China Counterfeiting. Just One Among 1.3 Billion.

The PN China Blog recently posted on counterfeiting and poor quality products in China. The post is entitled, "A Monumental Blacklist" and it discusses why Chinese companies so frequently and confidently engage in unfair business practices (including counterfeiting) and what needs to be done to stop it.

The post starts out answering "why unethical business practices are so rampant and what counterfeiters thrive on" by quoting a Chinese friend who says "it's OK to burn your customers and not expect them to come back, because if you burn every Chinese person [of the 1.3 billion] once, you'll make a fortune already." PN China takes agrees there needs to be more accountability:

That's sort of true. But more fundamentally, it's because China doesn't have a credit monitoring system for individuals or record keeping agency for foul businesses. No Better Business Bureaus. Consumers are in the dark. Therefore, even if the bad businesses, mostly very small in scale, get exposed by the press, the owners often disappear overnight and start a new shop the next day.

Things are improving, "gradually:"

Thanks to the wave of recalls of Chinese-made products in the West, the Chinese government, worried about the export-led gross domestic product, started right away pushing for mechanisms that track product information. An unprecedented "Product Quality Credit Scores" database was launched January 15, 2008, by China's Administration of Quality Supervision, Inspection and Quarantine. "Focus on product quality and credit, establish good faith," it says on the Web site. Anyone can use the online system to search the records for a company name or product name as well as browse relevant laws, standards and announcements. The system has six channels, 17 sub-databases, and 430,000 records. It also keeps track of all recalls of made-in-China products by the U.S. Consumer Product Safety Commission.

PN China tested the database and found 831 problem companies listed and concluded it to be a "good starting point." It is right now in Chinese only and I am less optimistic about a database like this. I believe that for something like this to work (and something like this could work), it needs to be in both Chinese and English. It also should be run by a private company, not by a Chinese governmental entity, though China is reticent about allowing private companies (particularly foreign companies) to get involved in this sort of information dissemination. Most importantly though, there will have to be a better way to monitor the companies that shut down due to problems and then open again under a new name.