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February, 2018

Chongqing authorities break up major fake auto parts ring

Original article: Sina

Chongqing police have broken up a large auto-part counterfeiting ring that spanned the special municipalities of Chongqing and Shanghai as well as the provinces of Sichuan, Jiangsu and Zhejiang. The counterfeiters infringed on the marks of Mercedes, BMW, Volkswagen and other major auto brands. 


Investigators estimate that the infringement value of the counterfeiters' activities totals RMB 50 million. At one auto-parts shop in Chongqing, police confiscated 4168 fake auto parts valued at RMB 4 million. 

Analysis:

In our 2017 wrap-up last week, O2O Brand Protection noted that China's top leadership pledged to crack down on counterfeiting several times last year. The auto sector especially needs stronger IP protection from the state. Phony auto parts endanger everyone on the road. Fake brake pads, wheels, or any of a number of engine parts may impair a vehicle's performance, causing an accident. Counterfeit airbags fail to protect passengers in the event of a collision. Given that China is the world's largest auto market, and that billions of yuan in counterfeit auto parts are manufactured, sold and distributed in the country every year, there are a lot of accidents waiting to happen. 


Auto-part counterfeiting has consequences beyond China's borders. Indeed, Alibaba is still fuming about Taobao's inclusion on the newest edition of the U.S. Trade Representative's Notorious Markets blacklist. An influential auto industry lobbying group urged the Trump administration to include Taobao on that list. 


In a January press release, the Auto Care Association lauded the USTR's decision. “Counterfeit auto parts represent a significant danger to the safety and welfare of the general public, and also pose a significant economic threat to our industry,” said Bill Hanvey, the organization's chief executive. “We thank the USTR for its tremendous efforts and the strong action plan outlined in the report to address rights holders’ concerns.”


It's high time for Alibaba to start taking the auto industry's concerns seriously. The company likes to highlight its budding partnerships with luxury brands, but many of them are European and lack clout in Washington. In contrast, the auto industry has lots of influence in the U.S. capital. 


Fortunately, the USTR has made it easy for the Chinese e-commerce giant. It recommends Alibaba consider banning heavily counterfeited products not usually sold on C2C marketplaces, such as brake pads and other auto parts. USTR also urges Alibaba to more effectively respond to the concerns of U.S. auto firms which find products infringing their marks on Taobao. 

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