Police smash massive China counterfeiting gang

1 min readUpdated Mar 25, 2019Apr 1, 201911:29 PM

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Police have shut down a huge China counterfeiting ring estimated to have raked in some US$15 million.

Chinese police have arrested 32 people believed to be part of the operation, which focused on counterfeiting luxury-branded goods.

The Shanghai raid led to the seizure of more than 4000 items of luxury apparel and accessories bearing Louis Vuitton, Kenzo and Loewe labels, among other top brands. Two assembly lines producing the counterfeit items were shut down.

The raid was in response to a tip-off to the Shanghai Qingpu district public security bureau that fake Louis Vuitton bags were selling on Chinese social media platform, WeChat.

Estimates held that the ring had sold more than 100,000 fake luxury items at a value of around RMB100 million (US$14.9 million). Each item would have cost around RMB200 ($30) to produce.

The rise of online markets all over the world has been blamed for a general increase in fake products sold globally. The counterfeit industry is now worth an estimated $590 billion a year, and accounts for around 3.3 per cent of total international trade.

According to customs officials, the most frequently seized fakes are items of footwear, clothing, leather goods and IT equipment. China is by far the world’s largest source of pirated goods.

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What this means

The police action against this Chinese counterfeiting ring, seizing luxury goods from brands like Louis Vuitton and Kenzo, offers a brief reprieve but does not fundamentally alter the landscape for genuine retailers. With the global counterfeit industry estimated at US$590 billion, this US$15 million bust represents a fraction of the problem. While it pressures platforms like WeChat to enhance their policing, the ease of establishing new online fronts means the impact is often fleeting. Brands must continue to invest in robust anti-counterfeiting strategies, far beyond what is seen with acquisitions like Shein's US$80 million Everlane deal, to protect their intellectual property and consumer trust. Watch for new data on overall counterfeit seizures in key Asian markets later this year.

Sarah Chen · Retail News Asia newsroom

Questions & Answers

What kind of items were being counterfeited by this gang?

The gang focused on luxury-branded goods, specifically counterfeiting apparel and accessories. Seized items included fake Louis Vuitton, Kenzo, and Loewe products, among other top brands.

How did police become aware of this counterfeiting operation?

Police received a tip-off about fake Louis Vuitton bags being sold on the Chinese social media platform, WeChat. This led to the Shanghai Qingpu district public security bureau initiating the raid.

What is the estimated value of the goods sold by this counterfeiting ring?

Estimates suggest the ring sold over 100,000 fake luxury items, valued at approximately RMB100 million or US$14.9 million. The individual production cost for each item was around RMB200 ($30).

What broader trend is this incident connected to in the retail industry?

This incident is linked to a general increase in fake products sold globally, largely blamed on the rise of online markets. The counterfeit industry is now estimated to be worth $590 billion annually.

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