Counterfeiting an Entire Company

We’ve talked about counterfeit money, counterfeit concert tickets, counterfeit police credentials, and counterfeit police departments. Here’s a story about a counterfeit company:

Evidence seized in raids on 18 factories and warehouses in China and Taiwan over the past year showed that the counterfeiters had set up what amounted to a parallel NEC brand with links to a network of more than 50 electronics factories in China, Hong Kong and Taiwan.

In the name of NEC, the pirates copied NEC products, and went as far as developing their own range of consumer electronic products – everything from home entertainment centers to MP3 players. They also coordinated manufacturing and distribution, collecting all the proceeds.

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Posted on May 1, 2006 at 8:02 AM • 16 Comments

Comments

Unixronin • May 1, 2006 8:30 AM

I suppose you could consider this corporate identity theft. Though really what they’re stealing isn’t so much the identity, as the brand recognition.

They do say imitation is the sincerest form of flattery ….

Kees Huyser • May 1, 2006 9:17 AM

This reminds me of the Japanese village of Usa (33° 27′ 14″N 133° 26’13E).
In the 1950’s they had a factory there that marked all products with “Made in USA” and they weren’t lying!

Carlo Graziani • May 1, 2006 9:49 AM

I can’t tell whether “Jim Dermitt” is a spambot or a mental clinic outpatient. I suppose the two possibilities are not mutually exclusive. Whatever this nuisance is, it’s driving the signal-to-noise on this blog to zero. Is there some way to shut it off?

Lou the troll • May 1, 2006 10:32 AM

@Carlo – Jim is at least three things: spambot, mental clinic patient, and maple syrup addict…

Lou the troll

David • May 1, 2006 10:46 AM

Heck, I currently work for NEC here in the US (or at least I think I do) and it makes you wonder how you can really be sure that anyone is really who they say they are and if they’re really authorized to do whatever you’re doing for them.

(disclaimer: I don’t speak for them and know nothing about this or even this whole line of business)

But, if I were a Chinese OEM Manufacturer and somebody wanted to hire me to make their products under their brand and they brought a bunch of realistic NEC labeled detailed engineering plans, had NEC business cards and wanted to imposed strict quality standards I could easily be deceived since many large companies work in exactly this way.

I’m not even sure how the manufacturer could verify that they’re really dealing with NEC. The company is so large that any inquiries (which, of course, had best be in Japanese) might just be made to the wrong parties who have no knowledge of your contract.

I could even see the fraudsters impersonating itself to other parts of NEC to gain legitimate OEM support for these manufacturers.

This is just as true for any large company from IBM to Microsoft to Dell.

I don’t see any way a large, complex fraud like this could be detected by the OEM manufacturer. I don’t know of consistent method for verifying this kind of thing.

greygeek • May 1, 2006 10:56 AM

OK, cut me in.

Where do I go to rent my social security number to a nice, hardworking illegal alien who will contribute a bunch of money toward my retirement? Of course, I’ll need to know them and their family so I can come back and turn the lot of them in to la migra if they duck out on an apartment or something that’s likely to get me in trouble.

Now, as for plausible deniability…

omni • May 1, 2006 11:13 AM

“These entities are part of a sophisticated ring, coordinated by two key entities based in Taiwan and Japan, which has attempted to completely assume the NEC brand,” So this is an operation managed by companies from Japan and Taiwan, Japanese counterfeit Japanese.

Anonymous • May 1, 2006 11:15 AM

Still in my “nature mood” i can only say: Nature uses plagiarism (counterfeit) all the time, to improve (continue) on good ideas, take the bad ideas out and make it better under one brand 😉

Joe Buck • May 1, 2006 11:48 AM

Matthew: but there is a real place that gets to falsely label goods as “made in the USA”, even though workers produce those goods under near-slave-labor conditions and don’t get minimum wage. It’s Saipan in the Northern Marianas, an island chain the US took from Japan in World War II. Thanks to Jack Abramoff and other lobbyists, the islands have some kind of special economic status, allegedly to help the islands develop but mostly to help make some well-connected businessmen rich.

Bruce Schneier • May 1, 2006 1:30 PM

“you remember that movie with Redford and Newman: The Sting…”

Yes.

I strongly recommend this book on the general topic: “The Big Con: The Story of the Confidence Man,” by David Maurer and Luc Sante.

Matthew Skala • May 1, 2006 2:59 PM

Joe Buck: Yes, the Northern Marianas Territory is discussed on the page I cited. I don’t think the quantities of goods involved are any significant fraction of the goods sold as “Made in USA” in the USA, however.

John M. Ford • May 1, 2006 11:22 PM

Imagine if they’d launched a NEC-branded game console, with a pile of cheap software (probably pirated abandonware, but that’s not necessarily a bad idea). Would NEC try to shut this down, or sigh and join in? Probably not, as nobody makes money off console sales. Still, it’s an amusing thought.

Anybody who says you can’t succeed selling fake maple syrup doesn’t shop in supermarkets. And hey, spammy, Melville’s “The Confidence-Man” is an allegorical novel. Maurer’s book is extremely well-researched nonfiction. (Sante only wrote the introduction.)

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