reality, the seeds didn’t grow at all.

Police Light Used to Encourage Production of Inferior Quality Steel

Inferior quality steel and its byproducts were the cause of so-called “tofu buildings.”  The structures and buildings made with this kind of steel have such poor structural integrity and seismic resistance that the buildings are unsafe or even collapse.

Inspectors of Quality Monitoring Bureau of Guangdong Province found that in Yao’an, Lianzhou, and the Shenlian Metal Products Factory hung a police light at its gate when making poor quality building steel.  A board was also hung on the gate that read “Patrol Station of the Yao’an Police Station of Lianzhou Police Department” in order to prevent the facilities from being inspected and reported.

Bulk Liquor Made of Industrial Alcohol

At 9 pm on May 11, 2004, Mr. Duan, a farmer of Meitian Village of Baiyun District, Guangzhou died after he drank the bulk liquor his wife bought from the farmer’s market. On the same day, a migrant worker from Hunan Province also died from drinking the bulk liquor.  Within seven days, eleven people died and fifty people were sick from drinking the bulk liquor.  All of them were low wage earners.  Investigation revealed that the “killer” liquor was made of industrial alcohol.

A Perrennial Problem

Each year, the  government swears that it will strike hard at product fraud. Unfortunately, the same problems have not only remained, but also been getting worse.

After the China trip, Mr. Evans might come home with pledges from Beijing authorities that they will improve the piracy problems and seriously punish the offenders. With the reality as it is now, success is unlikely in Mr. Evans time.  Unfortunately, his successor may come to understand that it is too tremendous a task to fulfill.

Lily Qu is a correspondent for Chinascope.