(by Charles Hurt in Washington, DC, and Bill Sanderson in NY, NYPost.com) – While we were toasting China’s President Hu Jintao at the White House [Wednesday]…his nation’s factories continued to pump out billions of dollars worth of counterfeit goods that were being sold right on the street in lower Manhattan and across the nation on the Internet.
On Canal Street, a vendor with a table full of knock-off designer handbags brazenly peddled a supposed Coach handbag to a Post reporter for $50 — far from the price of the real bag, the US-based firm’s Madison line, which sells for $698 in stores.
US Customs officials have determined that 90 percent of these fake goods, from pharmaceuticals to knock-off handbags, originate in China’s factories — robbing US firms of profits and workers of jobs.
“China is the source of a great deal of trademark counterfeiting, including fake drugs, knock-off handbags, and phony everyday consumer products. These products are often of low quality or dangerous to health and safety,” said Steve Tepp at the US Chamber of Commerce’s Global Intellectual Property Center.
Tepp said China’s counterfeiters have found even greater profits peddling their wares on the Internet, which he estimated generates $135 billion in annual sales.
“The losses from all this criminal activity steals jobs from the US businesses that lose out on legitimate sales,” Tepp said.
Small businesses, like David Pearl’s Uniweld, are fighting an uphill battle against the counterfeiters.
The Fort Lauderdale, Fla.-based manufacturer of high-precision pressure gauges used by mechanics and refrigeration repairers said he loses about $1 million a year to the pirates.
“We are getting hammered,” said Pearl, who employs about 250 people in his US factory. “They fully counterfeited everything, down to our box with our name on it. They have no scruples whatsoever.”
But intellectual property rights got short shrift at Hu’s official state visit with President Obama yesterday, with security and currency issues getting top priority.
Indeed, the only real concession Obama wrangled from Hu was a promise that Chinese state agencies would audit their software libraries in a bid to purge their own pirate files.
“As we look to the future, what’s needed, I believe, is a spirit of cooperation that is also friendly competition,” Obama said during a rare press conference in which Hu answered questions.
Hu, according to Obama, showed a “willingness to take new steps to combat the theft of intellectual property.”
Skeptics, however, doubted that this new willingness would do much to stem the flow of fake bags or the blatant copying of American innovations in high-tech and manufacturing.
“This is ingrained in Chinese business culture. They don’t respect intellectual property,” said Eric Corl, who runs an online intellectual-property marketplace called Idea Buyer. “The problem comes when these products make their way into the US supply chain.”
Additional reporting by Jennifer Fermino, Chuck Bennett and Post Wires.
Reprinted here for educational purposes only. May not be reproduced on other websites without permission from The New York Post. Visit the website at NYPost.com.
1. Define the following words as used in the article:
counterfeit/counterfeiting (from para. 1, 4)
knock-off (from para 2, 4)
scruples (from para. 9)
intellectual property/intellectual property rights (from para. 10, 13, 15)
2. a) What percent of fake U.S. goods are made in Chinese factories?
b) How much do Chinese counterfeiters make from selling their knock-offs over the internet?
3. What types of U.S. products do the Chinese counterfeit?
4. How does the Chinese practice of counterfeiting U.S. products hurt U.S. businesses and U.S. workers?
5. How can fake pharmaceuticals (medicine) harm Americans?
6. a) Define “short shrift” as used in para. 10
b) Why do you think intellectual property rights got short shrift at Hu’s official state visit with President Obama?
7. U.S. businessman David Pearl, who employs 250 Americans in his U.S. factory, loses $1 million a year to Chinese counterfeiters. He says “They [the Chinese] have no scruples whatsoever.”
Eric Corl who runs an intellectual-property marketplace says of the Chinese “This is ingrained in Chinese business culture. They don’t respect intellectual property.”
How do you think the U.S. president should deal with the reality that the Chinese government permits this to continue, knowing that their citizens are breaking U.S. intellectual property laws?
8. Many Americans do not hesitate to buy knock-offs, saying Coach or Nike, etc. charge too much for the original product. After reading this article, does it change your mind about purchasing counterfeit products? Explain your answer.
More from the NYPost article:
- Dignitaries and celebrities, including Jackie Chan, Barbra Streisand, designer Vera Wang, and former Presidents Bill Clinton and Jimmy Carter, dined on pear salad with goat cheese, lobster, rib-eye steak with double-stuffed potatoes, creamed spinach, and apple pie with vanilla ice cream.
- Before the dinner, Obama [won] agreements to help US companies trying to crack into the Chinese market.
- China agreed to scrap its government’s “indigenous innovation” policy of only purchasing Chinese-made goods and agreed to an export deal worth $45 billion, including $19 billion for the purchase of 200 airliners from Boeing.
- At a joint press conference with Obama, Hu applauded the “positive, cooperative and comprehensive” relationship between the two countries and said he and Obama agreed “to strengthen exchanges and cooperation in economy and trade, energy and the environment.”
- “We champion free trade and oppose protectionism,” Hu said.
- On another thorny issue, Hu made a rare admission on human rights. During the press conference, he said China had made enormous progress but surprisingly conceded that “a lot still needs to be done in China in terms of human rights.”
- On currency issues, Hu said only that China would slowly adjust the value of its currency, but many say its pace is too slow as it continued to give its exporters — both legitimate and illegitimate — a competitive edge.
- “I absolutely believe China’s peaceful rise is good for the world, and it’s good for America,” Obama said, addressing a major concern in Beijing that the United States wants to see China’s growth constrained.
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