The Silk Road of Counterfeits
Xinjiang, literally, the New Territory, is the westernmost province of China. It borders countries like Mongolia to the northeast, Kazakhstan, Kirgizstan, Tajikistan, and even Afghanistan to the West. This province, famous for being the home to the Turkic minority known as the Uighurs has been for centuries a land of commercial, military and cultural transit connecting the East to the West. The trade route that crosses sand dunes, arid plains with interspersed oasis, climbs up arid mountain chains culminating in green pastures and fir forests topped by snow capped peaks, has also been famously known as the Silk Road.
In spite of being thousands of kilometers away from the industrial hubs in the East and the Southeast of China, like Guangdong, Zhejiang or Jiangsu provinces, this frontier region has recently gained of importance in the logistic planning of China's counterfeiting syndicates. Hammered by relentless intellectual property enforcement raid actions and custom seizures in the East, counterfeiters are increasingly choosing the long trip to Xinjiang as the most viable alternative to the traditional shipping routes. Their hope is to trade the economic and logistic burdens of transporting the goods to the other side of the country, with a safer passage into Central Asia, from where their counterfeits can easily reach the West, and Europe in particular.
In response to this, the Chinese enforcement agencies in Xinjiang are stepping up their game. However, enforcement efforts are challenged by the geographical, administrative and political peculiarities of this region.
Immense and Porous Borders
In the East of China, most counterfeit manufacturing and warehousing happens near key ports like Shenzhen, Xiamen, Ningbo and Shanghai. Even when counterfeits are made elsewhere they will end up being traded and shipped from provinces like Guangdong and Fujian, loaded on vessels to their final destination abroad. In the face of huge challenges, China Customs and port authorities have gained a lot of experience in fighting counterfeiters and use modern systems for tracking down and seizing containers loaded with fakes. In the West, the border crossing will happen by land instead. The immensity of the land and its impervious nature offers counterfeiters opportunities to cross at unchecked points along thousand kilometers of unguarded borders. Even at official crossing points controls maybe less frequent and the local authorities less experienced than their colleagues in the East and South of China. Once the counterfeits sip through the Chinese frontier and arrive on the other side, there will not be any more chances to stop them goods from reaching their final destination.
The Infringing Landscape in Xinjiang
In the East and the South East of China most enforcement raids target factories and warehouses connected to distribution networks. Therefore, it won't be so difficult to sight targets for administrative or police enforcement. Of such enforcement there is aplenty in these regions of China. In the West, however, there is no comparable industrial infrastructure that could meet the high demand for counterfeits' production. Therefore, there will be little or no factories to raid. Most counterfeits in Xinjiang arrive from the rest of China for the purpose of crossing the borders. Therefore, warehouses will be the main target of investigators and enforcers. There are also two types of warehousing to consider. One is the traditional warehousing for temporary goods storage, the other are so called Foreign Trade Warehouses. The latter are bonded warehouses that facilitate custom clearance for goods that are to be exported aboard. Considering the vastity of the territory, counterfeiters have almost infinite options to find storage for their goods while deciding where to cross the border. Tracing and raiding these warehouses can be dauting. Chances of sighting fakes increase if an investigator is allowed to roam free in a Foreign Trade Warehouse and check the goods in there. In that case he could sight counterfeits and alert the brand owners. These will then file a complaint to the local police or administrative authority to go and quickly seize the bonded goods. Speed is of essence as counterfeits will be loaded and sent to the border within 48-72 hours from their arrival in the Foreign Trade Warehouse. The major difficulty with warehouses is that neither the administrative authority nor the police will actively look for counterfeits there except for periodical clean up operations. Therefore, right holders ability to raid targets depends on whether they can have their investigators access those places and sight the infringing goods before they cross the border. Success will depends on the individual relations between officials and the right holders on the ground, and on the intelligence network that a right holder is able to build in this region. All this, and the lack of initiative by the Chinese enforcement authorities without a complaint by the right holder, makes enforcement scarcer in this region compared to the other parts of China.
Political Factors
When you prepare launching a raid action in Xinjiang you must consider whether the people involved might belong to the local Muslim minority. There is always a fear that the arrest of Uighurs involved in counterfeiting raids might be a pretext for unjust punishment and treatment because of their status compared to a counterfeiter of Han ethnicity. Right holders are aware of these issues and tend to be more cautious when cases take place in Xinjiang. This adds complexity to an already challenging enforcement work.
Conclusions
My very first case in Xinjiang was back in 2012. It was a difficult case because someone had leaked the impending enforcement action we had carefully prepared to the infringers. When we raided the warehouse the counterfeiter had erected a plaster wall to hide the entrance to the warehouse we wanted to raid. It took us a while to convince the police that the white plaster wall had not been there the day before! Eventually, the police agreed to drill the wall and indeed they ended up raiding thousands of counterfeits goods and arresting a gang of counterfeiters. For a while I did not have cases in that province. During the COVID-19 pandemic we started receiving more and more intelligence of a what appeared a trend rather than isolated episodes of "migration" of counterfeit transports from the East to the West. That is when we started rebuilding our network in Xinjiang. By 2023 we started to have the first enforcement cases again. Fast forward to the past weeks, and we reported record seizures in warehouses near the border with Kirgizstan. In two raids a couple of weeks ago we assisted the local police in the seizure of over 200,000 counterfeit fashion and apparel products of different brands for a retail value close to US$10 millions. This shows how important Xinjiang has become to counterfeiters.
It will be therefore critical for right holders to partner with experts that have a good investigative and enforcement network in this region!
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