Faking a Company

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...

[jrmcferren]

Don't forget Duracell with Durasell, Dynacell, Duraking, and so on.

The IHT Goole AD says it all

[arivanov]

Well... The ad on the article says it all:

• 
  Product Sourcing
  Buy Risk Free From China IVELL - Global product sourcing
  www.ivell.com

and

• 
  Quality Manufacturing
  Plastic, electronics and metal UK Management, Chinese Factory
  www.motiontouch.com

More Questions anyone?

Re:This happens all the time...

[absent_speaker]

Not quite. While Oakleys, Rolexis and other knock-offs have been manufactured for a while, this is a whole different ball game. These individuals actually lease property, negociate with suppliers and establish sales relationships in the name of NEC. They do all this under the flag of the firm's proper brand name, not some mispelling. Those are two very different scenarios. It's kind of a neat scam. It will probably inspire con-artists everywhere to try something similar. I could just imagine someone faking Hilton. They could order a large quantity of samples from a few suppliers - and pay upfront for the samples to build trust. The scammer later says they love the product and then order 5 cargo containers from each supplier on 30 days credit terms with a forged letter of credit. And then Bam! They disappear with a few million in goods to never appear again.

Re:not "faking a company"

[Whiney Mac Fanboy]

. To fake the company, one needs to fake offices, for starters, so people can walk up to the office with sign "NEC" on it without knowing.

TFA:

...the counterfeiters carried NEC business cards, commissioned product research and development in the company's name and signed production and supply orders.

He said they also required factories to pay royalties for "licensed" products and issued official-looking warranty and service documents.

Some of the factories that were raided had erected bogus NEC signs and shipped their products packaged in authentic looking boxes and display cases.

I suspect this is extremely common

[bobamu]

I was looking at a chinese electronics manufacturers page some time ago, and they had a bulletin board.

One of the posts effectively consisted of "Can you make me some tv's branded panasonic and send them to north africa"

Tip of the iceberg, perhaps.

Neat!

[mano_k]

And I thought the guys who claimed to work for the railway company and started removing the rails of an abandoned line not far from where I livedhad been something!

The hired local companies for transport and even distributed leaflets to the people in the neighbarhood informing them of the upcomming works! They made some money from the scrap iron before anybody noticed!

MP3 Players, too

[Killshot]

An aquaintance recently went to China to visit a factory that makes the sony bean mp3 players. They told him they could make the players for him and just leave the sony logo off it. He then plans to sell them on ebay.

I tried to explain how bad an idea this was and how there are so many other legal ways to invest your money, but he wouldnt hear it.

Re:A school project

[kartack]

I'm no legal or finical expert however, wouldn't your 10 000 friend be legally required to pay taxes on their $1 000 000 of stock? I was doing a quick look at the fortune 500 FAQ, market cap is equal to the number of shares times their value as of such and such a date. Therefore, the shares have to actually be worth $1 000 000 or you company will have a market cap of $0. If they are therefore worth $1 000 000, then your friends have each been paid $1 000 000 and would be required to remit taxes on it. Since the stock is really worthless, in that they can't sell it to anyone, they would have to use other sources of income, aka their real jobs, to pay for the tax on that $1 000 000. Good luck finding your 10 000 friends willing to do that. I don't think the taxation office takes "it was a joke" as an excuse for not paying.

Chinese counterfits are excellent

[Oldsmobile]

Everytime I go to China I always buy a ton of counterfit goods. The stuff is quite often of excellent quality, sometimes even better than the original. I am talking about things like shoes, bags, clothing etc.

I am not so sure about electronics and counterfit media, except for movies, that are usually DVD rips. DVD rips actually work better than commercial DVD's as they don't have encoding on them -so no complaints there either.

I heard from a reliable source, that many western companies have been forced to enter the Chinese market by counterfitters presenting them with products identical to their own at trade fairs.

They have the choice of getting into a joint venture, or competing with a counterfitter at unequal terms. Or rather, not much choice at all.

Re:Chain of trusted sources

[Detritus]

Counterfeit goods are more likely to show up at retailers that don't buy from authorized distributors. The companies that specialize in inventory liquidations, overruns, excess inventory, etc. They can be fooled by a smooth salesman with a genuine-looking product at an attractive price. Some don't need to be fooled. They know they are selling counterfeit merchandise and do not care.

Cisco suffers a great deal from this

[puzzled]

    A WIC-1DSU-T1-V2 is $1,000 list, $700 or so to a small reseller in distribution, and $400 for a clean used unit from a reliable aftermarket dealer. Go look for that part number on Ebay and check out how new boxed product is 15% of list price ... this stuff is everywhere and it basically drove me out of the Cisco aftermarket.

The Yes Men

[Brackney]

This is news? The Yes Men have been doing this for a long time. http://www.theyesmen.org/ [theyesmen.org] Pure genius. :)

Fake Slashdot, too...

[Maljin Jolt]

In China, they have a fake Slashdot, see slashdot.cn [slashdot.cn], registered to [e-mail]. The website even keeps crashing my firefox-1.5.0.2 on linux box.

Re:Quite simple

[putaro]

Who's raising money? You don't need to. The factory and the suppliers give you credit. You don't need to put any money into R&D (or at least not much) and you're not putting any money into branding or advertising.

You're not selling in the US. There's no threat of lawsuits really. Maybe, possibly, the goods might get confiscated but the odds are highly against it.

It's an easy way to make a buck and it's been going on in the Far East for at least the last 50 years. Counterfeit products are big business. The people buying them usually know they're fake (hey, want a Rolex for $50? If you don't know that it's either fake or stolen you're an idiot). People buy fake iPods because they're half the price so they can afford them but they want something that looks like the real thing not Joe Blow's MP3 player. It's all about the image.

Your second example, of the legitimate company, is absolutely laughable. Have you seen Apple's profits lately?

Yah, Apple's doing great in the MP3 market. Have you seen everybody else's financials? If it's not an iPod your chances of selling an MP3 player are pretty low.

Re:Wow, that is so cool

[billcopc]

The kicker is that organized crime has little to do with it. It's not like you walk up to a guy in a dark alley with a business plan and product briefs for gadgets. These are often semi-legitimate companies that go rotten after a few years of lackluster success. One such market I'm very comfortable with is the booming FTA satellite receiver business. One particular company has had their receivers cloned like no other, looking and functioning almost identical to the original, except the software/firmware is incompatible. The beauty of this scheme is that you won't know you've been shafted until you go to update your firmware and end up bricking your receiver.

This company had a legitimate product at first, but they were jealous of their competitor's success and decided to clone the Pansat model. Since these are asian companies mostly dealing with american distributors (most of whom are sketchy affairs to begin with), it's really easy to fool the distributors which results in mass confusion. It wasn't until some crafty folks started ripping their dead machines apart that they figured out what had happened. If only the clone had been compatible with official firmware they might have gone undetected for years.

Re:Piracy means what again?

[Grishnakh]

I'm not saying you're wrong, but this is really silly. No one's suggesting letting cargo ship sailors carry automatic weapons into port cities when they go bar-hopping; I'm thinking something more along the lines of deck-mounted 50-cal. machine guns. Guns that stay on the ship, and are used when the ship is attacked out in international waters.

Of course, stupid laws are the norm in most countries, it seems, but wouldn't it be sensible to allow merchant ships to have weaponry on board to protect themselves from pirates? All the countries with ports have to do is change the law to allow ships in port to have weapons on board the ship (but not to take the weapons off the ship).