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Monday, November 7, 2011

C for China...C for Counterfeit...

U.S. Finds Chinese Counterfeit Parts in Military.....screaming headlines on Bloomberg.

"Counterfeiting in China has reached a crisis point." This common view is heard from many foreign executives and government officials. The problem appears to be getting worse each year: Not only is the quality of counterfeits improving, counterfeit goods are appearing in more overseas markets".-anonymous Chinese Government official.

What many people might not be aware of is the tacit official support provided in the early 1990s when China began a push to become the manufacturing centre of the world.60 Minutes found a corner shop in Donguan, China, selling clubs by Callaway, the American manufacturer of the famous Great Big Bertha driver.


The Chinese government didn't want 60 Minutes to bring our cameras, so they did - undercover. Inside, they saw a club that looked and felt like the Great Big Bertha. Not only that, they were offered Callaway irons, putters, golf bags, gloves, and even a Callaway umbrella.

My sources say there are streets in Shenzhen and SEZs in Donguan and Yiwu which is a 2hour drive from Shanghai are the main centre and anything from Tiffany's jewels to Nike shoes(counterfeit) offcourse can be found on main street.

What started as an enterprise to satisfy the aspirational urges of a few is now a roaring billion dollar industry that exports to Thailand,Vietnam,India and now as per CBS and Bloomberg its heading back to the US!

South Asian countries are more at risk as they can be browbeaten politically to accept more such products as well as them being a cheaper import and destroying the local small scale industries en masse.Just to put things in perspective India's trade deficit(excess of imports over exports)jumped 160% to 23.9 billion $.

Add the cheap poisonous material used in manufacturing(such as children's toys) and the social cost goes up further.

Offcourse it makes sense for China as it kills competition,gets its product into sensitive national security areas and creates a monopolistic environment.It will be important to see what happens if the purchasing index in Europe and US slides and there are fewer orders?

I keep saying in my blog that if there is to be armageddon it will have to come out of China.They are not counting the environmental cost....polluted lakes,forced shifting of population,uprooting whole villages to construct Special Economic Zones.Controlling state media and information services might last another half a decade.

The brutal policy of Chinization of Tibet is being applied in varying degrees in other parts of mainland China as well.If and when there is an "Arab Spring"it will be the Mother of all revolutions!!

My feeling is that the Chinese are superb at ultra long term planning and have an excellent grasp of global political realities BUT just somwhere they seem to be neglecting what is just in front of their nose.The muslim revolt by Uighers is but just one symptom.Those of you who travel often to China do keep ur eyes peeled...hahaha.