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ACF Blog- Its really not just China!
When discussing the countries that are at the centre of counterfeiting market it is too easy to blame China alone. We must not forget the sheer volume of electronics manufacturing delivered from China at the request and with the full support of western economies. The complex global logistics chains that exist today present many opportunities to intercept or replace quality parts. An interception can be made at any point during the transit.
Let us remember the following!
- The West chose to manufacture most of its electronics in China to take advantage of the low labour rates.
- Ignoring the lack of respect for Intellectual property – property is theft is a communist aphorism.
- The logistics advantage by being close to where the majority of semiconductors fabrication and assembly are undertaken.
- China produces 15% of all IC’s but mostly older types.
- South Korea produces 44% of all memory chips and 8% of all processor chips.
- Japan produces 17% of all chips.
- Taiwan produces 41% of all processor chips and 90% of the most advanced chips.
- Singapore produces around 5%
Source the excellent and thought-provoking book Chip wars by US author Chris Miller
- The lazy export of waste electronics to China for recycling – immediately setting up the opportunity to salvage and resell.
- The neighbouring countries of China are strongly supportive of the west and tensions in the South China seas are escalating. Countries such as Taiwan, Japan, Singapore, South Korea are good examples of this.
- It suits the west to claim that China is the core of cyber crime and potentially adding trojans to manufactured products – as if they would or have not done the same.
- Many of these political agendas are equally true of comparisons to Russia and its sympathetic neighbours.
The US and Europe dominate the silicon tools and semiconductor lithography technology and intend to use this to slow the Chinese ambitions for semiconductor manufacturing.
According to the ERAI the following countries have been reported as the source of counterfeit parts.
These are listed in order of source location and may identify the seller not the counterfeiter.
USA, China, Canada, Singapore, Netherlands, UK, India, Spain, Turkey, Taiwan, Israel, Germany, South Korea & France. The USA & China together make up 66% of the reports.
We must remember the individuals behind this counterfeiting business may well be from western countries. The most recent prosecutions have indeed been native citizens.
In February 2022, the United States Trade Representatives issued their latest report entitled Review of Notorious Markets for Counterfeiting & Piracy.
The report can be read in full here:
China, together with transhipped goods from China to Hong Kong, accounted for 75% of the value (measured by manufacturer’s suggested retail price) of counterfeit and pirated goods seized by U.S. Customs and Border Protection (CBP) in 2021.3
That leaves plenty of room for other countries to exploit!
Crime committed in any one country can easily be moved across borders and counterfeiters have sophisticated resources and finances. Customs and international policing bodies frequently tell us that counterfeit electronics fund crimes of more sinister nature such as child prostitution, drugs, firearms purchases and in extreme cases terrorism.
An example of this is sophistication is the apparent legitimacy of companies trading online and using online payment methods through legal channels.
The online exchanges (Amazon, Ebay, Alibaba, TaobaoYou and others) are investing significant effort to clean up their online presence and close thousands of accounts. The battle is a one that will not easily be won.