Cash for counterfeits

Source:Global Times Published: 2016-2-28 20:43:01

China’s ‘fakes fighters’ sue companies over knockoffs

After receiving a report from a "fakes fighter" surnamed Zhao, officials from the food and drug administration in Xi'an, Northwest China's Shaanxi Province, withdraw expired canned food from a local market in March 2015. Photo: CFP

Cracking down on fake products has always been a thorny problem for Chinese authorities, especially with the popularity of online shopping sites and social networking platforms, where many vendors are able to sell their ersatz goods to millions of people. However, while most customers try to avoid buying poor-quality knockoff electronics, housewares and clothes, there is a group of people who have gone from rags to riches by buying counterfeit products. They are known as "fakes fighters."

These fighters purposefully buy fake products so as to demand compensation from sellers. Some have become millionaires while others have faced revenge from angry counterfeiters.

China's 1993 Law on  the Protection of the Rights and Interests of Customers stipulates that businesses that supply fraudulent products or services shall, on the demand of the consumer, pay compensation at least equal to two times what the consumer paid.

The law, aimed at combating counterfeiting, gave rise to a new industry, which is booming along with the expansion of the e-commerce sector.

In the e-commerce era, customers can make complaints over fraud to either the vendor or the sales platform and take them to court if they refuse to pay compensation.

Brand new

Smelling a business opportunity after the law's introduction, Wang Hai became a pioneer. In 1995, Wang, then 22, bought 12 pairs of fake Sony earphones in Beijing. With the help of media outlets that reported on his case, Wang won a few thousand yuan in compensation after a few months.

Soon, the fight against fakes became his main focus. He focused primarily on knockoff leather shoes and belts sold in shopping malls and was earning up to 8,000 yuan a week, a small fortune at the time.

In 1996, Wang established a company dedicated to squeezing money from counterfeiters. It quickly grew to have 200 staff members and has branches in Tianjin, Nanjing in East China's Jiangsu Province and Shenzhen in South China's Guangdong Province. Wang revealed that his company earned over 4 million yuan ($611,000) from online fakes in 2015.

Liu Dianlin left Wang's company in 1999. For the past 20 years, he has been paid by over 100 domestic and overseas companies to combat companies faking their products, and has cracked down on hundreds of factories and warehouses, and helped police bust over 20 suspects. He said that he earned over 5 million yuan in 2015.

Wang's success inspired a whole industry devoted to getting cash from fraudsters. However, the battle can sometimes turn into a real fight.

Three of Liu's inspectors were attacked and brutally beaten while investigating an underground factory in a village in Guangdong in 2002.

Latest model

The boom in e-commerce has provided the "fakes fighters" with thousands of new targets. A State Administration of Industry and Commerce inspection of e-commerce platforms including, and Tmall in 2014 showed that 41.3 percent of the 92 products examined were fake. The Nandu Daily reported that the compensation expenditure of one e-commerce platform was 400,000 yuan in 2014 and this increased to over 10 million yuan in 2015.

Moreover, after a new Advertisement Law took effect in September 2015, it provided new grounds for people to make complaints against vendors, with phrases such as "the most," "the only," "the top one" and "first class" being banned. 

According to media reports, the Yuexiu district court in Guangzhou, Guangdong Province said it has received 126 cases of online shopping disputes since January 2015, in which all the plaintiffs are professional "fakes fighters."

Disputes over this industry have been circulating on the Internet. The economist Li Yining released an article in 1997, saying that Wang's business model has no faults and the more such companies appear, the less the counterfeits there will be. 

However, many people said that people who know products are fake but still buy them to earn money should not be supported.

Gan Qibin, a deputy to Anhui Province's provincial people's congress, said in a local legislative session that "fighting against counterfeiting has become some people's tool of reap fabulous profits and it has deviated from the original intention."

Nandu Daily

Posted in: Society

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