
Amazon and Ebay Opened Pandora's Box of Chinese Counterfeits - harshreality
https://www.forbes.com/sites/wadeshepard/2017/10/28/amazon-and-ebay-opened-pandoras-box-of-chinese-counterfeits-and-now-dont-know-what-to-do/
======
pitaa
I have drastically cut down on the number of amazon orders I place because of
the amount of no-name imports that have flooded their catalog in the last few
years. I finally decided that if I was going to be getting crap from china
anyway I might as well buy it directly from the source, so I buy a lot of
stuff on Aliexpress now. Sure, it sometimes takes upwards of 3 weeks to
arrive, but when you're getting stuff for a tenth of the cost elsewhere, 3
weeks doesn't seem so bad a lot of times.

~~~
atomi
It's truly infuriating.

I think the answer is to provide proof of authenticity. Perhaps something like
a hash that users can use a website to verify if their purchase is indeed
authentic, and actively encourage customers to file chargebacks for products
that fail the verification. Hit them where it hurts. This is something that
needs to be actively fought by both governments and consumers.

~~~
astura
But is Grandma really going to understand how to verify authenticity and/or
why she should?

~~~
jff
I think you'd be surprised how easily Grandma cottons to the idea of cheap
knock-off crap, and that by typing a code from her multivitamin bottle into
product-validation.gov, she can verify it's not full of heavy metals.

~~~
rtkwe
Not sure a system like that can really work. All a counterfeiter needs to do
is buy or scan a legitimate product if it's just a code printed on it and now
all the devices validate as 'real'. Can't do a challenge response
authentication with a simple printed HMAC.

I guess if we did a lot more intensive inventory tracking so whatever
validation service knew batch 213489234 was made 10/21/2019 and was being sold
by Amazon/CVS/etc. and was all sold out by 3/14/2020\. Then grandma could say
'Oh no' I bought this from BobsDiscountPharma.com so it's maybe fake.

Another option that could maybe make it work with a little RFID/powered chip
so you could actually do authentication but that's more expensive and creates
a lot of ewaste if it gets applied to a lot of products.

~~~
FireBeyond
That's what I thought too, then it was pointed out that another part of the
system is that "someone else has scanned this code".

Which if you're a counterfeiter, you obviously don't scan the code... but then
you use it to make your product, and as soon as one of your buyers uses it...

~~~
rtkwe
That becomes a huge amount data to track though if it's individual labeling.
It'll start out ok but quickly get huge.

Also doing that requires a decent percentage of people to be actively scanning
things, otherwise counterfeiters could just play the odds.

~~~
FooHentai
>That becomes a huge amount data to track though if it's individual labeling.
It'll start out ok but quickly get huge.

No, it's the same pattern as software CD-Keys and that's been working fine at
scale for decades. You draw from a pool of unique, unpredictable codes based
on a secret seed, and keep a tally of the number of claims over that code. The
only difference here is that instead of the online service 'failing
activation' for your software, it simply displays the number of activations to
the end user. If 'this code has already been redeemed' comes up for your $2
ali express MOSFETs, you know you're dealing with a knock-off.

>doing that requires a decent percentage of people to be actively scanning
things, otherwise counterfeiters could just play the odds

I'll partially concede this point - It's certainly a factor. However, if the
down-stream effect is product returns, the middle man sellers are likely to
take corrective action against the suppliers. I'm not convinced that this
limitation of the proposed system will render it ineffective.

~~~
rtkwe
> No, it's the same pattern as software CD-Keys and that's been working fine
> at scale for decades. [Truncate for brevity]

It's similar except you're not tracking one product with a few hundreds of
thousands to a million or so at the largest scale to tracking many products
with billions of copies sold. Just taking vitamins/nutritional supplements for
example, last year that market sold 36.1 billion dollars in the US alone so
ROM that's 1-3 billion codes to track. That gets whittled down pretty quickly
by people who don't use the service but it's still a lot when you start adding
other industries too.

~~~
FooHentai
The variety of products shouldn't matter though - You only need to know unique
code and number of times redeemed. There is no need to track it back to an
individual product.

For example, if you ship the unique codes with your products via a small card
in the packaging, or a small product-neutral sticker applied to the outside,
the end result is the same.

I hear you on the volume problem but I'm not sure it's a significant issue. A
key/value store meets the need and will scale to billions while remaining
space and compute efficient.

------
joezydeco
There's another issue where middlemen like Amazon are mixing counterfeit
product into the flow of real products.

This discussion came up during the 2017 Solar Eclipse where Amazon was selling
counterfeit viewing glasses and then recalling legitimate product from real
vendors in the confusion:

[https://news.ycombinator.com/item?id=15008338](https://news.ycombinator.com/item?id=15008338)

~~~
nkrisc
This is exactly why I no longer buy electronics or other higher ticket
consumer goods from Amazon. Inevitably I'll be researching the product on
Amazon and it will have 5 stars reviews with a healthy smattering of 1 star
reviews. If you investigate the 1 star reviews it turns out most of them are
usually from people who received a counterfeit.

So you have people buying from (ostensibly) the same product page on the site,
but some percentage are getting inferior counterfeit products. If there's a
way around that I haven't figured it out and won't be spending any more time
to figure it out. I now buy from authorized retailers and have yet to have a
problem.

Unless I'm buying little plastic things that stick on my desk and hold cables.
I still buy those from Amazon. I don't really care if they're counterfeit,
insofar as they could even be.

~~~
ng12
I only order items "Sold by Amazon" and have never received a counterfeit item
(AFAICT). I always assume those reviews are from 3rd party sellers -- is that
an incorrect assumption?

~~~
jaggederest
Amazon commingles everything, even "sold by amazon" products, unless they've
changed that recently. Everything goes into the warehouse by SKU and has no
further tracking.

------
ljf
Bought a 64gb Kingston micro SD from ebay, and appeared fine at first but
after running some checks was clearly fake. Reported it to ebay and the
seller. Was refunded instantly (and could keep the duff card) but the seller
is still selling and ebay do not appear to have taken any action. I now
realise that no-one would sell for 64gb card new for £12, so ALL the sellers
there must be selling fakes - but ebay allows them to make new listings and
others to sell. Sad thing is someone won't notice until they get back from
their holiday and find their pictures aren't there. And by then the seller
will have closed that account and opened a new one.

~~~
tooltalk
This has been going on for almost two decades, or as long as eBay has been
around. Back in the days, once you unknowingly bought a fake SD card, you not
only had to prove that you had a fake, but also ship it back to China to get a
refund! Even though the cheap fake memory card problem was widely known (there
were selling in thousands), eBay didn't seem to care and quickly lost me as a
customer.

~~~
sowbug
I doubt it's a good idea to knowingly mail a counterfeit product. Crossing
state lines, etc.

If any seller or retailer asked you to do that today, I'd recommend refusing
and instead offering to make it available for them to pick up via their choice
of carrier.

------
rrggrr
Who is responsible when a counterfeit device results in injury or damage to
personal property?

Is there much difference between Ulbricht's culpability for Silk Road and
Amazon (Bezos) liability for Amazon's embrace of counterfeit products? True,
the former was criminal liability, and perhaps that might be enough of a
difference, but it ought not be.

Decades of product safety regulation and tort deterrence is being washed away.

~~~
gscott
The seller has implied liability, I think it would be the Amazon seller. Even
though Amazon corporate sent the customer a fake not from your sellers
inventory but from another sellers inventory you would still have the sue the
seller first and then the seller would have to prove it wasn't the same one
sent by the seller to Amazon. By the time the seller was cleared they would be
in bankruptcy.

~~~
j-c-hewitt
Amazon shunts all the liability to the seller if it's 3rd party and to the
vendor if it's sold/shipped by Amazon.

Amazon does check to see if a product is obviously spoiled or in unsellable
condition, but they don't check for counterfeits.

------
mabbo
Perhaps there needs to be a new open standard for authenticating physical
products.

Put a unique key on each item- added cost, I know- that validates against a
public key for the company and product. At each sale of the product or passing
of possession from a supplier to a vendor, the keys would register a transfer.
Anyone in the supply chain could use the company's public APIs to say "I have
this item, does that make sense? Or did someone already sell this one?".

Companies could sue anyone selling unverified goods. Border police could
easily identify fakes. Customers could confirm authenticity. Sellers could
prove they are or are not selling fakes.

~~~
reportingsjr
This exists under the name bitmarks.

Bunnie Huang wrote a blog post about this just a couple of weeks ago:
[https://www.bunniestudios.com/blog/?p=4981](https://www.bunniestudios.com/blog/?p=4981)

~~~
Cacti
This person's suggestion is to replace serial numbers with a blockchain code?
When will the madness end?

/edit mistakenly used UPC instead of serial number.

~~~
gvb
UPC is a product code (what it is).

Bunnie's blockchain code is a serial number that is (theoretically) impossible
to guess or fake. This prevents scammers from guessing/faking serial numbers
to scam him out of product.

~~~
Cacti
Sorry, I didn't mean UPC, I meant serial number. You can generate unique,
nearly impossible to guess serial numbers using all kinds of methods without
any need for a blockchain.

~~~
cracell
A UUID would work fine. Every product gets a UUID and it goes into a public DB
hosted by the manufacturer (or a 3rd party that verifies who is publishing the
data).

Then anyone can query against that database to verify if a product is
legitimate.

~~~
antsar
Wouldn't counterfeiters scrape that database for legitimate UUID's? You could
allow consumers to "claim" a UUID as theirs (and when I get a product with the
same UUID, I can assume it's a dupe), but that requires every consumer to
actually do this...

~~~
Scoundreller
Make it difficult to scrape?

At the end of the day... we know these things get leaked anyway...

------
ChuckMcM
From the article -- _" This is a world where just about anything can be made
almost instantaneously; a world where a product can be iterated, produced, and
then sold around the world within a couple of weeks."_

And yet every Kickstarter that uses Shenzen to manufacture is months if not
years late in delivering.

Presumably if you could make money by taking out counterfeiters it would
inspire a some subset of people to do so. Most of what I've read on this
problem though seems to hinge on the fact that even if you identify the
business that is at fault they just vanish and a new business pops up to take
their place. And their does not seem to be a lot of incentive on the Chinese
government to regulate these guys.

~~~
leggomylibro
A lot of that is inexperience. If they spoke Mandarin and had ongoing
relationships with people/places having access to everything ranging from
simple milling equipment up to a superfactory in the space of a few square
miles, (and next-day shipping from Taobao,) they might have less trouble.

~~~
ethbro
I feel like Shenzhen factory owners must work very hard to keep a straight
face when someone shows up and says "I have a bag of money from Kickstarter,
and need a one-off large order under a tight deadline."

------
steven777400
Related question: what online sites, if any, are better to purchase items to
avoid counterfeit?

I've been thinking of using B&H instead of Amazon for electronic stuff,
assuming that their reputation means they are less likely to enable
counterfeit sellers, but I don't know that for sure. I also don't know if
other online sites (jet.com?) have or don't have the counterfeit issue.

~~~
mcguire
B&H? Once upon a time the world's greatest source of "grey market" camera
equipment?

~~~
astura
Grey market is not black market though. They aren't counterfeit, knockoffs, or
potentially dangerous. They are legitimate products made by the manufacturer.
They are very upfront that they sell grey market items.

[https://www.bhphotovideo.com/find/HelpCenter/USGrey.jsp](https://www.bhphotovideo.com/find/HelpCenter/USGrey.jsp)

We also sell some products we've obtained from sources other than the
manufacturer or its licensed importer. These are "grey market" products. "Grey
market" is not illegal, not factory seconds, not demo merchandise, not cheaper
or inferior products. In fact in almost every instance a "grey market" product
is absolutely identical to its US-warranted counterpart. "Grey market" and US-
warranted products are manufactured in the same factories from the same
components, and sub-assemblies, to the same specs and tolerances, by the same
workers. In terms of the item itself (excepting PAL video -- see below) there
is no difference at all. A "grey market" Nikon 50mm f/1.4 D-AF lens (for
example) is exactly the same in every possible way as the US-warranted
version.

------
reiichiroh
Not explored in the article is what happens when Amazon clones your product.
HN last discussed this in 2016:
[https://news.ycombinator.com/item?id=11533973](https://news.ycombinator.com/item?id=11533973)

------
akgerber
There are a lot of honestly-marketed and fun products that you can buy China-
direct on eBay, e.g. nuts and bolts of all types and random titanium or carbon
bicycle fabrications, all with shockingly low shipping.

But I wouldn't trust them for something safety-critical, since you have no
idea what engineering went into them and no recourse if they fail.

~~~
s0rce
I would say a bike frame and associated bolts are safety critical since a
failure could result in serious injury/death, especially if you are in
traffic. However, I've read a bunch of positive reviews of the Chinese frames
and its likely that they are produced on the same factory lines as branded
frames, unless you buy something hand made in US/Europe.

~~~
akgerber
I don't have a Chinese eBay bike frame (though I do have a lovely Taiwenese
titanium one ordered from the ORA factory[0] by an American importer that sold
for less than many steel bikes)— just a water bottle cage and a random headset
spacer.

[0] [http://oraeng.imb2b.com/](http://oraeng.imb2b.com/)

~~~
s0rce
I'm kinda considering a Ti bike, who did you order from?

------
bitmapbrother
I don't know why Amazon continues to jeopardize their reputation with being a
counterfeit reseller, but they're becoming worse than eBay. I guess the money
must be so good that they just don't care.

~~~
astura
There's a lot of money to be made and it hasn't backfired on them _at least
yet,_ they are still dominating online retail and still growing, to my
knowledge.

Average Joe on the street doesn't know Amazon has a counterfeit problem or
even that third party sellers exist, they just press "buy" without thinking
much about it. I know because I talk to Average Joes all the time about it and
everyone I've talked to so far is surprised. They are surprised it possible to
get counterfeits on Amazon and they are surprised I have the ability to sell
on Amazon. So I guess customer education is an issue?

I think their long term plan is to stop selling themselves and turn into a
logistic company.

------
ctdonath
Wanted: Amazon Custody Chain - assurance that the product in question was in
fact purchased by Amazon directly from the manufacturer, or otherwise Amazon
vouches for the authenticity of the product.

Ditto eBay.

------
elandybarr
One of my laptops is running with a counterfeit charger (Amazon) and a
counterfeit battery (eBay). As soon as I realized that I have never left it
plugged in where I don't see it - who knows what kind of fire hazard it could
be.

Also, _lasers_. There are plenty of illegal laser pointers on eBay and output
rarely matches the claims. And you really don't want to play with these
illegal lasers unless you have real wraparound lenses.

~~~
ethbro
I had a knockoff laptop power supply energetically self-disconnect. That was
surprising!

Laptop was plugged in, cord draped over something and under mild tension. As
near as I can tell, the wires shorted on the DC side, instantly melted the
plastic insulation, and suddenly I had a severed cord and two live wires
sticking out of the brick.

... so no, I would _never_ leave a counterfeit laptop charger unsupervised.

------
danesparza
Youtube has done a decent job of filtering out copyrighted material (or even
making sure certain videos are sold -- not distributed for free). I'm not sure
why this can't be managed in a similar way.

The people in the article mention they had patents, etc. This would be easy to
prove to corporations like Amazon and eBay.

I'm also surprised the US based companies distributing the goods aren't
getting their pants sued off in court.

~~~
cracell
If you a profiting from it, why stop it?

That said I think in the long term Amazon's brand could be being damaged by
this more by more than they are profiting. But who knows.

They must be very aware of the problem and either working on a solution or
purposely just letting it go for now.

~~~
r00fus
Consider me cynical, but I think it's far more likely, given Amazon's power,
that the company convinces their consumers that counterfeits are "status quo".

US consumers exist for their masters, not the other way around. Where else
will they go to buy?

------
SubiculumCode
Interesting. The producers in China operate in a more capitalist market than
in the U.S. In some ways this has created an entrepreneurial class in China of
high innovation, instead of rentiers owning a market. That said, whatever your
feeling on patents and IP, stealing someone's brand name crosses a real line,
even in the most capitalistic ideology

------
paul7986
Is there an AliExpress vs. Amazon vs. Ebay shopping comparison site?

If not I was thinking that might be a good side project.

------
otterpro
I've been buying from B&H and NewEgg for electronics, and avoiding Amazon if I
can. I use Amazon for cheap stuff out of convenience with "prime", and buy
only from Amazon, LLC and not other sellers, although that is not always
guaranteed to solve the problem, as others have mentioned (such as mixing of
counterfeit with real products). When writing a review of counterfeit product,
make sure to include the Seller's name in the review so that buyers are aware.

------
baybal2
I believe it is very "if you can't win them, join them" moment for the Amazon.

If they will not engage with Chinese makers, people will simply shop on
Chinese mail order sites as is particularly popular with current American
college age group now (and yes, Alibaba provides a lot of hard statistics on
that.)

If they will begin actively working to detriment of existing Chinese sellers,
they will loose even more.

They are choosing in between "not winning much in move 1, and loosing a lot in
move 2"

~~~
xenihn
Which Chinese sites other than Alibaba?

~~~
baybal2
Deal extreme, DHgate, JD global, Ankakak group shops, Lazada (bought by
Alibaba) + say 5 more major ones

------
readhn
shouldn't there be a mechanism that allowed legitimate sellers to report and
block knock-off sellers on ebay/amazon?

Amazon and eBay are American companies so they the problem here it seems to
me. How are they getting away with it? Arent they technically participating in
the copyright/patent violations by providing the counterfeiters a platform to
sell their knock offs?

Knock offs on alibaba are another issue but then again average American is not
shopping there. ... yet.

~~~
baybal2
Well, Apple and Sony together effectively bribed Alibaba to prohibit trade in
factory refurbished second hand electronics.

I was making money on that myself in my teenage years. Probably, I would not
be a developer now if Apple did not come up with Iphone and Sony and Nokia did
not tank to the bottom so quickly at around 2009.

First and second generations of iphones were easily refurbishable. They turned
to optic medium and harder adhesives in third gen, and in the middle of
production run for the third, they began using one that was completely
impossible to undo in garage workshop conditions to finally kill refurbishment
industry

------
nfRfqX5n
funny thing is, they actually block you from posting if you let people know
it's a fake or replica. ebay and amazon do tend to side with the buyer most of
the time, making it a tough problem to solve because it can be exploited on
both sides.

on the other hand, this has opened up other places for people to buy and sell
with authentication provided as a service ie: StockX and GOAT for sneakers.

------
binarysolo
I run a mid-sized online distributorship: there's a lot of factors at play.
Have a few private label items + exclusives with a few US manufacturers and
fought the war against counterfeiters for the past 7-8 years on Amazon, eBay,
and a few other sites. These thoughts pertain primarily to Amazon.

THE ARTICLE'S PROBLEM IS BEING SOLVED: Amazon Brand registry 2.0 just came out
late 2016 - if you have applied for a trademark (with USPTO registration), you
can brand gate your products and prohibit others from selling. Amazon _had_ to
do this as a response because things were entirely out of control the past few
years. It's definitely a process full of friction to the rights-holder, but
this overcomes not only counterfeit items (other people stealing your brand)
but also inauthentic items (grey market products not authorized by you as a
vendor).

AS A CUSTOMER: as long as you can identify you have a counterfeit, you just
use the magic words and apply for a refund saying it's a counterfeit and
you're protected. From personal experience -- you can do it post-facto ~90
days and Amazon will still be on your side.

AS A BUSINESS: basically enter the brand registry program and gate your
products as needed, depending on who else is selling your stuff. You need to
spend some effort making sure people aren't stealing your photos and designs
and camping out on other listings -- that's probably the highest point of
friction right now, but note those knockoffs can't enter your brand without
triggering gating effects. There's a chunk of opportunity here for full
service, value-added resellers like myself here who essentially run the online
channels for older American businesses that aren't techified at all and need
to navigate all the techno-bureaucracy.

AS AMAZON... it's tricky, you need to set up strong controls for brand and
facilitate a system so that it forces the eventuality it desires -- every
manufacturer directly working with Amazon ("most efficient"). Letting the
counterfeiters run a bit amok actually forces the hands of the brand owners to
be really hands on in Amazon sellercentral, sell direct to Amazon via
vendorcentral, or deal with the constant irritation of counterfeits,
review/performance bombing by competitors, and their associated performance
notifcations (that can shut down your store). Kinda brilliant actually.

ON BRANDS and knockoffs: when I as a consumer buy something, I am spending
money to solve a want or need. The brand and its associated reputation gives
me an expected value that said shirt/snack/shaver is going to give me what I
want without much downside -- it's gonna fit well, or is tasty and will not
poison me, or will trim my hairs cleanly... and that expectation is the value
of a brand. In this regard, yes, I think counterfeiting is unethical since you
are delivering a fake promise that your shitty product will do XYZ based on a
good marketplace actor's performance.

------
thisisit
> We have a store on Amazon and counterfeits have been able to attach
> themselves to our page, violating all of our intellectual property.”

How is attaching themselves to the page even possible? I don't believe Amazon
has any kind of ad system which allow people to buy spaces.

~~~
brianwawok
They are talking about owning an ASIN

For example:
[https://www.amazon.com/dp/B00KRYMB88/](https://www.amazon.com/dp/B00KRYMB88/)

The ASIN is B00KRYMB88.

Whoever FIRST listed to that item picked the title, description, pictures..
and it created the page on Amazon and assigned it an ASIN. If you have an
identical shirt to that, you can list it with ASIN B00KRYMB88, and it will
appear on that page (But you can't edit the listing details). That is how
Amazon is built.

The problem is, what if you have a counterfeit shirt, and you sell under the
same ASIN. A customer will get it delivered.. it sucks maybe.. and you blame
the listing and leave a bad review.

~~~
dabernathy89
So you cannot prevent other sellers from selling under the same ASIN?

~~~
j-c-hewitt
It is possible, but only with direct permission from Amazon. It's called
'brand gating.'

~~~
brianwawok
Yah it is a bit of a process. It is much easier if you are say, selling
something with Brand = Nike and you have a company called Nike.. vs just being
the first person to sell generic widget X.

------
randyrand
I don't care if its a counterfeit as long as its completely indistinguishable
in every manner from the original.

If it _is_ distinguishable, then amazon should be distinguishing it and
selling it under a "counterfeit" label with its distinguishing qualities on
the sale page.

Easier said than done of course. But I think this is the right approach in
dreamland.

~~~
bdcravens
Not all products are obviously counterfeit; the "distinguishable" part may
come later (for instance, iPhone chargers that fail due to lacking safety
internals authentic parts have)

------
dba7dba
Not long ago people got sent to jails and had their lives ruined (sure they
broke law) for carrying counterfeit stuff. They were treated like drug
dealers.

Now same is done but it's considered ok and even a brilliant business move,
all because some MBAs and their bosses make it look ok.

------
sova
An impressively unusable website due to ads on mobile.

------
baybal2
I believe American companies are uncompetitive in the "new world order" \-
where 99% of durable consumer goods (yes, that's how economists call it)
categories are either made in China, or not being made at all (edit.)

Americans are not as innovative and strong as Chinese in the way they
appropriate designs and ideas: Chinese extract all value from novel high
margin niches quickly, they run at the forefront at the race to the bottom in
mass market goods, and do painless exits from product niches that are sucked
dry and are out of trend/hype cycle.

American companies needs to become more innovative to compete with Chinese.
Completely scraping the useless concept of "intellectual" property of every
kind, and the idea that one can "own" and idea and create captive markets
through that ownership will be the first step in that direction.

~~~
elefanten
Let's ignore the ridiculous 99% figure on which you rhetorically position your
argument.

\- I don't know that innovation is the right term for the rapid value
extraction you're talking about. It's more like a powerful and well-configured
economic environment for manufacturing-related value extraction. Many aspects
of that environment are temporal and historically contingent. Things like
labor costs, labor conditions, rule of law/regulations and international
tolerance for norm-breaking are not constants. And some of those may have
passed inflection points recently (ie- labor costs and tolerance). So, good
competitive circumstances. "Innovation"... I don't know.

-How profitable and sustainable are these value extraction operations, on average? I really don't know, but how reliable of a business plan is it? I'm not doubting people get rich off it, but it feels like slash and burn territory rather than a blueprint for building big, sustainable businesses.

-Sure, there's a case to be made against IP. But this article and this thread are examining the outright fraud of trying to pass off counterfeits as a different company's product. That's categorically different and clearly problematic even in an IP-free world.

~~~
baybal2
>I don't know that innovation is the right term for the rapid value extraction
you're talking about. It's more like a powerful and well-configured economic
environment for manufacturing-related value extraction.

Yes, you are totally right in what you are saying. You do get the subtleties
of the matter even better than me here.

That environment/business-ecosystem is what China has managed to sustain for
30 years and what America never managed to create to begin with, unless you
count times of Bennie Franklin.

See this: if you give a hungry Chinese business owner a hen laying golden
eggs, he will probably slaughter it upon first opportunity, but he will spend
the proceeds from sale of than hen and its eggs to breed more of them and do
it again. If you give such hen to a hungry American or Western European, he
will probably run away, hide that hen, and will be brooding over it until he
dies from hunger or the hen dies from old age.

What seems to me to be the raison-detre for a lot of American business people
is to find some easily securable cash cow captive market niche, and then deep
a huge patent/legal/copyright moat around it to monopolize it. That is an
example of very passive-rentieristic mindset.

Chinese entrepreneur can slaughter his cash cow business and go on to next big
thing, while American has no willpower to do so.

>Many aspects of that environment are temporal and historically contingent.
Things like labor costs, labor conditions, rule of law/regulations and
international tolerance for norm-breaking are not constants.

This is true too. Western companies that were setting up shops in China in
nineties are long long gone. They were there not for simply cheap labour, but
ridiculously cheap labour.

Chinese industrialists have long closed businesses like rubber sandals
factories and are continuously moving their industrial groups from one "next
big thing" to another faster than anybody else on the planet. Nobody in SV are
like those guys. Doing things this way takes special talent.

>How profitable and sustainable are these value extraction operations, on
average? I really don't know, but how reliable of a business plan is it? I'm
not doubting people get rich off it, but it feels like slash and burn
territory rather than a blueprint for building big, sustainable businesses.

Yes, the slash and burn approach it is. You can build a substantial business
group using it, but you will have to keep moving all the time.

I see it as a valid business strategy with major strength of being strong
against Western type competitors. You enter early, scale faster than others,
by the time any foreign competitor simply realise the existence of your market
niche, you already ran margins into zero and is doing an orderly downscaling
and profitable exit. You leave rotten capitalists nothing, but crumbs behind
you. They can't grow and challenge you that way.

In China this tactic is called "Locust business" \- any trendy product makes
healthy double digit profits for three month before the locust swarm of late
comers, and you need to switch to the next big thing.

A guy describes that phenomenon very vividly in this video -
[https://www.youtube.com/1IYu4wzy9Lw](https://www.youtube.com/1IYu4wzy9Lw)

This is how it was with countless novelties that make our daily lives today
that came out of China - consumer 3d printers, hdmi stick computers, drones,
bluetooth car monitors, dashcams, portable bluetooth boomboxes, wifi
lightbulbs, LED lighting, air washers, hoverboards, vapes, spinners and so on.

I met 3 Chinese millionaires from mainland during my life in Vancouver, all of
them did something in electronics, and all of them went through many many of
those slash and burn cycles. One started from making socks, then phone
holsters, then small gadgetry where he went through 3 very different product.
Another did sandals and mp3 players. The third one started with radios, but
ended making semi fab tooling where he nuked Western competitors that had 10
digit valuations.

------
dizzystar
I'd like to clear up a few misconceptions here. I have a lot of experience in
this space.

For starters, Amazon has very good policies that allow sellers to protect
their IP and products. It's very easy to remove fraudulent products from your
listing.

The problem is that Amazon is a very complex platform to use, with a lot of
rules and policies, so it seems to me that the sellers in the article, and
many others, don't quite know how to protect their ASINs. I would like to
think that Amazon would do a little better to inform the sellers, but since so
many are just starting, or are amateurs, there probably isn't time to walk
each one through.

Of course, RTMFD, as they are very clear on what is and isn't allowed to be
sold. For example, it is a clear and blatant violation of Amazon policy to
drop-ship from overseas.

eBay and Amazon aren't able to police everything. It is up to the sellers and
buyers to report products that are knock-offs. As a buyer, I've closed down a
few listings. As a seller, I've done the same, but mind that there is a
complex war going on between sellers. Some sellers game the system by nuking
your listing over fake violations, so there is a balance to all of this that
is very difficult to maintain. Unfortunately, the world is full of jerks, so
if it was a blind trust, we'd be in a much worse position.

Anyways, please read through ALL the policies of Amazon and eBay before making
assumptions about what is right and wrong. What is in this article and in many
of these comments are very wrong.

~~~
austinheap
I think you might be missing the point. Amazon didn't used to be a "buyer
beware" e-commerce platform. You used to be able to trust them, where as
everyone knew eBay was rife with counterfits and fraud. Amazon and eBay didn't
used to be comparable, because one site (Amazon) used to have integrity in
their product listings.

That's no longer the case. Amazon doesn't even attempt to protect consumers
the way they used to. This has cheapened their value and put the burden on
consumers -- most of which are unable to decipher fraud from legitimate
products. I assure you my grandma has zero clue when she's getting scammed on
Amazon and that's bad for business and bad for those in our society who are
vulnerable to these types of scams.

Buying on Amazon shouldn't be like playing roulette.

~~~
dizzystar
This was all an issue 5 years ago, and even before that.

I'm not sure why people are just now noticing, but it did cause Amazon to
update their policies so it's a bit harder to get started these days. I
suppose it was too easy to get started at some point, but the onus has always
been on the sellers to protect their product. It's just that this is a lot of
work, and I don't think inexperienced sellers like you have in the article are
prepared to really understand this.

~~~
compiler-guy
Amazon's policies mean nothing if they are not being enforced with sufficient
rigor to deal with the problems the policy is meant to address.

They haven't been, aren't now, and it doesn't look like they will be.

Policies are just words without enough action to make them stick.

~~~
dizzystar
Amazon never enforced their policies in regards to counterfeit. It's always
been up to the sellers to take the required actions.

------
PublicFace
I like the Chinese counterfeits. I got a bundle of knock off Ralph Lauren
polos that let me experiment with the frat boy look in college with out
spending thousands on real ones.

I personally like shanzai culture. Brands are cool but ultimately quality
should be an internal thing that customers should seek out and test, not rely
on status symbols and brands to define their tastes. Caveat emptor is a thing
you know.

~~~
chrisper
What if you paid and ordered Ralph Lauren and received counterfeit? Because
that's the larger problem in my opinion. Especially since it often also
includes goods that are dangerous as counterfeit (like medication).

~~~
icebraining
It raises an important distinction, though: protecting users vs protecting
brands. There are business interests pushing to conflate the two, but we
shouldn't.

~~~
graphitezepp
Precisely, in my worldview. Brands have some amount of value for users as they
are a stamp of a certain level of manufacturing standard. However that does
not mean they are inherently beneficial to consumers.

~~~
PublicFace
Yeah exactly. I guess I didn't address the inherent way you GET knockoff
shirts/clothing off of ebay which is look for the people who are obviously
selling fakes pretending to be reals but for far too cheaply and order
accordingly. It's not hard if you aren't totally blind to the standard Engrish
language cues. That being said I am probably hurting RL's brand. But do I
care? What if selling "official knockoffs" was a thing? What if you paid the
smallest of licensing fees to sell an "official knockoff". A certified look
alike with no quality standard. That would be a new market segment right?

