U.S. shoemaker faces Chinese 'gall factor'
From CNN's Eunice Yoon
SHENZHEN, China (CNN) -- U.S. athletic shoemaker New Balance is worried about China.
In this nation known as the factory floor of the world, the Boston-based firm says not only are its goods being counterfeited, but its stores are being copied as well.
New Balance is running into a problem that multinational companies from Louis Vuitton to Warner Brothers face when operating in China -- copies of their trademarks and copyrighted products.
Harley Lewin, an intellectual property rights lawyer based in New York, represents New Balance in its fight against upstart Chinese brand, New Barlun.
"New Barlun represents a quantum leap in the, I probably should say, gall factor or cheeky level of counterfeiters," says Lewin, chairman of trademarks and global brand strategies group Greenberg Traurig.
The name may look different from New Balance in English, but said in Chinese, it sounds the same.
What's more, New Barlun shoes, shoeboxes and the layout of the stores are nearly identical to the American company's.
New Barlun even franchises its business, exporting shoes to New Balance's key markets such as Japan.
Like so many other companies, New Balance is investing heavily in China, lured by its low cost labor and huge market potential. Eight of the firm's 15 footwear factories are located here.
Private investigator and former New York police officer Ted Kavowras spends his days tracking down copycats for companies like New Balance.
"Because China is a manufacturing base, it's easier for counterfeiters there to access genuine or genuine look-alike components to make higher grade counterfeits," says Kavowras, manager of Panoramic Consulting Limited.
"Sometimes it is almost impossible to tell the difference."
Kavowras' agents went undercover to show how easily a Chinese customer could mistake New Barlun for New Balance -- from the store layout to the advertisements to the shoeboxes and shoes.
Even the catalogs look similar, with New Barlun claiming that it is "the brand from the U.S.A."
Stories like these are worrying the United States, which recently added China to its priority watch list for "unacceptable levels of counterfeiting and piracy."
So-called "intellectual properties," in the form of counterfeit DVDs and CDs, have long been a point of contention between the two countries.
Many U.S. corporations are urging the Bush administration to take China to task at the World Trade Organization -- a move that could considerably strain relations between Washington and Beijing.
"We know that the global problem is probably $600 billion or more in magnitude, of which China represents 60 percent of the global problem," says Myron Brilliant, vice president for Asia with the U.S. Chamber of Commerce.
"It's being manufactured in China, counterfeiting and piracy. It's being exported around the world and certainly into the U.S. market, so the U.S. companies are very concerned."
New Balance is so concerned that it has filed suit against Qiuzhi sports goods, believed to be the owner of New Barlun, based in Fujian, China.
Qiuzhi denies it has done anything wrong.
A representative said the company designs its own products and insists its licenses are legitimate. She says her company ditched the New Barlun brand long ago.
CNN tried to speak to someone at New Barlun's incorporated company in Hong Kong, but despite repeated efforts, they declined an interview.
Kavowras' cameras filmed three New Barlun stores on May 11th and 13th. The investigator and attorney Lewin said stores open and close so quickly that pinning down just who owns them is almost impossible.
"It's a licensing trick. It always reminds me of the child game that you see at the arcades with the little brown fuzzy thing that pops up out of a hole and you sit with that mallet and you hit it and another one pops up and you hit it. And if you move fast enough, you win. This is much like the issue here," says Lewin.
The Chinese government says stomping out the counterfeiters takes time, as was discussed in January by Vice Premier Wu Yi.
"Protecting and improving intellectual property rights is not a one-off matter. In our country, where the economic and technological development is low, we especially need the government, businesses and consumers to work hard together to change the current intellectual property rights situation."
Part of that change is being spearheaded through public awareness campaigns.
In February, Beijing hosted an anti-piracy concert with over 100 pop singers urging fans not to buy pirated music and movies.
"China takes copyright protection work very seriously. This is seen from the last ten years of laws and regulations which have developed quickly. We have strengthened legal enforcement in the market," says Liu Jie, deputy director of China's general administration of press and publication
But Lewin says China could do more. He says the government is hamstrung by its desire to keep its 1.3 billion people employed to maintain social order.
"Governors or mayors of various cities that have risen through the ranks rise because they keep their local towns employed. If you were the government and were to suddenly clamp down on counterfeiting, you would put an awful lot of people out of work," he says.
Companies like New Balance hope China's growing economy will help ease the problem.
They believe as China's consumers get richer, more will opt for the real thing.
New Balance plans to expand from 100 stores today to triple that number by the end of the year.
"I think the Chinese consumer is a little bit more savvy than some people give them credit for," says Joe Preston, vice president international and Asia-Pacific for New Balance.
"New Balance is a performance athletic brand with its foundation based on technology so the more we can educate the consumer on what the real New Balance is, the easier it is for them to make the differentiation between new balance and a counterfeit."
And for some it's not hard to tell the difference.
We gave Kenyan marathon champion Henry Wanyoike a pair of similar model shoes from both New Balance and New Barlun.
And though he's blind, Wanyoike picked out the New Balance shoes right away.
The New Balance pair retails for $58 while New Barlun goes for roughly half of that.
At the end of the day, closing down the counterfeiters is a responsibility that all consumers share.
"Everybody has a little bit of larceny in them, everybody likes a good deal. But this is no different than a guy who takes a gun and walks into a little shop and holds it up and says, 'gimme your money'," says Lewin.
Find this article at:
edition.cnn.com |
