Faking the little things

It's not unusual to see Gucci or Burberry handbags on just about every shoulder in Chinese cities. And despite the break neck GDP growth rates over the last three decades, incomes in China are not high enough to sustain standard issue luxury purses with price tags equaling annual per capita income. So, yeah, it's probably a knock-off. As anyone who reads Western media is aware, the Chinese figure out how to make excellent copies. Legend has it that when shown a knock-off Louis Vuitton handbag made in China, the head of LV was so impressed with the quality and workmanship that he wanted to find the factory to source his production there.

Copies indistinguishable from the orginals don't end with handbags however. Unfortunately, copies are made of just about anything, like network routers, cars, foods, and even medications. A second rate handbag wouldn't kill anyone. Nor would a knock-off router. But second rate medications, even without road paint coatings or toxic contaminants, can. Some counterfeiters, in good faith perhaps, include the active compound but at lowered doses. This is puts some patients at risk of sub-optimal treatments and treatment failure. Sub-optimal treatment with antibiotics (blood levels below the minimum inhibitory concentration) can threaten the general population by speeding the evolution of drug resistance in diseases like malaria, TB, or HIV. If it were easy to tell the fakes apart from the real drugs, it might be less of a problem with savvy consumer education. But the copycats have honed their skills down to the packaging. There was a report on the evolution of fake security holograms that found that holograms intended to indicate the authenticity of the medicine had been so carefully recreated that the difference could only be determine using a microscope.

I have my own theory on why industry regulation continues to be so lax. And there are certainly many factors that I won't attempt to debate here. I will venture to say that there's adequate incentive for the tvog to strictly regulate money here. And yet it's a rare person in China who hasn't been slipped a counterfeit bill. Fake bills are so common here that when someone is receiving change it's not usual for her to feel each bill individually. No vendor will take a 100 RMB bill without holding it up to the light. When I first arrived in China, I marveled at the idea of a fake 100 RMB bill. All that work for only about $12 (at the time). But after considering the relative cost of living and PPP, it wasn't unreasonable. When I tried to pay for dinner one night, my 10 RMB bill was refused because it was a fake. I found it comical that a counterfeiter bothered to make 10 RMB bills instead of 100 RMB bills. Chinese friends make jokes about 30 RMB and 7 RMB bills all the time. They claim that the Chinese were willing to copy anything, even 1 RMB bills. The 1 RMB (1 RMB = $0.15) counterfeit seemed the stuff of urban myth. That is, until I received a 1 RMB coin the other day. Compared to the real thing, it was noticeably smaller and lighter and the edges looked like they had been pressed and welded. It was a pretty pathetic excuse for a 1 RMB coin.

So I got to thinking, for a 1 RMB counterfeit ring to be worthwhile, it would have to be a pretty big operation. Even the metal to make the coin must cost something (Note: the value of the metal in a U.S. nickel was more than $0.05 in 2006 and that was not including processing, labor, and transportation. And, because of rising costs of copper, the metal in a U.S. penny was worth more than $0.01 until they switched to the zinc pennies in 1982. Another side note from wikipedia: they even considered an aluminum penny, but that was rejected because 1) vending machine owners complained that they would cause mechanical problems and 2) pediatricians and radiologists complained that the radiodensity of of aluminum was too similar to the soft tissues of the GI and respiratory tracts, complicating detection on x-rays. My reaction to this is: what vending machine accepts pennies?!). Back to 1 RMB coins. And how would they transport these things? A suitcase of 100 RMB bills I can understand. A suitcase of 1 RMB coins? No way, you'd need a truck and a distribution system. And this gets to my point, here is something the tvog has every reason to regulate and, since economic growth and stability are top priorities, we know they want to rein in counterfeiting, and, still, it's worth someone's time to make an unconvincing 1 RMB coin. Until verifying the authenticity of the bills (and coins) here is no longer a national hobby, we probably won't see much effective regulation of anything else.