Inside the Knockoff
A shopkeeper in Italy placed an order with a Chinese sneaker factory in Putian for 3,000 pairs of white Nike Tiempo indoor soccer shoes. It was early February, and the shopkeeper wanted the UGG Espa a online Tiempos pronto. They would have no blueprints or instructions to follow. But Lin didn’t mind. He was used to working from scratch. A week later, Lin, who asked that I only use his first name, received a pair of authentic Tiempos, took them apart, studied their stitching and molding, drew up his own design and oversaw the production of 3,000 Nike clones. A month later, he shipped the shoes to Italy. “He’ll order more when there’s none left,” Lin told me recently, with confidence.
Lin has spent most of his adult life making sneakers, though he only entered the counterfeit business about five years ago. “What we make depends on the order,” Lin Ralph Lauren Outlet said. “But if someone wants Nikes, we’ll make them Nikes.” Putian, a “nest” for counterfeit sneaker manufacturing, as one China based intellectual property lawyer put it, is in the southeastern Chinese province of Fujian, just across the strait from Taiwan. In the late 1980s, multinational companies from all industries started outsourcing production to factories in the coastal provinces of Fujian, Guangdong and Zhejiang. Industries tended to cluster in specific cities and subregions. For Putian, it was sneakers. By the mid 1990s, a new brand of factory, specializing in fakes, began copying authentic Nike, Adidas, Puma and Reebok shoes. Counterfeiters played a low budget game of industrial espionage, bribing employees at the licensed factories to lift samples or copy blueprints. Shoes were even chucked over a factory wall, according to a worker at one of Nike’s Putian factories. It wasn’t unusual for counterfeit models to show up in stores before the real ones did.
“There’s no way to get inside anymore,” Lin told me, describing the enhanced security measures at the licensed factories: guards, cameras and secondary outer walls. “Now we just go to a shop that sells the real shoes, buy a pair from the store and duplicate them.” Counterfeits come in varying levels of quality depending on their intended market. Shoes from Putian are designed primarily for export, and in corporate footwear and intellectual property rights circles, Putian has become synonymous with high end fakes, shoes so sophisticated that it is difficult to distinguish the real ones from the counterfeits. Customs and Border Protection seized more than $260 million worth of counterfeit goods. The goods included counterfeit Snuggies, DVDs, brake pads, computer parts and baby formula. But for four years, counterfeit footwear has topped the seizure list of the customs service; in the last fiscal year it accounted for nearly 40 percent of total seizures. (Electronics made up the second largest share in that year, with about 12 percent of the total.) The customs service doesn’t break down seizures by brand, but demand for the fake reflects demand for the real, and Nike is widely considered to be the most counterfeited brand. One Nike employee estimated that there was one fake Nike item for every two authentic ones. But Peter Koehler, Nike’s global counsel for brand and litigation, told me that “counting the number of counterfeits is frankly impossible.”
The factory is off white, five stories tall and fronted by a brown metal gate. It was a seasonable summer afternoon when I visited. Billetero Louis Vuitton Lin is 32, with a wispy mustache and a disarming smirk. He met me outside the factory and took me through the gate. We scaled two flights of aluminum stairs and entered a production floor echoing with the grinding and hissing noises of industrial labor. A few dozen workers stuffed shoe tongues with padding, brushed glue onto foot molds and ran laces through nearly finished sneakers. Nike and Adidas boxes were stacked in one corner, a pile of Asics uppers in another. On this particular day, the factory was churning out hundreds of trail runners.
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A help wanted notice on the wall beside the gated entrance sought individuals with stitching skills for all shifts; the bulletin Camisa Ralph Lauren made no mention that the work was illegal. Such things are often just assumed in Putian. Managing a fake shoe factory puts Lin in the middle of a multibillion dollar transnational enterprise that produces, distributes and sells counterfeits. Of course, like coca farmers in Bolivia and opium croppers in Afghanistan, Lin doesn’t make the big money; that’s for the networks running importation and distribution. The profits are high while the penalties are low. An Interpol analyst added: “If they get caught with a container of counterfeit sneakers, they lose their goods and get a mark on their customs records. But if they get caught with three kilos of coke, they’re going down for four to six years. That’s why you diversify.”
In September 2007, police officers in New York City seized 291,699 pairs of fake Nikes from two warehouses in Brooklyn. The early morning raids were part of a simultaneous crackdown on a counterfeiting ring with tentacles in China, New York and at least six other American states. Lev J. Kubiak, an immigration agent involved in the case, said the total street value of the seized goods (had they been legitimately trademarked) “turned out to be just over $31 million.” Establishing provenance on the sneakers proved difficult. “Naturally the importation docs were not truthful,” an immigration spokeswoman wrote in an e mail message, when I asked her where the shoes originated. “But probably in or near Putian.”
After touring the assembly line, Lin and I walked up another flight of stairs to the roof of the factory. A mild breeze blew off the creek that snaked behind the building. Half constructed high rise apartments, ensconced in scaffolding and green mesh, stood beside towering cranes. The pace of development in Putian, a secondary provincial city with a population of about three million, was dizzying. A cluster of unfinished apartment buildings visible from my hotel window seemed to be a floor higher every morning.
PULL TAB The Bolsas Originales Louis Vuitton finish of the top edge is asymmetrical. LOGO The signature Nike logo on the counterfeit shoe is more like a check mark than a swoosh. LOGO The signature Nike logo on the counterfeit shoe is more like a check mark than a swoosh. Lin proceeded to sweep the excess water off the tea table with a paint brush and then make a pot of green tea while recounting the transaction with the Italian shopkeeper earlier this year. After pouring cups for my translator and me, Lin excused himself and ran downstairs. He returned with three samples, including a single fake Nike Tiempo, the first of the batch, which was sent to the Italian buyer to make sure it met his standards. Scribbled on the side of the shoe in navy blue pen was a date and the man’s signature. While looking the shoes over myself, I noticed the label on the inside of the tongue read “Made in Vietnam.” That was all part of the subterfuge, Lin said, adding that there are “different levels of counterfeit. Some are low quality and don’t look anything like the originals. But some are high quality and look just like the real ones. The only way to tell the difference between the real ones and ours is by the smell of the glue.” He took back the shoe, buried his nose in the footbed and inhaled.
National Intellectual Property Rights Coordination Center is the anticounterfeiting headquarters in the United States. J. Scott Ballman, an immigration agent with short, sandy hair and a Tennessee accent, is the center’s deputy director. Since joining customs in the early 1980s, Ballman has tracked the evolution of law enforcement’s response to intellectual property violators as closely as anyone. (Customs split after 9/11 into Customs and Border Protection, which handles interdiction, and Immigration and Customs Enforcement, which deals with investigations.) He worked on what he says was the first undercover intellectual property case for the customs service when he and a team of agents investigated and ultimately arrested a group in Miami for assembling counterfeit watches in 1985. “Most production of this stuff has since been pushed out of the United States,” he told me.
In 1998, the National Security Council studied the impact of intellectual property crimes and concluded that federal law enforcement efforts lacked Es Nike Air Max coordination. An executive order soon followed, sketching out the role of the National Intellectual Property Rights Coordination Center. Two years later a makeshift office opened in Washington, but after 9/11, chasing counterfeit goods lost priority. Ballman said: “Resources and focus changed overnight. to counterterrorism and weapons of mass destruction.”
The Obama administration has made intellectual property more of a focus. “Our single greatest asset is the innovation and the ingenuity and creativity of the American people,” President Obama said in a speech in March. “But it’s only a competitive advantage if our companies know that someone else can’t just steal that idea and duplicate it with cheaper inputs and labor.” To implement his intellectual property strategy, Obama appointed an intellectual property enforcement coordinator, while Immigration and Customs Enforcement Bolsos Louis Vuitton Para Hombre invigorated the property rights coordination center.
Can such efforts make a difference? “You’re not going to arrest your way out of this,” Bob Barchiesi, president of the International Anticounterfeiting Coalition, told me in a despairing tone this past spring. As long as there is a demand, he insisted, there will be supply. He had just returned from a trip to China, the point of origin for nearly 80 percent of all goods seized by Customs and Border Protection in the previous fiscal year. The factory, its employees and all its equipment remained in place. Barchiesi called the raid a “propaganda show.”
Efforts to have intellectual property rights honored in China are not new. Soon after Gilbert Stuart completed his Athenaeum portrait of George Washington in 1796, the one that’s reproduced today on the front of every $1 bill, a Philadelphia ship captain named John Swords set sail for southeast China. (Two replicas had somehow already made their way to China and served as the template.) Stuart was furious when he learned of Bambas Air Max Mujer Swords’s activities and, in 1801, he sued Swords in a Pennsylvania court and won. The damage was probably done, however. Even more than a century later, Antiques Magazine observed, “a good many portraits of George Washington painted on glass are knocking about the country.”
But China’s counterfeiting dynamic is more complicated than foreign goods being copied in places like Putian. Chinese sneaker brands, for instance, are also counterfeited. Baul Louis Vuitton Baratos Patent and Trademark Office’s first permanent intellectual property representative at the American Embassy. (He has since become co chairman of the American Chamber of Commerce’s intellectual property committee.) One initiative of the Taiping Rebellion during the 1850s, Cohen told me, was to “draft a patent law to encourage Chinese innovation.” Over a cappuccino one morning at an upscale cafe in Beijing, Cohen criticized the notion of Chinese government negligence, which he called overly simplistic. “People come to this environment with certain assumptions that all this counterfeiting must mean that there’s no one enforcing,” he said. officials” at least several hundred thousand by his estimate “to make a small European country.”
Numbers don’t necessarily spell efficiency, of course. Joe Simone, an intellectual property lawyer with Baker McKenzie Bolsos para hombre Louis Vuitton Baratos in China, said: “This is police work, but [the Chinese government] isn’t putting enough police on it. Ninety nine percent of the enforcement work is nothing but bureaucrats.” He questioned whether the current enforcement system was effective. But production always goes on.
ETCHING The model number is rendered more crudely on the counterfeit. STITCHES The size of the individual stitches vary considerably. STITCHES The size of the individual stitches vary considerably. (Shoes provided by Immigration and Customs Enforcement)
Beijing’s top intellectual property officials, meanwhile, seem to disagree over what even constitutes counterfeiting. The dispute revolved around shanzhai, a term that translates literally into “mountain fortress”; in contemporary usage, it connotes counterfeiting that you should take pride in. There are shanzhai iPhones and shanzhai Porsches.
In February 2009, a reporter asked Tian Lipu, the commissioner of the State Intellectual Property Office, whether shanzhai was something to be esteemed. “I am an intellectual property rights worker,” Tian curtly replied. “Shanzhai shows the cultural creativity of the common people,” Liu said. “It fits a market need, and people like it. We have to guide shanzhai culture and regulate it.” Soon after that, the mayor of Shenzhen, an industrial city near Hong Kong, reportedly urged local businessmen to ignore lofty debates about what is and isn’t defined as counterfeiting and to “not worry about the problem of fighting against plagiarism” and “just focus on doing business.”
This contradictory political environment parallels or perhaps fosters a seemingly confused corporate response. There is no doubt that, as with Washington’s Athenaeum portrait, there are today a “good many” fake sneakers “knocking about” China, the United States, Italy and the rest of the world. But none of the major footwear companies I contacted ventured an estimate of the scale of their counterfeiting problems. For them, it’s something better not discussed. “Because when word gets around the consumer market,” Humphrey said, “then everyone starts wondering if their shoes are real or not.”