Trademark counterfeiting has been called the crime of the 21st century, and China has long been identified as its global hub. Despite this, no academic studies have heretofore been produced that examine in detail the persons and entities involved in the business of counterfeiting in China. In his new book, Counterfeited in China: The Operations of Illicit Businesses, Ko-lin Chin seeks to fill this void, focusing on some of the most popular counterfeited products: luxury handbags, apparel and shoes. Chin’s arguments and evidence are convincing and portray an accurate picture of counterfeiting in Guangzhou consistent with my own experience.

Chin’s book is based on more than six months of research conducted over two years in the southern economic powerhouse city of Guangzhou, one of China’s hotbeds for counterfeiting. His extensive research includes 70 in-person interviews with counterfeiters, law enforcement officials, government officials, informants and private investigators. Fifty-seven counterfeiters took part in Chin’s interviews. The picture that emerges is that the business of counterfeiting is mundane and unglamorous; most counterfeiters lead tough lives, work unending hours, must constantly battle with traitorous employees or rivals, and live in constant fear of being caught by law enforcement officials.

Chin’s study dispels some common myths about counterfeiting in China. Some accounts, including some of my own, make claims about the formidable size and scope of counterfeiting in China that could be characterized as sensational. Chin argues that most of the people involved in counterfeiting lead unexciting lives, no different from their compatriots involved in similarly tough lines of business that are entirely lawful. Counterfeiters have low levels of education with most having less than a high school education. The business is extremely and viciously competitive: not only are counterfeiters competing with genuine goods, but they’re also in competition with other counterfeiters. Those who have successful counterfeits even find that other counterfeiters are copying their products. They constantly fear that their own employees will leave to set up a rival counterfeiting business.

Most operations are small, run by a few persons who are related by family kinship. They must remain small due to the risks of detection: if they become too large and successful they become targets for law enforcement. As their margins are very thin, very few counterfeiters become wealthy. But even those that do become rich avoid enjoying their wealth, for fear of detection by the authorities or being reported by jealous rivals. One man who bought a mansion with proceeds from counterfeiting rented it out and instead lived in a small apartment to avoid unwanted attention.

What becomes apparent is that this illicit business is well accepted and has become integrated into Chinese commerce. Counterfeiters are treated by other entities in the manufacture and supply chain as no different from legitimate businesses. For example, Chin explains how suppliers of raw materials such as leather do not distinguish between selling to a manufacturer that produces counterfeits and selling to those that produce lawful goods. An operator of a store that sells genuine luxury handbags will not differentiate between a buyer who is purchasing the product for her own use and a buyer who is purchasing the product to copy it and sell counterfeits. Store operators can quickly identify buyers who are counterfeiters but will not discourage them and will treat them like any other buyers. Landlords that rent out properties do not care whether the tenant sells genuine or fake goods. Counterfeiting and counterfeiters appear to be as well accepted in China’s fashion industry as their legitimate counterparts.

Another myth that Chin dispels is the role of organized crime in counterfeiting. Counterfeiting of luxury goods and apparel in China consists of thousands or millions of small and discrete businesses that are not organized or inter-connected in any systemic fashion. Links between counterfeiters rely on personal relationships and are usually transactions-based. Several studies, including some of my own, have argued that organized crime plays a central role in some areas of global counterfeiting. Chin’s research indicates that organized crime plays no role at all in the counterfeiting business in Guangzhou. Several counterfeiters interviewed by Chin explain that criminal organizations have no interest in the counterfeiting business because it involves hard work and the profit margins are low in comparison to more lucrative crimes such as smuggling and the sex industry.

I have no doubt that Chin’s description of the role of organized crime in Guangzhou and in the local trade in counterfeit goods in China is accurate. Purveyors of such goods in Guangzhou sell most of their wares to local buyers in southern China and there is little export activity (except in some cases to Africa). However, some counterfeit industries, such as counterfeit cigarettes, focus on exports to the US and other countries. The profit margins are high, rivalling those of illegal narcotics, but manufacturing and exporting counterfeit cigarettes to the US requires skills and resources that only a sophisticated organization can provide. Chin does not study industries that export counterfeit goods, so his conclusion that organized crime is not involved in counterfeiting, while accurate, is likely limited to the domestic sales of counterfeits.

Lastly, Chin examines the role of local government entities in enforcement against counterfeiting. The attitude of the Chinese government is that it will take some forceful action in order to appease foreign governments, but it has no interest in eradicating counterfeiting. The counterfeiters interviewed by Chin believe that the Chinese government could easily eliminate counterfeiting, but it has no interest in doing so as it would deprive many people of a livelihood and harm China’s local economies. Instead, the government tolerates counterfeiting so long as it is not too excessive and obvious. For these reasons, counterfeiters prefer to keep their operations small. Chin argues that government enforcement against counterfeiting in China increased in 2008 due to foreign pressure, and that this year signalled the end of the “golden era” of counterfeiting, which began after China’s entry into the World Trade Organization in 2001. During the “golden era” some counterfeiters became giddy from profits, but today counterfeiting is a tough, grinding business that has become all too mundane.

I would recommend this book to anyone interested in learning about the details of the counterfeiting business in the fashion industry in China.