Globalization of the Counterfeiting Industry, and China's role in it.

Essay by leo23High School, 12th gradeA, September 2006

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The World Customs Organization estimates that counterfeiting accounts for 5% to 7% of global merchandise trade, equivalent to lost sales of about $512 billion for the last fiscal year. China is arguably the most crucial player in international business today and is proving to be a catalyst in the phenomenon of counterfeiting, owing to globalization, availability of able technology and finances, and its own prerogative of not wanting anything to do with the situation. There is an increasing need to curb the counterfeiting industry, which is growing as an international trade problem at an alarming rate.

First and foremost, counterfeiting thrives on the whole process of globalization itself. Globalization, after all, is the spread of capital and know-how to new markets, which in turn contribute to low-cost labour to create the ideal export machine, manufacturing first the cheap stuff, then moving up the value chain. It's very clearly the story of China. Counterfeiting packs all the punch of skilled labour, smart distribution, and product finesse without getting bogged down in the costly details of research and brand-building. Today, the counterfeiter makes the shrewdest use of globalization.

Why, you ask? I say because they can. My friend actually owns a TAG-Heuer watch that he bought from China for $40; the real one retails for $2500! This piece and numerous other fakes are now so good that even company executives say it takes a forensic scientist to distinguish them from the real. The counterfeiters even ape the multinationals by diversifying their sourcing and manufacturing across borders. The extent to which even counterfeiters strive for perfection never ceases to astound-cum-disgust me. Financing comes conveniently from a variety of sources, including the Middle East middlemen, local entrepreneurs, and organized crime. Often, they're legitimate companies that have a dark side. In fact, many are...