The Biden administration named six Chinese online and nine bricks-and-mortar markets on Thursday in its latest list of “notorious” sellers of counterfeit goods violating US trademarks and copyright law. Produced by the US Trade Representative’s office, the 2021 Review of Notorious Markets for Counterfeiting and Piracy included two first-time online Chinese entries – the AliExpress and WeChat e-commerce ecosystems – in addition to long-time entries Baidu Wangpan, DHGate, Pinduoduo and Taobao. Global counterfeiting costs the US economy some US$29.2 billion annually, the report said, and China is the world’s largest producer of fake goods. AliExpress and Taobao are units of Alibaba Group, which owns the South China Morning Post . “The global trade in counterfeit and pirated goods undermines critical US innovation and creativity and harms American workers,” said US Trade Representative Katherine Tai. “This illicit trade also increases the vulnerability of workers involved in the manufacturing of counterfeit goods.” Child labour and sweatshops are difficult enough to identify in supply chains of well-established multinational companies, the report said, let alone those making pirated goods. “The operators know their operations are illegal and therefore take measures to evade detection,” the report said. As an example, it cited Chinese-made masks and other Covid-19 protective equipment manufactured in “unsterile conditions, including in sweatshops previously used to make other types of counterfeit goods”. The shadowy world of fake goods is strongly correlated with the use of forced labour and child exploitation, the report added, referring to research by the World Customs Organization and the Organisation for Economic Cooperation and Development. Garments, electronics, footwear and fashion accessories head the list of fake goods seized by Customs entering the US, the 56-page report said, with China the top country of origin “as well as the country with the greatest number of products made with forced labour, including state-sponsored forced labour”. It did not elaborate. China punishes online merchants for fake reviews, inflated sales Goods directly from China or shipped through Hong Kong account for 79 per cent of all counterfeit goods seized at the US border by volume and 83 per cent by value, the report noted. Thursday’s report – part of Washington’s annual Special 301 review monitoring global intellectual property protection – has been broken out separately since 2010 to highlight foreign violators. “The report has been an important tool to identify bad actors,” said Nicole Bivens Collinson, international trade head at the Sandler, Travis & Rosenberg law firm. “It also shows that companies and organizations have invested in supply chain transparency and accountability.” Additionally, though, another analyst said, the US needs to do a better job getting its own house in order, including tougher controls on US retailers selling products and better data on pirated goods. The USTR report “doesn’t address what are we doing about these issues, what is Amazon doing,” Mark Cohen, director of the law and technology centre at the University of California, Berkeley, said. “I still think the US is mostly the victim, but in some places it’s getting more tenuous.” Thursday’s report found that WeChat – Weixin in China – which claimed 1.2 billion users globally in 2021, has become an increasingly convenient conduit for buying imitation products through its “seamless” links between social media and e-commerce sites selling sham goods, including its “Moments” and “Mini programmes” features. “Punishments often involve little more than a brief suspension,” the report said. Among other Chinese platforms, cloud storage service Baidu Wangpan was cited for the widespread sharing of pirated films that – even when removed – could quickly reappear. DHGate, which primarily sells counterfeits goods wholesale to companies outside China, has added five inspectors and 3,400 keywords flagged by its vetting process, but numerous complaints continue. The USTR report said that AliExpress and Taobao had some of the industry’s best anti-counterfeiting tools but were marketing more fake goods. Moreover, it noted, reports suggest that removing dodgy sellers from the sites has become more difficult. ‘Made in China, sold on Amazon’ community grew in 2021 Pirate groups are more adept at using technology to mask their handiwork, the report said. Tools include: domain name registries and registrars; reverse proxy services; hosting providers; caching services; advertisement placement networks; payment processors; social media platforms; and search engines. Just as legitimate retailers have seen, online sales have supplanted bricks-and-mortar stores selling bogus goods. However, physical markets often serve as an entry point for larger internet orders, the report found. Sellers are also adapting by keeping less inventory in shops and more offerings on websites. The report also identified a fake-goods innovation: wholesalers that provide turnkey operations for violators. Dubbed “piracy as a service”, these merchants offer templates to create streaming websites as well as databases and dashboards for pirate TV platforms, making it easier to process orders and distribute pirated video content. The report also cited Chinese physical markets, including Asia-Pacific Xinyang Clothing & Gifts Plaza in Shanghai; Chenghai District in Shantou; Huaqiangbei Electronics Malls in Shenzhen; Kindo and Zhanxi Garment Wholesale Markets in Guangzho; and Silk Market in Beijing. While China received special attention, the report also detailed violations in dozens of countries, from Canada to Cambodia, India to Indonesia and Brazil to Bulgaria. The report, which covered 42 online markets and 35 physical markets worldwide, said that the problem was too widespread for a comprehensive picture. Another problem is that the trade representative’s office relies on goods seized by Customs to track the problem, Cohen said. Seizures are often driven by pressure from industry groups, but many industries don’t push Customs, giving a skewed picture. “Counterfeit pharmaceuticals probably come in by DHL, computer chips are the same. They’re more likely to evade detection,” Cohen said. “We’re not going to do it by naming and shaming. We have to track shipments, monitor, seize and get China to cooperate on criminal cases.” “We have to think about appropriate responses.”