Fake-brands crackdown nets 73 counterfeiters

Police from China and the United States arrested 73 suspects after a joint operation targeting an international gang making and selling fake brand-name bags, China's Ministry of Public Security said on Sunday.

According to the statement, the police seized more than 20,000 counterfeit bags bearing fake Louis Vuitton, Hermes and Coach tags, and destroyed 37 production and sales sites during a raid in May.

The gang had sold about 960,000 fake bags worth more than 5 billion yuan ($801.7 million).

Police also seized enough material to produce about 50,000 fake bags, and 91 bank cards and accounts used for receiving and transferring funds, the statement said.

"This is another successful joint law enforcement action between China and US law enforcers, which not only demonstrates the capability of Chinese police to combat transnational crimes through international law enforcement cooperation, but our firm stand to protect and fight intellectual property infringement crimes," Liao Jinrong, director of the ministry's international cooperation and communication bureau, told China Daily on Monday.

The case dates back to January, when residents in Guangzhou, Guangdong province, reported their suspicions to the police about an operation producing and selling fake brand-name bags.

Police then found that the main suspect, surnamed Qian, and some other suspects allegedly produced and smuggled fake bags to the US and Middle East countries.

"The fake bags have poor workmanship and a rough feel. The low-quality leather used has an irritating smell. The factory price for each bag ranged from only 8 to 55 yuan ($1.30 to $8.70)," said Li Shanxiong, deputy director of the economic crimes investigation department under the Guangdong Provincial Public Security Department.

Li said that the gang was run as a family business. A couple rented two stalls and a house to operate the leather goods business, and set up exhibition halls to display the products to clients.

Qian, the main suspect, also allegedly helped his relatives open seven processing factories in suburban areas of Guangzhou to produce fake bags.

"Qian was responsible for the overall operation, including contacts with US clients via online video meetings, arranging shipments, and capital flow through underground banks," Li said.

In 2011, a US client called Lin Hongwei visited Qian's shop and paid 50,000 yuan to order more than 1,000 fake bags. The two kept in touch via online video chats and Qian sent the bags by air cargo, the ministry's statement said.

Lin, allegedly a fake-leather wholesaler in the US, introduced several other US clients to Qian. As the business expanded, the suspects started operating additional illegal sites in Fujian and Anhui provinces. In May, Lin bought 3.33 hectares of land in Anhui, and planned to open factories there, according to the statement.

As air transport could not meet Qian's delivery demands, he hired a shipping agency in Shenzhen to transport the goods, and organized with the company to arrange for customs clearance, the statement said.

"The bags cleared customs as common leather goods," Qian said in a detention house in Guangzhou, according to video footage shown by China Central Television.

"I just thought that since this wasn't drug smuggling, if found, the punishment would be to seize the goods and some fines, rather than assuming criminal responsibility," he said.

After gathering evidence in May, the ministry exchanged information with the US Immigration and Customs Enforcement and proposed a joint investigation.

The ministry then ordered police forces in Guangdong, Fujian and Anhui to conduct the raid that destroyed the criminal gang.

"We'll continue to intensify efforts to combat intellectual property rights infringement crimes, as such cases hurt the public interest, the legitimate rights of companies, national innovation capabilities and China's image," a senior official with the ministry's economic crimes investigation bureau surnamed Gao said over the phone on Monday.

Wang Zhi, the director of the anti-smuggling department of Shenzhen Customs in Guangdong, said that only 5 percent of goods are examined by Customs, so it's inevitable that some smuggled goods escape supervision.