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Tuesday, 7 May, 2002, 15:03 GMT 16:03 UK
Counterfeiting thrives in China
Chinese resident near WTO sign
WTO entry means more competition for China's industries
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By Peter Day
In Beijing, China

At first sight it looks like Russia when you drive along Treasure Street in the north-east suburbs of Beijing - Ya Bao Lu in Chinese.

Big signs in Cyrillic shout dozens of greetings - the shopkeepers call out in Russian to anyone with Western features.

But look closer, and there is a clue to where we really are.

Chinese street scene
Membership of the WTO will open China up to the free market
Outside some of the shops are transparent plastic cages full of white fluff blown round and round like those plastic toy snowscenes by a hidden fan.

The fluff is duck down, and those eyecatching signs (a bit like a barber's revolving pole) beckon the passerby to stop and examine the goods on display inside the rows of shops.

Warm downlined jackets from this land of village duckponds are among the array of clothing on sale at knockdown prices, to the bargain-minded middlemen from distant Russia.

Treasure Street

This is new, free market China, with its own problems.

There is a clue to Treasure Street's dirty little secret when you stop for a bite to eat.

The first restaurant we find is run by people from Wenzhoi, a long way from Beijing, in Zhejing province on the coast of south-east China.

The restaurant is a modest place, but seafood is the speciality and the little entrance is lined with tanks of live fish.

These are the treasures of Treasure Street. In another building, there are shops loaded with electronic goods and famous name Swiss watches at very unSwiss prices

This is significant. Wenzhoi is famous in China as the city of agile new entrepreneurs and private businesses.

It is also notorious for pirates. Not seadogs, you understand, but hundreds of little factories specialising in reproducing Western branded goods.

There are famous fashion labels, famous watches, famous jewelry.

And that is what I find on sale in Treasure Street after lunch, when we go up the stairs of a multi-storey building packed with hundreds and hundreds of little factory showrooms.

Each floor has a long corridor lined with open doors. But each doorway has a blue curtain hanging halfway down, printed with the name of the business within and the warning: "export only, do not enter without invitation".

Defy the sign, twitch aside the curtain, and the shelves of shoes or the hanging racks of clothes are revealed. The staff are used to their wares being inspected, and they volunteer prices by the tens and hundreds for the items on display.

They are pretty cheap to begin with, and are (if you want them by the 10 or by the 100) easy to bargain down.

Counterfeit goods

And, oh yes, they say, these are our labels, we are not copying anyone.

A little party of Russians look round the curtain, more likely to buy than I am.

As you hunt through the hangers of blouses, it does not take long to find some labels that are definitely Western. These might be copies or they might be genuine ones made in China but diverted here by underhand means.

The wholesale prices are certainly Eastern rather than Western.

These are the treasures of Treasure Street. In another building, there are shops loaded with electronic goods and famous name Swiss watches at very unSwiss prices.

There are fake toiletries, and lots of counterfeit CDs, videotapes and computer software. Rickshaw men wait outside to carry off the bulk purchases on their bicycles.

End of Treasure street?

But thriving though it is, it is not clear how much longer Treasure Street can go on.

China's entry to the World Trade Organisation means strong new foreign competition for its industries, which will now have to meet global standards, in all sorts of ways.

This push has already produced an interesting piece of local free enterprise.

Through a sky-darkening spring dust-storm, I drove to another suburb of Beijing to meet an ingenious campaigner for consumer rights, a rare bird in a country which has only recently discovered mass consumption.

Wang Hai was a student in 1995 when he stumbled on a new law that laid down that anyone who bought a fraudulent product could demand double his or her money back from the retailer.

Every consumer in China will encounter these counterfeit goods

Wang Hai, entrepreneur

So that is what he did, buying dozens of the fake goods easily available in Beijing, and then doubling his money by returning them.

Wang Hai is an entrepreneur, and he soon found a way of turning this stunt (which made him quite famous) into a business.

Serious business

What his company Wanghai Online does now is track down counterfeit goods and then advise the original makers how to stop the pirates pinching their profits.

"It is very serious here," he says, wearing his fake designer sweatshirt. "Every consumer in China will encounter these counterfeit goods."

But the question remains whether the authorities in that city of pirates - Wenzhoi (and other places like it) - will take kindly to being told by the national government to get into line with China's new status as a WTO member and prosecute the counterfeiters.

Protectionism of the kind opposed by the WTO is in China very much a local or regional affair; just because Beijing signs the WTO Agreement does not mean that local government officials in Wenzhoi will take it very seriously.

Meanwhile, does anyone want to buy a Swiss-style watch from Treasure Street? It has, of course, stopped.

Peter Day
"This is new, free market China, with its own problems."
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