Steele works harder as tracking down counterfeiters gets tricky
It was one of the more curious cases Philip Curlewis, Asia-Pacific managing director for the Steele Foundation, has ever countered. About five years ago, China, infamous as a source of knock-off products, was on the receiving end of an overseas counterfeiting ring that specialised in fake Bordeaux wine.
'Wine was just becoming the social thing to drink, but local drinkers didn't know the real taste - they were mixing it with Coke and making spritzers,' Mr Curlewis recalls. 'Counterfeiters bought genuine Bordeaux bottles, corks from Portugal and Malaysia, and stencils for the labels. They took a cheap wine and re-engineered it with sugars to the point where on initial inspection it would appear to be Bordeaux.
'Only on examination of the metal and soil content could it be identified as a cheap wine from just outside Barcelona.'
Mr Curlewis' investigation first took him to Pauillac, outside Bordeaux, to learn about bottle markings and the manufacturing process.
Following a combination of raids on Chinese retailers, surveillance and posing as customers, his team eventually found documents leading to Europe.
The paper trail snaked its way through six different jurisdictions, from a trading company in Hong Kong that accepted orders and organised shipping, Swiss banks that received the funds, a front company in Holland and the original wine sourced from Spain.
The Bordeaux wine case highlighted one of the biggest problems investigators face in countering counterfeiters: tracing the goods back through a network of retailers and suppliers back to manufacturers unaccustomed to printing their address on the back of business cards.
Locating the source of counterfeits is becoming increasingly difficult. The days of hunting down illegal tobacco counterfeiting outfits in Fujian province armed with little more than a sense of smell are long gone.
Even relatively complex processes, such as remarking computer chips with higher speeds, can now be done on machines no bigger than a photocopier.
'All investigations are about narrowing down the field,' Mr Curlewis said. 'The important thing is to get the initial lead, and this could come from [any number of means including] dumpster-diving or black-foresting [industry jargon for rummaging through trash cans].
'Most rubbish is public rubbish,' he adds added without a hint of apology.
'Anything from wasabi, soy sauce, mineral water and condoms to brake pads and processors has been counterfeited in China and the products are becoming increasingly sophisticated.
'Previously, counterfeiters produced low-quality goods nearly always intended for the domestic market.
'But there has been a transition in the last three to five years.
'The counterfeiters realised they were enjoying margins that were reasonable but not great, so they began producing goods of a higher quality, packaging them as if they were genuine and selling them as the genuine article.
'Counterfeiters now make more money than drug dealers - and they're not going to get shot.'
There are two ways to confront the problem. The most time-consuming and expensive solution, but also the most effective, is to take down the source of the counterfeits, which usually involves a lengthy investigation with surveillance, Mr Curlewis said.
But many companies opt for the 'quick fix or feel-good solution', namely seizing a number of counterfeited goods and imposing fines on the retailers.
'You can make a statement by hitting the retailers, and that may be what the client wants, but it is unlikely to end the problem,' Mr Curlewis said.
'Every link in the chain has to go for the problem to go away - if you take one link out, they will just replace it. Also, you can make things worse by pressing retailers. They simply disappear for a while and take clues with them.'