Feds Seize $78M of Bogus Chinese Cisco Gear

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."

So, um...

[scubamage]

when are they auctioning this stuff off..? I'd love to get me some pods together on the cheap.

Re:no wonder

[trolltalk.com]

The Chinese SOP

1. Copy foreign hardware/software
2. ???
3. Profit!

A generation ago: s/Chinese/Japanese/g;

A generation from now: s/Chinese/American/g;

Re:Not really counterfeit

[jmorris42]

> The amount of gross margin in Cisco gear makes this activity extremely profitable.

It isn't just that. In any other tech industry you would see 'legit' clones, i.e. ones that were sold AS clones, with someone else's name on it. But you can't do that with Cisco gear. If you put any non-cisco stuff in one it voids the service contract. No service contract no bug fixes. Unpatched gear is an accident waiting to happen.

Personally I'm happy as hell. We don't have much Cisco gear and I didn't buy it (donated) but it has been enough of a PITA that I absolutely HATE Cisco. When I had to scrounge up some extra ports I certainly hope I managed to get the knockoffs and avoid giving those rat bastards one cent more than absoluteley required. Had to put the unit back under a service contract before I could get a IOS with device drivers. Tell me, who still charges for (basically) device drivers and security fixes?

Adn their hardware is so pathetic. Open one up sometimes and check out just how little is inside one. Ponder just how little they are paying those Chinese contract manufacturers for the hardware they then jackup to such stupid prices. And don't tell me it is the software either, they used to just be running BSD with the serial numbers filed off and with the volume they do they can afford some software devels. As for support it ain't in the price of the product, they sell that as a extra and for all intents and purposes only to those who have also paid em a crapload to get their people certified.

By being able to milk hardware, software and support they probably make Gates & Balmer jealous.

Re:Makes one wonder ...

[networkBoy]

Actually I wonder if this was genuinely counterfeit, or was it "unlicenced" Ala Disney DVD factories that are only "open" 10 hours per day, but run 24 hours per day...

-nB

Was it just non-sanctioned boxes or IP theft?

[ErichTheRed]

It sounds like most of these Chinese counterfeiting cases have been manufacturers making exact copies of the items they were contracted to make, then selling them without the warranty, name, etc. for similar profit margins.

How much of this is the manufacturer just building more than what they were supposed to, and how much of it is actually theft of intellectual property? I remember reading that the Soviet Union would go the IP theft route...obtain a computer from another country and totally reverse-engineer it so they could use a similar design. My bet is that these manufacturers just want to make more money and not necessarily use the same quality parts. (If you're building 1000 routers, the difference between a $10 transciever and a $100 one is big, for example. How worried should we be that, say, the manufacturer has reverse-engineered IOS and put it into their own gear?

Either way, if my business was based on building clever hardware, I'd be worried about outsourcing the manufacturing to anyone, let alone a different country. However, there is absolutely no way to stop people from demanding cheaper goods. It's at the point where people are haggling over a few cents -- we're just addicted to low prices.

I'm generally not one of these protectionist, "keep America working" types, but I can't see a good way out of this situation. All the scenarios are bad:
- Go to war with China or cut off trade completely in some other fashion --> Huge price increases and emergency ramp-up of domestic production --> possibly a bad recession.
- Continue as-is --> More poisoned or cloned merchandise and IP theft --> eventually a very bad situation for us.
- Try to get China to comply with environmental and IP laws --> ???

Re:no wonder

[spun]

That's the plan, man. As soon as a country starts getting wealthy and the workers aren't so desperate, take all the money and invest it in the next poverty stricken region. Wait until the first country gets poor and desperate again, then move back in. As long as money and goods are free to move between countries, but people are not, that's what we'll have.

Re:Some gear doesnt work

[jandrese]

I have a suspicion that a lot of this third party resale equipment is the stuff that failed QA the first time around, but only barely. There's probably some overproduction in there as well, but it does make buying one of these discount routers a risky proposition.

Re:This would be good for spying

[bleh-of-the-huns]

This is currently a valid issue, not a "what if" scenario. Currently, atleast in the gov entities I work in, the gov is no longer purchasing IBM desktop and Laptops, well the Lenovo branded ones anyways. A while back, in some of the meetings I have attended, there was a particular briefing which discussed a particular component in a device, that apparently had no function. This was from a well known brand that manufactures it's products Taiwan.

Or has backdoors and viruses

[goombah99]

You may recall the Taiwanese router vendor that put backdoors in their routers (no one every explained why that I recall). And then there's all the picture frames and thumb drives that inject viruses.

If someone is producing un-lic gear why not pick up a few more bucks on offer to add compromises.

Why not go cheap on the capacitors or the solder? not like it will hurt your brand rep.

Not saying it happens but why not?

Re:no wonder

[Intron]

Look at steel. It's kind of amazing that Japan was able to import all of the raw materials, make steel and ship it to the US cheaper than it could be made here where the resources were available. Doubling oil prices will probably be good for what's left of the US steel industry.

Huawei already does that.

[Lanboy]

Cisco has won an injunction that prohibits Huawei from selling routers in the US.

The router code is identical down to the security bugs.