Counterfeit Wine Producers Arrested in North China: Reports Suggest Increased Counterfeiting on Mainland Driving Hong Kong Sales Increases

Counterfeiting of branded goods in China is an old story. Foreign companies have complained for years, with mixed - though mostly poor - success. The government has taken steps to rein the practice in, but there is simply too much money to be made and too few resources available to curtail it.

On January 19 the annual Spring Festival holiday began, during which tens of millions Chinese return home to visit relatives. It is also a huge spur to shopping as people buy gifts for their friends and loved ones. Recent reports suggest that retailers in Hong Kong are seeing an even larger than usual influx of mainland shoppers due to increased counterfeiting. The attached article from CRIEnglish.com speaks to counterfeit wine (liquor sales are among those that skyrocket during this holiday), but baby formula, electronics and even currency are alleged to have been affected this year.

As China begins to create more of its own intellectual property, there is growing concern in the Chinese business community about counterfeiting of goods by their fellow countrymen. They now have more of an incentive to better police IP violations. Foreign companies may take cold comfort from this development but it signals that change may be driven by internal demand.

The CRIenglish.com story follows:

"A number of suspects have been arrested for producing counterfeit and substandard wine in China, the country's food safety authorities said Friday, as the Spring Festival approaches and liquor sales boom.

The business licenses of six wineries have been revoked and nearly 75 tonnes of counterfeit and substandard wine have been uncovered since a nationwide crackdown began last month, the State Council's food safety commission said.

The crackdown came after it was reported some wineries in Changli County in north China's Hebei Province had made adulterated products.

Authorities have checked 895 wineries across the country and the crackdown is ongoing.

Authorities in Hebei Province shut down nearly 30 wineries last month.

China Central Television Station (CCTV) footage showed a sales manager in admitting some of the county's wine was only 20 percent pure, with the rest being water and chemicals, such as color additives and citric acid.

Changli County has nearly 100 wineries. It is known as a wine distribution center.

The State Council, China's cabinet, set up the food safety commission in February last year, showing the government's determination to address the country's food safety issues.