Faking a Company 262
gambit3 writes "What happens when pirating a movie, an application, or a game is not enough for you? Well, you take the next step and pirate a whole company. It happened to Japanese electronics giant NEC. Counterfeiters had set up what amounted to a parallel NEC brand with links to a network of more than 50 electronics factories in China, Hong Kong and Taiwan."
Re:This happens all the time... (Score:3, Insightful)
You know the guy with a garbage bag of the product is bullshitting you. But what if it was in the Sunglass Hut (tm) ?
Piracy means what again? (Score:4, Insightful)
Re:This happens all the time... (Score:5, Insightful)
This is just taking piracy to new levels. This would have taken a lot of effort, but I'm sure that it would be increasingly commonplace in years and decades to come.
As a few people have said, slapping a bodge label on a bodge product in a bodge market is something, but producing decent-quality products, as the article infers, in proper factories and sold in proper shops and retail outlets is another.
Re:This happens all the time... (Score:5, Insightful)
They were placing orders with factories using the NEC name. They commissioned R&D, their factories had NEC signs on the outside. They even designed and built their own products.
This is a huge step from the guy selling Oakley sunglasses. By faking the company and not just the product they were able to get their goods sold in legitimate outlets, right alongside genuine NEC products.
When you start to think about it, the scheme works on so many levels. Ordinarily you run a huge risk to create a factory producing fake goods and everybody in the factory shares that risk. That means it's massively expensive to set up and run, your staff are sub-standard and there's always the risk of blackmail. By creating a fake parent company and just ordering the goods from 'legitimate' factories, they bypassed all these problems. You've now got good cheap staff, proper management, and all in all a far more efficient service.
Even better, now the police can't prosecute these factories for producing the goods since they've done nothing wrong - they've just fulfilled orders as normal. Of course they'll have to stop production and will have their goods confiscated, but their insurance will cover that... The police have no choice but to go for the parent company. Fair enough you've now got to collapse that side of the operation but you've got nowhere near the costs. A few staff, some nice headed paper... sure beats loosing a factory.
Plus, you're no longer selling cheap pirated goods on the street. Instead you're able to charge full retail price.
In one fell swoop they've cut the costs of producing goods, made production more efficient, sold them at a higher price, and managed to legally insure the vast majority of their pirate production line against the risk of getting caught.
Genius, sheer genius. Yes it's illegal, but you can't help but be impressed. Somebody somewhere deserves serious Kudos for coming up with this.
Why target NEC? (Score:3, Insightful)
So which one is the real NEC? (Score:5, Insightful)
Just a thought. Seriously though, if I was NEC, I would try and by up the fake company and continue to operate it. you could probably get it for pennies on the dollar and you already have trained employees.
Re:This happens all the time... (Score:4, Insightful)
Perhaps these "official-looking documents", passes, ID cards, etcetera, *were* official. Perhaps they were just issued by the bizzaro-NEC that was stepping on the real NEC's name. That's could still be nothing more than trademark infringment.
There is nothing here that even resembles piracy, or copyright infringment, or theft. These people used the NEC mark, and the real NEC is pissed. These guys were able to exploit the ease with which NEC could close business deals for manufacturing, or marketing a product. They have been riding in on the coattails of a large company with an established brand *by infringing their trademark*.
Duck? (Score:2, Insightful)
Comment removed (Score:5, Insightful)
Chain of trusted sources (Score:5, Insightful)
One of these friends said "Wow, I am sure am glad I get my NEC stuff from a reputable online dealer, like Newegg!"
My question is, where'd Newegg get these drives? Did their distributor vouch for the goods? How about their distributor's distributor or the originating factory?
When somebody up the chain said "I _KNOW_ these are good drives" and vouched for them, then that product carried that credential all the way to the end users and that's what we're trusting. But we don't know, really.
"It came from Newegg" might be nice sentiment but Newegg probably has no idea if they were selling fakes or not. I don't think they would knowingly do so, of course. That kind of cheap money is not worth the hassle with an IPO in the works.
wow (Score:2, Insightful)
In other words: The criminal version of "embrace and extend". Plus, of course, it avoids direct comparison which would threaten the appearance of authenticity.
Genius, pure genius.
Also note that the article says the goods were generally of good quality. I wonder if NEC - provided they had known about these before starting criminal investigations - would've simply bought them out instead, expanding its product line at the same time.
Re:Wow, that is so cool (Score:3, Insightful)
The advantages are now need for marketing, a well built up brand, and not having to provide warranties or support.
Quite simple (Score:5, Insightful)
1) Buy generic mp3 player innards off general market for next to nothing
2) Wrap iPod shuffle lookalike plastic
3) Sell as iPod
4) Profit
Compare with business case number 2:
1) Buy generic mp3 player innards off general market for next to nothing
2) Pay designer to design a cool funky faux iPodesque white plastic exterior
3) Pay huge international marketing firm to make worldwide humongously expensive marketing campaign
4) Rummage through garbage for scraps of food, use cardboard for shelter
Re:This happens all the time... (Score:3, Insightful)
Why would you even question it, unless they came of rather dodgey.
Comment removed (Score:5, Insightful)
The next level in corporate deniability: (Score:3, Insightful)
Bleeding heart liberal type: You're running sweatshops and paying 12 year olds 10 cents for an 18 hour working day! You're pumping toxic chemicals into the drinking water supply! You're making defective products that explode and kill people! You bribe politicians!
Your factories are run by fascist thugs who hire death squads to kill union organisers! And we have proof this time! You're going to jail at long last!
CEO of MegaCorp, your friendly neighbourhood planet-raping multinational: Errr umm
Third World Workers: Sigh. Shafted again...
Re:Quite simple (Score:2, Insightful)
The people that do this ARE organized crime. John Smith, engineering degree from XYZ college, who has a wife and three kids and used to work salary for a legit business doesn't wake up one morning and start a business like this.
No, its Joey Fishhooks who starts this sort of thing. He's already organized crime, and he doesn't bat an eye at dealing with that crowd.
Chinese learning capitalism well (Score:3, Insightful)
Re:Format of text (Score:3, Insightful)
The International Herald Tribune has had this layout for several years and were pretty early adopters of using dhtml to allow the readers to save articles and also modify the size and format of article text.
Anyway, the wide 3-column format usually allows for much more text than the traditional one-column variant, at least with the wide margin that the latter comes with.
Re:MP3 Players, too (Score:5, Insightful)
Or like virtually every notebook manufacturer (including Apple), assembling their notebooks out of Chinese OEM parts?
Do you know why Chinese 'piracy' is so rampant? Because all the products are made in China anyway. One factory produces the 'brand' product during the day and the 'pirate' product after-hours. Of course they're completely identical.
I mean think about it, if you were a Chinese company manufacturing electronics, and you see how the stuff you design and produce is sold for ten times the price that brand X pays you in the West, you'd start to wonder a bit too.
If the products were designed and produced in the 'West', this would be much more difficult. But the corporations don't care. They still make a huge profit by sticking their brand name on Chinese stuff and selling it for a huge markup.
Re:Quite simple (Score:3, Insightful)
No, its Joey Fishhooks who starts this sort of thing. He's already organized crime, and he doesn't bat an eye at dealing with that crowd.
Maybe there's some crossovers:
John Smith, with engineering degree from top-ranked XYZ University, works salary for a legit business. One morning, he wakes up and realizes he's put in a lot of work for a pathetic salary, year after year of "Your work was great, but there's no money in the budget for a raise for you. Sorry. Maybe next year. Oh by the way, sorry, but the great product design you worked on all year is being canned.", while his neighborhood garbageman is making the same salary. Then he realizes that through his contacts in China, and his EE expertise, he could design iPod shuffle knock-offs and have them manufactured in China for pennies on the dollar, and his old friend Joey Fishhooks from high school might know how to make a (illegitimate) business out of this.
John and Joey team up, make Shuffle knock-offs and sell them on Ebay for a huge profit. Just before the Feds catch up to him, John moves his family to beautiful Costa Rica and lives a life of luxury while the Feds wonder where he went to.