LARGE networks making and selling fake goods across China, Thailand and Europe are linked to arms and drug activities, a French luxury goods association believes. Comite Colbert, whose members include Remy Martin, Hermes, Chanel and Louis Vuitton, says counterfeiting is becoming more wide-spread across the globe as dealers in arms and drugs use traffic in fake labels to launder money. Comite Colbert president Christian Blanckaert said: ''One of the reasons why there is so much counterfeiting in the world is because of the drug problem in the world. It is easier to invest in counterfeiting than drugs nowadays. ''Very often when you talk to police of several countries they usually know exactly what other businesses are being used to recycle the money.'' Police sources had revealed extensive networks which could start off in Amsterdam but be part of huge operations fanning out to Asia and funded by dirty money. Comite Colbert, which is actively lobbying to stamp out counterfeiting, is calling on the Chinese Government to slash taxes on luxury products - which can tip 350 per cent on perfumes - to make the real thing more affordable. Industry estimates say France loses up to 30,000 jobs a year through counterfeiting. For the whole of Europe the loss 100,000. Mr Blanckaert said: ''China is a big market for French luxury products but it is also one of the biggest threats we have. It is a threat and a potential at the same time.'' While the Chinese Government has tightened up intellectual property laws in its bid to re-enter the General Agreement on Tariffs and Trade (GATT) and to develop better relations with Europe, implementation is not yet perfect. Mr Blanckaert said: ''The application of the law is something we are not pleased with.'' Even when goods were seized, new boutiques could start up doing the same thing again, he added. In Asia, China and Thailand, including Thai-Chinese joint ventures, topped the counterfeiting list of culprits, he said. Networks are also employing more comprehensive sales techniques. In Paris a group of women organise parties to distribute fake designer labels and in Norway and Sweden a promotional catalogue called Fake has been distributed to hundreds of thousands of households. Fake lists names and addresses of suppliers of counterfeit goods. Mr Blanckaert said: ''The police have discovered the origin of this, and we believe it to be part of a network. In this network we think China is going to play a major role, unless the Chinese Government decides to fight against counterfeiting.''