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Feds Seize $78M of Bogus Chinese Cisco Gear
Ian Lamont writes "The IDG News Service is reporting that US and Canadian authorities have made more than 400 seizures of counterfeit Cisco hardware from China in an ongoing investigation that started in 2005. The most recent seizure was last Friday in Toronto, where the RCMP charged two people and a company with distributing large quantities of counterfeit network components to companies in the US through the Internet. The RCMP seized approximately 1,600 pieces of counterfeit network hardware with an estimated value of $2 million, says the report. According to another source, bogus Cisco gear from China typically includes network modules, WAN interface cards, gigabit interface converters, and less expensive routers."
I rather doubt that much of this equipment is truly "counterfeit", at least in the usual sense of a cloned design such as the iClone. Rather, what happens is that the contract manufacturer will buy extra parts and make more units than Cisco actually ordered, and then those units go out the back door after hours. They might have illegitimate serial numbers or might be missing the authenticity stickers on some internal chips, but they are otherwise identical.
It's a very difficult problem to manage unless you have trusted people overseeing the entire manufacturing operation. The amount of gross margin in Cisco gear makes this activity extremely profitable.
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The attractiveness of low cost manufacturing in China seems to be inevitably offset by some other negative, whether it be the creation of instant competitors once the contract manufacturer figures out how to reach their customers' customers, or ersatz ingredients (melamine in dog food last year for instance). Remind me again, why is free trade with China such a great deal for the developed world?
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when are they auctioning this stuff off..? I'd love to get me some pods together on the cheap.
Other than the brand name on the boxes being fraudulent, what is the difference between this HW and the real Cisco products? If they're even close in quality, then catching these fraudsters will move Chinese manufacturers to market them under their own brands. Then they'll just be violating patents, not trademarks (and copyrights in the manuals). But then they'll be pressured to actually create their own better ways of doing it. Which is actual progress, even if not quite as profitable as the ripoff.
If Chinese counterfeits can get marketed under their own brands, we'll actually have some price competition. And maybe when some American companies get killed by their OEM factories like Japanese manufacturers did to cameras and consumer electronics in the 1970s-80s, we'll see some more caution in shipping all their tech expertise overseas to create their competitors. They might be more likely to consider the less immediate costs of outsourcing from a country where the law (usually) protects things like intellectual property, contracts, labor and the environment.
Or maybe every generation is doomed to watch America squander its hard-won tech leads for the sake of a few years of cheap manufacturing that then eats the parent for lunch.
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No, I think the goal is to protect the corporation. Not that I completely object to these actions, just that it's getting pretty tiresome to see the police always trotting out the public safety angle.
It sounds like most of these Chinese counterfeiting cases have been manufacturers making exact copies of the items they were contracted to make, then selling them without the warranty, name, etc. for similar profit margins.
How much of this is the manufacturer just building more than what they were supposed to, and how much of it is actually theft of intellectual property? I remember reading that the Soviet Union would go the IP theft route...obtain a computer from another country and totally reverse-engineer it so they could use a similar design. My bet is that these manufacturers just want to make more money and not necessarily use the same quality parts. (If you're building 1000 routers, the difference between a $10 transciever and a $100 one is big, for example. How worried should we be that, say, the manufacturer has reverse-engineered IOS and put it into their own gear?
Either way, if my business was based on building clever hardware, I'd be worried about outsourcing the manufacturing to anyone, let alone a different country. However, there is absolutely no way to stop people from demanding cheaper goods. It's at the point where people are haggling over a few cents -- we're just addicted to low prices.
I'm generally not one of these protectionist, "keep America working" types, but I can't see a good way out of this situation. All the scenarios are bad:
- Go to war with China or cut off trade completely in some other fashion --> Huge price increases and emergency ramp-up of domestic production --> possibly a bad recession.
- Continue as-is --> More poisoned or cloned merchandise and IP theft --> eventually a very bad situation for us.
- Try to get China to comply with environmental and IP laws --> ???
Had actually received some of this gear unknowingly and while some of it does work...there were a few cases where that when a switch that would lose power the GBIC would not come back up in a 'no shut' state. Instead you had to console into the switch and issue a 'shut > no shut' on the interdace to get the port to come back. So while the technically do kind of work, it is not something I would recommend deploying in a mission critical switch/router.
It could have something to do with all of the campaign contributions that come from large organizations manufacturing goods and services. Of course it could be that the general populous likes products that are dangerous, poisonous, fake, bogus and fraudulent. It's so hard to tell.
I don't believe in karma, I just call it like I see it.
This is currently a valid issue, not a "what if" scenario. Currently, atleast in the gov entities I work in, the gov is no longer purchasing IBM desktop and Laptops, well the Lenovo branded ones anyways. A while back, in some of the meetings I have attended, there was a particular briefing which discussed a particular component in a device, that apparently had no function. This was from a well known brand that manufactures it's products Taiwan.
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