Chinese Factories Are Counterfeiting Their Own Clients’ Products

According to a recent story by Jing Daily, the Chinese e-commerce site, NetEase, is “now working directly with the manufacturers for brands like Gucci, Burberry, and Rimowa to produce unbranded items for [their website],” creating a whole new kind of gray-market headache for western labels.

While most Chinese counterfeit operations are run by criminal organizations and used to fund all sorts of nefarious doings, NetEase’s “business model” is completely above board, and actually helping to save a growing group of struggling-yet-capable Chinese factories, by allowing them to continue to make what they’ve always made, just without the designer labels attached.

It’s also making NetEase some serious bank. “According to NetEase’s Q4 2017 financial report, its e-commerce business… generated net revenues of $715.3 million,” the story says, while also adding that their goal is to “bump [that] number up to $3 billion.”

Of course, that’s knockoff-generated revenue. But, thanks to China’s intellectual property laws, which not only allow copycatting but actually seem to encourage it, the western brands being knocked-off have little recourse.

(The Jing article includes a very detailed and technical breakdown of the laws, which include things like ODMs, OEMs, and IP ownership. But in the interest of not putting you all to sleep, I’ll just sum them up as a uniquely nightmarish cocktail for brands trying to protect their product.)

On the other hand, you might be able to cop some *basically* Gucci mules for like $85, so there’s that.

You can read more about it at Jing Daily.

[image via]

  • An example of the cartoon principle of “If you can’t beat ’em, join ’em.”