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Faking a Company
Posted by
CowboyNeal
on Fri Apr 28, 2006 06:43 AM
from the just-like-the-real-thing dept.
from the just-like-the-real-thing dept.
gambit3 writes "What happens when pirating a movie, an application, or a game is not enough for you? Well, you take the next step and pirate a whole company. It happened to Japanese electronics giant NEC. Counterfeiters had set up what amounted to a parallel NEC brand with links to a network of more than 50 electronics factories in China, Hong Kong and Taiwan."
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Wow, that is so cool (Score:4, Funny)
These guys should get a criminal Nobel or something!
Re:Wow, that is so cool (Score:5, Insightful)
There are a lot of "counterfieting" operations where the work involved makes you wonder why they didn't go legit. People selling "fake" iPod Shuffles, for instance, that actually work, they're just not real shuffles. Someone's taken the time and trouble to organize the manufacturing of this item, including a certain amount of R&D, for a working product. And then they proceed to spoil the entire enterprise by putting someone's else's name on it, meaning:
- they can't sell via legitimate distributors
- they can't get funding except from organized crime.
- they have to do business constantly looking over their shoulders.
Now, we're talking about creating a massive corporation. This solves the first part of the problem, but suddenly introduces brand new ones. We're no longer talking about a one-off production run of something that, once off loaded onto distributors, can be treated as a job done and, as time goes on with no knock on the door, a success that doesn't have to be worried about. We're talking about a business where you're guaranteed to get caught eventually. Your risks just went up massively. Even organized crime is going to be careful dealing with you. On top of this, you need the organizational ability and resources to hire a hell of a lot more people, which is going to be difficult to do if you either have to fool everyone in the organization that you're legit, or you limit yourself to a pool of people who don't really care about the almost certainty they'll end up in prison at the end of the game.
What the hell? If you're that skilled in business, why knock off NEC? Why not start something legitimate? Yeah, NEC's an established brand, but, c'mon!
Parent
Quite simple (Score:5, Insightful)
1) Buy generic mp3 player innards off general market for next to nothing
2) Wrap iPod shuffle lookalike plastic
3) Sell as iPod
4) Profit
Compare with business case number 2:
1) Buy generic mp3 player innards off general market for next to nothing
2) Pay designer to design a cool funky faux iPodesque white plastic exterior
3) Pay huge international marketing firm to make worldwide humongously expensive marketing campaign
4) Rummage through garbage for scraps of food, use cardboard for shelter
Parent
Re:Quite simple (Score:5, Insightful)
Between 2) and 3) you need to insert "2.5) Find distributors for a product who know you're not Apple but will be selling a product branded as Apple, therefore putting themselves at risks of lawsuits. This limits you to organized crime, and they'll be demanding a high margin on the products. Which they'll be selling discounted anyway. Congratulations.
4) needs to be replaced with "Get some money, pay back your investors, and hope you're not caught"
So: to recap: you're having to get your money from people who'll kneecap you if you don't pay it back. Despite the high price of the legit product, you'll be making a tiny margin, if one at all, because you're selling to distributors who will be taking a massive risk and will want to be compensated for it and who don't want to sell for the same price as the legit product, you're restricted in terms of the number of sales anyway. Where's the profit?
Your second example, of the legitimate company, is absolutely laughable. Have you seen Apple's profits lately?
Parent
Imitiation is the sincerest form of flattery (Score:5, Funny)
Piracy means what again? (Score:4, Insightful)
Re:Piracy means what again? (Score:5, Funny)
Parent
The IHT Goole AD says it all (Score:5, Interesting)
-
andProduct Sourcing
Buy Risk Free From China IVELL - Global product sourcing
www.ivell.com
Quality Manufacturing
Plastic, electronics and metal UK Management, Chinese Factory
www.motiontouch.com
More Questions anyone?
Re:The IHT Goole AD says it all (Score:5, Funny)
Buy Risk Free From China? IVELL certainly NOT!
Parent
I suspect this is extremely common (Score:5, Interesting)
One of the posts effectively consisted of "Can you make me some tv's branded panasonic and send them to north africa"
Tip of the iceberg, perhaps.
Will the real slim shady please stand up? (Score:5, Funny)
http://www.m1cr0s0ft.com/ [m1cr0s0ft.com]
That's a co-incidence (Score:5, Funny)
I don't trust the article... (Score:5, Funny)
So which one is the real NEC? (Score:5, Insightful)
Just a thought. Seriously though, if I was NEC, I would try and by up the fake company and continue to operate it. you could probably get it for pennies on the dollar and you already have trained employees.
Chain of trusted sources (Score:5, Insightful)
One of these friends said "Wow, I am sure am glad I get my NEC stuff from a reputable online dealer, like Newegg!"
My question is, where'd Newegg get these drives? Did their distributor vouch for the goods? How about their distributor's distributor or the originating factory?
When somebody up the chain said "I _KNOW_ these are good drives" and vouched for them, then that product carried that credential all the way to the end users and that's what we're trusting. But we don't know, really.
"It came from Newegg" might be nice sentiment but Newegg probably has no idea if they were selling fakes or not. I don't think they would knowingly do so, of course. That kind of cheap money is not worth the hassle with an IPO in the works.
Format of text (Score:5, Funny)
most hard to read create a stupid column
format for the text based layout. These
I have ever seen. The guys should be shot.
web != the newspaper, th-
Pfft. I know a genuine Panaphonics when I see it.. (Score:5, Funny)
That's nothing,... (Score:5, Funny)
Cisco suffers a great deal from this (Score:5, Interesting)
A WIC-1DSU-T1-V2 is $1,000 list, $700 or so to a small reseller in distribution, and $400 for a clean used unit from a reliable aftermarket dealer. Go look for that part number on Ebay and check out how new boxed product is 15% of list price
Re:not "faking a company" (Score:5, Informative)
Only because you didn't READ IT.
These records showed that the counterfeiters carried NEC business cards, commissioned product research and development in the company's name and signed production and supply orders.
Some of the factories that were raided had erected bogus NEC signs and shipped their products packaged in authentic looking boxes and display cases.
etc, etc
Parent
Re:This happens all the time... (Score:5, Insightful)
They were placing orders with factories using the NEC name. They commissioned R&D, their factories had NEC signs on the outside. They even designed and built their own products.
This is a huge step from the guy selling Oakley sunglasses. By faking the company and not just the product they were able to get their goods sold in legitimate outlets, right alongside genuine NEC products.
When you start to think about it, the scheme works on so many levels. Ordinarily you run a huge risk to create a factory producing fake goods and everybody in the factory shares that risk. That means it's massively expensive to set up and run, your staff are sub-standard and there's always the risk of blackmail. By creating a fake parent company and just ordering the goods from 'legitimate' factories, they bypassed all these problems. You've now got good cheap staff, proper management, and all in all a far more efficient service.
Even better, now the police can't prosecute these factories for producing the goods since they've done nothing wrong - they've just fulfilled orders as normal. Of course they'll have to stop production and will have their goods confiscated, but their insurance will cover that... The police have no choice but to go for the parent company. Fair enough you've now got to collapse that side of the operation but you've got nowhere near the costs. A few staff, some nice headed paper... sure beats loosing a factory.
Plus, you're no longer selling cheap pirated goods on the street. Instead you're able to charge full retail price.
In one fell swoop they've cut the costs of producing goods, made production more efficient, sold them at a higher price, and managed to legally insure the vast majority of their pirate production line against the risk of getting caught.
Genius, sheer genius. Yes it's illegal, but you can't help but be impressed. Somebody somewhere deserves serious Kudos for coming up with this.
Parent
Re:This happens all the time... (Score:5, Insightful)
This is just taking piracy to new levels. This would have taken a lot of effort, but I'm sure that it would be increasingly commonplace in years and decades to come.
As a few people have said, slapping a bodge label on a bodge product in a bodge market is something, but producing decent-quality products, as the article infers, in proper factories and sold in proper shops and retail outlets is another.
Parent
Already done here in the US... (Score:5, Funny)
It was already done, here, in the US: it was called "Enron".
Parent
Re:Why target NEC? (Score:5, Informative)
Parent
Re:MP3 Players, too (Score:5, Insightful)
Or like virtually every notebook manufacturer (including Apple), assembling their notebooks out of Chinese OEM parts?
Do you know why Chinese 'piracy' is so rampant? Because all the products are made in China anyway. One factory produces the 'brand' product during the day and the 'pirate' product after-hours. Of course they're completely identical.
I mean think about it, if you were a Chinese company manufacturing electronics, and you see how the stuff you design and produce is sold for ten times the price that brand X pays you in the West, you'd start to wonder a bit too.
If the products were designed and produced in the 'West', this would be much more difficult. But the corporations don't care. They still make a huge profit by sticking their brand name on Chinese stuff and selling it for a huge markup.
Parent