CHINESE CUSTOM SEIZURES DROP SHARPLY
Updated: Aug 7, 2019
Recent figures show that Chinese Custom seizures of suspected counterfeit products have dropped significantly for foreign goods. This is not because the problem has gone away. Business should consider key steps that will bolster enforcement strategies.
Recent statistics point to a significant decline in Chinese Customs seizures. In the first half of this year, Chinese Customs seized ‘only’ 7.1 million items suspected of infringing IP rights. In contrast, more than 40 million items were seized in the 12 months of 2017.
The problem hasn’t ‘gone away’. Statistics from the EU and US show that China (combined with Hong Kong SAR) remains the dominant country of origin (83% of goods seized in EU and 78% in the US in 2017). Notwithstanding current US/China trade tensions, many of the fundamentals of production and world trade remain the same. This is especially true of illicit trade.
Express post continues to grow rapidly
Chinese Customs, like their counterparts elsewhere, are battling with the rise of fast parcel post. Sea freight made up 95% of goods seized by volume and the majority by value, but the vast majority of shipments seized (88%) were in the express postal channel. Express post remains a huge challenge. For example, over 110,000 parcels are shipped out of the Yiwu international postal channel alone every single day.
Much more attention is now being given to domestic Chinese rights holders
Another trend is emerging and it’s not an encouraging one for foreign rights holders. 4.8 million of the 7.1 million items seized in the first half of this year involved IP owned by Chinese enterprises. The proportion of seizures relating to foreign companies continues to decline.
This trend is likely to continue with the planned “Dragon Rising” campaign in the last quarter of 2018 which will focus on the protection of domestic brands. The escalating US/China trade war is unlikely to encourage Chinese Customs officials to pay more attention to suspected infringements of US IP rights.
Foreign rights holders are taking steps to encourage more detention activity. Some recent examples include:
Intelligence provided to Guangzhou and Ningbo Customs on single suspect containers resulting in a series of related seizures of containers in each port.
Timely reporting of intelligence from seizures in Europe tracked back to Beijing airport, leading to several seizures in Beijing in the following weeks.
Dialogue with Huangpu Customs on shipping patterns to ‘One Belt One Road’ destinations encouraging analysis of historic shipment data which led to further seizures in China.
Detaining suspect goods leaving China remains a key component of many international enforcement strategies. Our take homes:
Continue to file recordals for key IP rights in China
Invest in targeted Customs training, based on informed risk assessment
Invest in identifying key infringers and understanding their ways of working
Collect, analyze and share intelligence on infringers and trade routes
Share overseas seizure intelligence quickly
If Chinese Customs increasingly turn their attention to domestic rights holders, foreign rights holders will need to better understand illicit trade routes and engage with customs authorities at trans-shipping hubs and destination countries. As China’s Belt and Road initiative continues to take shape, investment in cooperation with customs authorities in Dubai, the Russia-led Eurasian Customs Union, and Southeast Asia is likely to bear fruit.
Rouse’s CHORUS database helps rights holders collect and analyze data to build a more comprehensive picture of illicit trade:
CHORUS helps inform decision making and supports rights holders prepare risk assessment intelligence for law enforcement. CHORUS is now used by a growing number of IP and brand protection departments in some of the world’s leading rights owners.