Very interesting LA Times article on China’s fake pen business (h/t to IP Dragon who does a consistently amazing job ferreting out China IP stories). The Times’ article is entitled, “Fake pens write their own ticket: The art of making writing tools goes back far in Wengang, China. Now counterfeiting branded products is a fine art there.” The article does an excellent job of conveying China’s current status regarding counterfeiting.
The article starts out by talking about how China has adopted stringent anti-counterfeiting laws and “knockoff markets in large coastal cities such as Shanghai and Shenzhen have been shut down or pushed underground.” However, things are very different in inland China and in places like Wengang.
Wengang is China’s historical and current center for pen production, both legitimate and counterfeit:

The town, in southern China’s Jiangxi province, has been making writing implements for centuries. Famous calligraphers and poets such as the Tang Dynasty’s Wang Bo looked to this place for their maobi, or brush pen.
In more recent years, villagers not only cornered the nation’s market in maobi but also added metal pens to their repertoire. Today more than 2,100 businesses in Wengang (population 70,000) make brush pens, and 1,000 others produce ballpoint, fountain, gel-ink and other modern pens, says the China Writing Instrument Assn. In 2005, the town made and sold roughly 7.5 billion brush and metal pens — enough to supply one to every person on the planet, and then some.
Zhou Guosheng, Wengang’s Communist Party secretary in charge of press affairs, says the growing pen trade has boosted the town’s annual per capita income to $800, about half the nationwide average but better than that of other villages in this relatively poor and hilly province. Zhou insists that Wengang isn’t making counterfeit goods. “Most factories are producing their own brands,” he said.

The article describes Wengang as underscoring “the intractable state of affairs in China’s long-running battle against knockoffs” and likens it to “counterfeit production hubs” elsewhere in China — “auto parts in Taizhou, cosmetics in Chaozhou, pens in Wengang.”
According to the article, counterfeiting in China is no better than “before:”

In a survey this year by the Quality Brands Protection Committee, an industry group made up of 164 multinational companies operating in China, 70% said the situation was worse than or the same as before.

“Chinese scholars and government officials” beg to differ and cite the fact that “Chinese courts took on nearly 20,000 civil and criminal cases related to such protection last year, up from about 13,000 two years earlier.”
What I found most interesting about this article is the apparent recognition by Chinese manufacturers of the need for them to build up their own brand:

It’s true that many more manufacturers in Wengang, like those in other industries throughout China, are trying to build up their own labels.
“We all know counterfeiting is not the right road to long-term success,” said Luo Qinghua, president of Paiya Stationery Co., which makes Diyuewen fountain pens. Luo, whose family has been making brush pens for generations here, said all of his products were for export. Though he wouldn’t allow a visitor to walk through his factory, Luo said his 100 employees weren’t pirating famous brands.
“It’s not worth the risk,” he said.

The Parker Pen Company aggressively fights this piracy in China by going after wholesalers and retailers, but in the end, the problem goes back to Wengang, where pens are too important to the local economy to quash:

Over the last two years, Lou [Brian Lou, Parker’s IPR protection supervisor in Shanghai] says, the [Parker] company has filed about 300 lawsuits, winning more than 90% of the cases that have closed and sharply reducing the supply of fake Parker pens in the Chinese market. But sometimes judgment awards are so small they’re not enough to pay investigative and legal costs.
In some instances, Lou noted, counterfeit pens are so well made that even investigators struggle to determine their authenticity. At some wholesale markets in Guangdong province, counterfeit Parker products that retail for $8 each can be bought for about a dime.
Lou and his team would like to stop the supplies at the source, but most see little hope of doing that any time soon, especially in a town like Wengang where the pen industry — real and counterfeit — is its economic lifeblood.
Local officials “need financial income like taxes. They want to resolve employment problems,” said Kevin Koo, an IPR lawyer in Shanghai who has handled cases for Parker. “The central government will not push local government to crush that.”

For more on counterfeiting in China and on how to fight against it, check out the following:
Nike On China IP Protection: Just Do It With Green Tea,” on Nike’s superior handling of its IP portfolio in China.
Protecting Your China IPR — The Best Offense Is A Good Defense
Protecting Your IP in China,
Update To China: Counterfeiting And Piracy — The Issue And The Challenge.
Adidas On China IP: Just Do It.

Photo of Dan Harris Dan Harris

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network.  His work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

He was named as one of only three Washington State Amazing Lawyers in International Law, is AV rated by Martindale-Hubbell Law Directory (its highest rating), is rated 10.0 by (also its highest rating), and is a recognized SuperLawyer.

Dan is a frequent writer and public speaker on doing business in Asia and constantly travels between the United States and Asia. He most commonly speaks on China law issues and is the lead writer of the award winning China Law Blog. Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed Dan regarding various aspects of his international law practice.

Dan is licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at his firm, Dan focuses on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.