Feds Seize $78M of Bogus Chinese Cisco Gear 197
Ian Lamont writes "The IDG News Service is reporting that US and Canadian authorities have made more than 400 seizures of counterfeit Cisco hardware from China in an ongoing investigation that started in 2005. The most recent seizure was last Friday in Toronto, where the RCMP charged two people and a company with distributing large quantities of counterfeit network components to companies in the US through the Internet. The RCMP seized approximately 1,600 pieces of counterfeit network hardware with an estimated value of $2 million, says the report. According to another source, bogus Cisco gear from China typically includes network modules, WAN interface cards, gigabit interface converters, and less expensive routers."
Not really counterfeit (Score:5, Insightful)
It's a very difficult problem to manage unless you have trusted people overseeing the entire manufacturing operation. The amount of gross margin in Cisco gear makes this activity extremely profitable.
Why make *anything* in China, then? (Score:5, Insightful)
What's the Difference? (Score:5, Insightful)
If Chinese counterfeits can get marketed under their own brands, we'll actually have some price competition. And maybe when some American companies get killed by their OEM factories like Japanese manufacturers did to cameras and consumer electronics in the 1970s-80s, we'll see some more caution in shipping all their tech expertise overseas to create their competitors. They might be more likely to consider the less immediate costs of outsourcing from a country where the law (usually) protects things like intellectual property, contracts, labor and the environment.
Or maybe every generation is doomed to watch America squander its hard-won tech leads for the sake of a few years of cheap manufacturing that then eats the parent for lunch.
Re:Why make *anything* in China, then? (Score:2, Insightful)
Prefered Trade Status (Score:2, Insightful)
yeah, right. (Score:5, Insightful)
No, I think the goal is to protect the corporation. Not that I completely object to these actions, just that it's getting pretty tiresome to see the police always trotting out the public safety angle.
Re:Not really counterfeit (Score:3, Insightful)
Re:Prefered Trade Status (Score:3, Insightful)
Re:Not really counterfeit (Score:5, Insightful)
(hint: it's around 80$. same cable that comes with every power supply)
Re:So, um... (Score:3, Insightful)
when are they auctioning this stuff off..?
"Counterfeit" (or in this case, unlicensed) goods are usually destroyed.
Re:So, um... (Score:3, Insightful)
You're missing the whole point of this. Having these products in circulation is extremely detrimental to Cisco. Not just in terms of lost sales, but also that people will be calling in for tech support, attempting to get warranty replacements, putting it up on eBay, etc. Even if you donate it to a charitable cause it is costing them real money in a direct sense, and also tarnishing the brand and pissing off their legitimate dealers.
The product absolutely should be destroyed and the people responsible should bear the full pain of that loss. The only other remedy I could think of that might make sense would be to return the hardware to Cisco so that it can be either refurbished or destroyed at their discretion. I guess it would depend on whether the goods ultimately get classified as stolen vs fraudulently manufactured.
Re:So, um... (Score:4, Insightful)
Re:Why make *anything* in China, then? (Score:4, Insightful)
The cause of offshoring/outsourcing is not labour cost, but labour mobility: the price of labour in electronics is very low, around 5%, but you cannot do without people. Giving better salaries is not a solution. It was tried during the IT bubble but it did not work: the companies got more expensive workers but not in greater numbers, since all competed over the same number of workers, and due to the limitations on immigration the game was a zero sum game. This problem is much more grave in EU than in US (imagine needing a Green Card in order to leave California and find work in Florida) so factories are moved not only to China or Eastern Europe, but even to US.
Of course in the long run it gets you into trouble, but in order to have a "long run", the companies that moved their operations in other countries attempted to have a "short run" first: they would be already dead without the ability to expand.
Re:Why make *anything* in China, then? (Score:3, Insightful)
Remind me again, why is free trade with China such a great deal for the developed world?
Screw all the people who say "those evil CEOs want an extra dollar in the stock benefits" or whoever the current bogeyman is.
Trade with China is good for the developed world because they can make some things a lot cheaper than we can. Practically everything we buy is cheaper, either directly or indirectly, because of Chinese production.
The higher standards of living everyone enjoys comes with the cost of some domestic jobs. If you have to pay a union worker at Delphi $60/hr to make auto parts, you're not going to buy from Delphi if you don't have to - and China is what makes "don't have to" possible.
We lose jobs in some sectors, but everyone's dollar goes further. Is that a "fair trade", pardon the pun? You be the judge.
Re:This would be good for spying (Score:1, Insightful)
Re:Makes one wonder ... (Score:3, Insightful)
The fact that this is from China is not the point, even if it is (sounds likely, IMO). That it *is fake* is the point - who cares where it comes from, apart from some xenophobic, er, xenophobes?
From TFA[1] - note the names involved - Todd Richard, Michael Edman, Robert Edman.
Sound Chinese to *you*??? Didn't think so.
When *in* China, in my experience, fake electronics is openly admitted as fake. They don't mind you buying the real stuff, but it'll cost more and take longer to get. That some foreigners have taken that same fake stuff and sold it as real is not China's fault - and I don't suppose they care either.
[1] From TFA:
On Feb. 14, *Todd Richard*, 33, was sentenced to 36 months in prison and ordered to pay $208,440 in restitution to Cisco by the U.S. District Court for the Northern District of Georgia. From late 2003 to early 2007, Richard imported shipments of counterfeit Cisco computer components from China, and separate shipments of counterfeit Cisco labels. He then affixed the fake labels to the fake components and sold the products on eBay, the DOJ said.
Richard sold more $1 million worth of counterfeit Cisco products, the DOJ said.
On Jan. 4, a grand jury in U.S. District Court for the Southern District of Texas indicted *Michael Edman*, 36, and his brother *Robert Edman*, 28, for trafficking in counterfeit Cisco products. The indictment alleges that the Edmans purchased and imported the counterfeit computer network hardware from an individual in China, then selling the products to retailers across the U.S. The Edmans shipped some of the counterfeit hardware directly to the U.S. Marine Corps, Air Force, Federal Aviation Administration, FBI, defense contractors, universities and financial institutions, according to the indictment. These organizations had purchased the product from a computer retailer serving as a middleman, which in turn purchased the products from the Edmans.
MOD PARENT INSIGHTFUL (Score:2, Insightful)
When the workers in China got rich enough (relatively speaking) that they are no longer willing to leave families behind, you will see those factories either spread to the rural areas in China, or move to some other even poorer countries where they can find the workers.