Anti-Counterfeit Law Allows Chinese Consumers to Cash In

Wang Haidong bought hundreds of cordless phones, fax machines and earphones. Then returned them for a double refund.

All he had to do was prove they were counterfeit, missing proper paperwork or otherwise fraudulent. Even false advertising has the more-than-your-money-back guarantee.

“I couldn’t believe it,” Wang said. “Every major department store was selling them. I made more than $10,000 just buying bogus phones and fax machines. If I had more money, I would have emptied out every store in the city.”

Two decades of economic reforms have transformed China into a dream market with 1.3 billion potential customers, but thanks to widespread piracy, the country is also fast becoming the counterfeit capital of the world.

A new breed of consumer warriors, however, has been winning small but significant battles in the war against fakes.

Armed with a little-known law that allows them to demand a double refund for fake merchandise, bootleg “vigilantes” attack counterfeiters by buying knockoffs in bulk and forcing the stores to pay for violating the law.

They call it the Wang Hai phenomenon. Named after a Beijing resident who was the first in the country to test out the consumer protection law in the mid-1990s, the scheme caught on like wildfire. Now practically every city has its own “Wang Hai.”

“There was a ‘Sichuan-Wang Hai,’ a ‘Zhejiang-Wang Hai,’ a ‘Wuhan-Wang Hai’ and a ‘Shanghai-Wang Hai,’ ” said Yang Hong, a “Wang Hai” from Nanjing. “Some people were motivated by money. But most of us saw it as a great way to protect our rights.”

No matter what their initial motive, the Wang Hais have sparked a sea change in how the Chinese see themselves in a new market-driven economy. Until the Wang Hais came along, very few people knew anything about consumer rights, much less about how to fight back.

Yang Hong is a former movie stuntman turned security guard and amateur film buff. He bought a Japanese-made camcorder for a wedding. He wanted to shoot the newlyweds in slow motion and show the video at the banquet. But he couldn’t get the camera to work. He found out later that the camcorder never had the feature. It was a clear case of false advertising. He complained and got a refund.

“I didn’t get into this on purpose, but because I wanted the slow motion to work so much, I studied the law and found out how I could fight for my rights,” Yang said.

Since March 2000, he has won more than 130 cases of fraud. But to distinguish himself from the other Wang Hais, he began to demand public apologies and a symbolic refund of one yuan, or a little more than a dime, for each victory.

That has made his fight a lot easier, because most store owners don’t bother to resist the small fine. If they did, he would have to find the original brand-name manufacturer and get them to verify the goods.

“Doing this for personal gains grates against a lot of people’s sense of right and wrong,” said Yang, explaining that he makes enough money as a security guard. Others, however, believe that’s letting the bootlegger off too easy. Besides, the burden of proof can get expensive, especially if it involves hiring a lawyer and going to court. Buying in bulk and getting a big refund is the only way to cover costs and have an effect, according to the original Wang Hai from Beijing.

Shanghai’s Wang Haidong, whose name coincidentally means Wanghai of the east, doesn’t mind admitting he’s also in it for the money. Referring to the selfless model soldier from the 1966-76 Cultural Revolution, he said, “They ask me to learn from Lei Feng, and fight counterfeiters for free. Sure, I can do that a couple of times, but I need to make a living. They violated the law, and I’m following the law. There’s nothing wrong with how I’m making my money.”

Recently, an official from the state-run Shanghai consumer affairs bureau suggested changing the law so people such as Wang Haidong would no longer qualify as an ordinary consumer. The argument is that he’s buying things knowing they are fakes and therefore shouldn’t be entitled to any refund. The proposal set off a debate that left many wondering if this would be the end of the consumer crusade.

“Chinese consumers lack a real representative voice,” said Wang Hai, adding that many local consumer bureaus are staffed with people who run department stores that sell bogus goods. “We still don’t have a neutral and unbiased body to protect our rights.”

Being an activist is tough enough even without a legal about-face. Some counterfeiters hire thugs, make threatening calls and stop at nothing to protect their interests. “Someone once threatened to chop my toes off to make soup,” said Liu, who now runs a private-investigating firm helping multinationals break up counterfeit rings. “But I feel good when I can stop a certain fake drug from entering the market. I know I’m performing an important public service.”

Then there is the financial investment. Wang Haidong still has a few thousand dollars’ worth of bogus health tonics sitting in a warehouse. It takes time and patience to prove they’re phony.

If the law changes, he would be stuck. But he isn’t giving up, not when there are so many blatant violators running free.