---
title: "Rural Counterfeit Investigation: Behind 'Mai Jie', 'Kang Shuai Fu', 'Jin You Yu' Lies a Hidden Counterfeiting and Sales Chain"
description: "As rural e-commerce grows, counterfeit goods in rural areas have evolved from fake seeds to fake bags, with internet platforms spawning 'home factories' and 'rental house factories'. Despite legal crackdowns, a gray market persists due to limited purchasing power and lax enforcement, prompting calls for stricter penalties."
author: "毛淑杰"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-08-12"
language: "en"
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# Rural Counterfeit Investigation: Behind 'Mai Jie', 'Kang Shuai Fu', 'Jin You Yu' Lies a Hidden Counterfeiting and Sales Chain

> As rural e-commerce grows, counterfeit goods in rural areas have evolved from fake seeds to fake bags, with internet platforms spawning 'home factories' and 'rental house factories'. Despite legal crackdowns, a gray market persists due to limited purchasing power and lax enforcement, prompting calls for stricter penalties.

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With the development of the times, counterfeit and shoddy goods sold in rural areas have also undergone changes.
Rural e-commerce consumption has gradually become a new market that major e-commerce giants are competing for, and rural residents' shopping channels have expanded from offline familiar small shops to a coexistence of online and offline shopping methods. However, counterfeit and shoddy products in rural areas have not disappeared due to changes in consumption patterns.
With the development of the times, the focus of rural counterfeit goods has shifted from "fake seeds" to "fake bags and suitcases", and convenient internet platforms have given rise to "home factories" and "rental house factories". Nandu reporters found that driven by profit, illegal groups take risks, even forming a hidden chain of counterfeit production and sales.
On the other hand, due to limited purchasing power, some rural consumers regard knockoff products as "substitute consumption"; some merchants also ignore rules and take chances by walking a fine line. This makes counterfeit production and sales a gray area that receives mutual recognition.
**From "Fake Seeds" to "Fake Bags"
**Rural Counterfeits Undergo Changes
**Mai Jie, Kang Shuai Fu, Jin You Yu, Ba Ge He Tao...**
These various "high imitations" often become topics of ridicule about rural counterfeits. In fact, with the development of the times, counterfeit and shoddy goods sold in rural areas have also undergone changes.
More than 10 years ago, rural counterfeits were mostly concentrated in bulk agricultural products, such as fake seeds, fake fertilizers, and fake pesticides; now they have gradually developed into multiple fields including tobacco and alcohol, daily chemicals, home appliances, and clothing.
Moreover, rural residents' shopping channels have expanded from familiar small shops on the streets to large chain supermarkets, internet e-commerce platforms, and even some people try cross-border consumption.
According to the "2017 Rural E-commerce Development Report" released by the China E-commerce Research Center, in 2017, rural areas in China achieved online retail sales of 1,244.88 billion yuan, a year-on-year increase of 39.1%; among physical products, the top three online retail sales were clothing, shoes, and bags; home decoration; and food and health products.
The huge potential of rural e-commerce consumption has gradually become a new market that major e-commerce giants are competing for. However, counterfeit and shoddy products in rural areas have not disappeared due to changes in consumption patterns.
E-commerce has the attributes of cross-regional and cross-population, and whether in urban or rural areas, consumers face the same risk of purchasing fakes. Rural areas have inconvenient transportation, relatively closed information, limited supervision, and lower average purchasing power among rural residents, making rural areas a hard-hit area for low-quality and inferior products.
Moreover, compared with the more mature e-commerce consumption habits in cities, for rural consumers who value personal relationships more, O2O offline stores may continue for a considerable period of time.
The problem of counterfeit goods in rural offline stores is also not optimistic. In January 2018, the media released a consumer evaluation report for Meishan City, Sichuan Province. The report showed that 66.67% of users in Meishan had bought counterfeit goods in township offline supermarkets. Among them, daily chemical counterfeits accounted for 70.83%, food 58.33%, and clothing 37.5%.
Counterfeit cigarette production and sales chain
Principal offender sentenced to 15 years
Due to high transportation costs, some remote rural stores generally rely on traditional channels such as county wholesale markets and large discount supermarkets, choosing to purchase goods nearby, and rarely directly connect with manufacturers.
This gives counterfeiters an opportunity, and counterfeit chaos such as passing off fakes as genuine, inferior goods as high-quality, and selling under licensed brands is common. Among them, there are merchants who "unintentionally" sell fakes due to lack of discernment, and there are also "counterfeit industry chains" that organize production, transportation, and sales for profit.
In the cross-provincial counterfeit cigarette sales case cracked by Xunyang County Police in Shaanxi in 2014, low-quality cigarettes counterfeiting high-end brands were transported from Guangzhou to Xi'an for sale, involving more than 2 million yuan.
The suspect Zhang Mouyi confessed that the purchase price of these mid-to-low-grade counterfeit cigarettes was only 5-20 yuan, and they were generally purchased and sold in whole pieces (50 cartons), with a profit of 500-800 yuan per piece. According to him, generally, buying genuine cigarettes for four or five yuan, opening the packaging, and replacing the tobacco can make high-grade cigarettes worth 20-30 yuan or more.
The suspects disguised the counterfeit cigarettes as ceramics, electrical appliances, tea, and other items, transported them to Xi'an via logistics companies, then had local freight drivers pick them up, and then resold them to the most terminal street tobacco and alcohol shops. Driven by profit, whether it was the upstream counterfeit cigarette manufacturers, freight drivers, or downstream distributors and tobacco shops, they all turned a blind eye to and actively participated in the production and sale of counterfeits.
After trial, the court held that the six defendants, for the purpose of illegal profit, knowingly sold and transported cigarettes that were counterfeit and shoddy products over a long period and in large quantities, and their actions constituted the crime of selling fake products. In the end, the six suspects were sentenced to multiple years in prison and fined, with the principal offender Zhang Mouyi receiving the heaviest penalty: 15 years in prison and a fine of 1.18 million yuan.
"Rental House Factory" Produces Fakes
Social Network Platforms Attract Customers
In recent years, selling fakes through internet channels such as QQ, WeChat, and e-commerce platforms has gradually emerged.
On the one hand, the internet enables cross-regional sales, which invisibly facilitates large-scale sales of fakes; on the other hand, because it eliminates transportation and face-to-face transactions, the chain of production and sales of fakes is also more hidden.
Zhang, a post-90s resident of Tianjin, started reselling counterfeit cigarettes on WeChat in September 2015. He did not have a tobacco monopoly wholesale and retail license and knew these cigarettes were not genuine. However, he continued to post photos of counterfeit cigarettes on his WeChat Moments, along with a price list significantly lower than market prices, and shipped them to other places via express delivery. Buyers could send the product name and quantity via WeChat, and then choose payment methods such as transfer or cash on delivery. Famous brand cigarettes with a market price of 500-600 yuan were priced by Zhang at only over 100 yuan.
After the case was exposed, a buyer said, "I knew the cigarettes were cheap and couldn't be genuine, and I didn't ask whether the seller had a tobacco monopoly license." In March 2018, the Hequ County People's Court in Shanxi Province sentenced Zhang for illegal business operation to six months in prison and a fine of 6,000 yuan.
The convenient and low-threshold internet channels have also given rise to "home factories" and "rental house factories" in rural areas. In addition, counterfeit goods sent to rural areas also include fake health products and even fake medicines, which pose certain safety hazards. In February 2015, Zhang and Wang from a natural village in Yima City, Henan Province, hired multiple workers in a rented house to illegally produce and sell sexual health foods containing toxic and harmful substances. They specially purchased packaging machines, capsule machines, vacuum cleaners, and other equipment as well as necessary raw materials, with dedicated personnel responsible for promotion, production, and delivery, with a clear division of labor.
Wang confessed that they undertook business through QQ and shipped via express delivery. In just 10 months, the gang produced and sold hundreds of thousands of pills of toxic and harmful food, illegally profiting 56,684 yuan. At the production site, local police also seized pills containing sildenafil and a large amount of production raw materials.
Knockoff Goods Involve Brand Infringement
Yet Gain "Tolerance" from Merchants and Consumers
In the counterfeit market, "knockoff goods" that counterfeit well-known brands and sell inferior products are the most common. For example, the ridiculous "Jin You Yu" blended oil, "Zhou Zhu Pai" washing powder, "Ba Ge He Tao" (Eight Walnuts), etc. Knockoff products are highly similar to genuine products in appearance or design, making it difficult for consumers to distinguish. Moreover, some knockoffs are priced lower, making it easier to invade rural markets where low-income consumers are the majority.
However, besides profit motives, there are deeper reasons why counterfeiting and selling fakes cannot be completely eradicated.
During interviews, some merchants who sold fakes expressed dissatisfaction with anti-counterfeiting measures on online shopping platforms to Nandu reporters. They even believed that "if it doesn't kill people, it's not fake" and "if consumers don't complain, it's not fake". At the same time, some rural consumers, due to limited purchasing power, default to this low-priced substitute consumption, thinking "as long as it works". Even if they accidentally buy fakes, they choose to "forget it" because the return and exchange procedures are complicated.
It is this mutual "tolerance" psychology of merchants and consumers that allows some merchants to ignore rules, take chances, and walk in the gray area of producing and selling fakes. High-imitation cosmetics, high-imitation bags, and high-imitation brand foods are also prevalent in county towns and villages.
In fact, Chinese law protects the exclusive rights of registered trademarks, and for specific trademarks, use without registration or authorization from the trademark owner is prohibited; intentional confusion that misleads people into thinking they are someone else's goods or have a specific connection with others is regarded as unfair competition. These knockoffs not only harm consumers' rights and interests, but their production and sale also constitute brand infringement against the counterfeited merchants.
In May of this year, the uproar over the "knockoff Deppon incident" once again put Baidu on the front page. At the end of April, multiple netizens reported that when they searched for Deppon Logistics on search engines, they encountered knockoff logistics companies ranked high, and were deceived. Baidu later responded that "the knockoff Deppon forged a brand authorization letter from the Deppon brand company to Baidu, and Baidu failed to identify the authenticity of the authorization letter."
In order to combat similar "Li Gui" (the counterfeit), many "Li Kui" (the genuine) have invested enormous money and energy in protecting their rights. The real Deppon responded that it handles more than 2,000 such complaints every year.
Voices
Representative Proposal: "Fight Fakes Like Fighting Drunk Driving"
In May of this year, at the 2018 China E-commerce Conference, Liu Qiangdong, Chairman and CEO of JD.com, stated that in his hometown in rural areas, 30% of goods can almost be said to be fake. Across the country, a large number of village stores and convenience stores are flooded with fakes, with prices higher than in Beijing, causing rural people to pay higher costs and still buy fakes.
Earlier in March, Zhang Mao, Director of the State Administration for Industry and Commerce, publicly proposed the goal of "fewer fakes in the world". At the same time, during this year's two sessions, many representatives and committee members also made suggestions on tackling the problem of fakes, saying "we should fight fakes like fighting drunk driving" and increase criminal penalties for producing and selling fakes.
Zhang Mao once revealed that last year alone, 28,000 cases of trademark infringement and counterfeiting were investigated and dealt with. Among online shopping complaints, one-fifth were counterfeit and shoddy products.
Zhu Zhengfu, a member of the National Committee of the Chinese People's Political Consultative Conference and Vice President of the All China Lawyers Association, has submitted a proposal on "Increasing the Crackdown on the Production and Sale of Fakes" for two consecutive years.
Also in March of this year, he said in an interview, "We must implement industry bans that extend from the production end to the sales end, storage end, and transportation end. Only by linking legislation, law enforcement, and judiciary, and increasing the criminal penalties for producing and selling fakes, can we tackle the problem at its source."
Source: Southern Metropolis Daily
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