China: Counterfeits ‘R’ Us 

In 2006, Hasbro released the Marvel Super Hero Squad line of action figures. The figures are little — only about 2 inches tall, on average — and made of plastic. They are rendered in what is known as the “superdeformed” style: small, stumpy arms and legs, oversized heads, and hands with four, instead of five, fingers. This aesthetic appeals primarily to very small children, and the Super Hero Squad — classic Marvel comic book characters such as Spider-Man, Iron Man and Thor — was designed, as you may have guessed, as a gateway drug for 2- and 3-year-old boys.

Yet something odd happened. The Super Hero Squad caught fire in the world of toy hobbyists. Older — one hesitates to say grown-up — buyers devoured the figures, and today there is a brisk collectors’ market for them on eBay. Originally sold in packs of two for about $6, individual figures now sometimes sell for $25, or even $45.

But if you hunt around the Super Hero Squad listings on eBay (there are a few thousand of them at any given time), you’ll notice something strange: There are often two versions of a figure selling at radically different prices. For instance, a Spider-Woman that costs $10 next to a Spider-Woman that costs 99 cents. The cut-price Spider-Woman is a fake. Of the several thousand Super Hero Squad sellers, about half are located in China, Hong Kong and Singapore. They sell their figures at bargain prices.

This raises the interesting question of what counterfeit really means these days. Once, we knew what a knockoff was. A real pair of designer shoes was made in Italy out of leather and steel tacks. The knockoffs were slapped together in Vietnam or Korea using glue and pleather to barely approximate the look of the Italian originals.

Today, the “real” Super Hero Squad figures are tiny hunks of colored plastic spit out by slave-wage laborers in Chinese factories. And so are the fakes. There might be tiny cosmetic differences. But if I put the two Spider-Women in front of you, you’d be hard-pressed to tell which was which, even if you were intimately familiar with the Super Hero Squad toy line.

And it’s not even clear that all of the fakes are, literally, fakes. It’s not impossible to imagine that some of the figures being sold in China metaphorically fell off the back of the truck: Perhaps a factory that was supposed to shut down after reaching its quota kept going for an extra 20 minutes, minting an extra thousand Spider-Women, which were diverted to eBay.

It’s not just action figures. Last month an American woman living in Kunming, the capital of China’s Yunnan province, wrote about her experience in a fake Apple Store. An entire store selling Apple products — iPads, iPods, laptops and software — was replicated.

Once the story of the faux Apple Store got out, the manager assured customers and the press that even though the store was “unauthorized,” all the gadgets they sell are genuine. And maybe they are — because most of the silicon goodies Apple sells are made in China, too.

One of Apple’s main manufacturing subcontractors is Foxconn, the biggest company you’ve never heard of. Foxconn makes all Apple’s iPhones and iPads. The company has just over a million — you read that right — employees. Its biggest factory is Foxconn City in Szechuan that houses 420,000 workers. Could a place the size of Foxconn City make enough ghost products to stock fake Apple Stores with real Apple products?

Last year, the Pentagon discovered that counterfeit electronics from China had worked their way into Missile Defense Agency hardware, weapons systems, and even onboard some F-15s.

How? The Department of Defense contracts with suppliers, most of whom subcontract out components they use in final assembly. These primary suppliers might work with a “legitimate” Chinese business to order, say, 50,000 microprocessors. But when they take delivery of the shipment, some small percentage of the microprocessors often turn out to be of substandard quality from a fourth-party source.

Jonathan V. Last is a senior writer at The Weekly Standard.

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