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Luxury groups in counterfeit protest

By FashionUnited

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LVMH, Burberry Group, and 21 other companies are trying to protect rising sales in China by asking Beijing city officials to force mall owners to shut down traders the second time they are caught selling fakes. Xiushui Clothing Market Co., owner of the 1,000-shop Silk Market, and two other centers agreed in June to enforce the ``two-strikes'' rule.

LVMH, the world's largest luxury-goods maker, plans to open two to three stores a year in China, where sales are rising 50 percent annually. The country's economy grew 9.9 percent last year, the most among the world's biggest economies, giving its 1.3 billion citizens more disposable income. ``The Silk Market case symbolizes that China can no longer tolerate counterfeit products sold so openly in the capital of a nation that is rising in global importance,'' said Paul Ranjard, a lawyer in charge of intellectual property protection at the European Union Chamber of Commerce in Beijing. ``We have to watch carefully to see if the market actually implements this accord.''

Closing local traders won't crimp China's fake goods industry, which costs overseas companies an estimated $60 billion a year, said Stephen Vickers, chief executive officer of Hong Kong-based risk-management consultant International Risk Ltd. International crime syndicates order counterfeits from Chinese factories, sometimes posing as company representatives, he said.

China made 50 percent of the counterfeit goods seized in the EU in the first 11 months of last year, down from 70 percent in 2004, according to the EU Tax and Customs Commission. Of $138 million in knockoffs confiscated by U.S. Customs in 2004, 63 percent came from China, inspectors said. Even when Chinese authorities close a factory making fakes, ``another one appears somewhere else,'' LVMH Chairman Bernard Arnault said in Beijing in November. The cost to luxury-goods makers is impossible to calculate, according to the Quality Brands Protection Committee, a Beijing- based anti-piracy group that represents 150 companies with more than $50 billion of investments in China.

Chinese Vice Premier Wu Yi vowed to crack down on counterfeiters when she met with then-U.S. Trade Representative Rob Portman on April 11 in Washington. President Hu Jintao repeated the pledge to President George W. Bush during an April 20 visit to the White House. Emert, the Tennessee auto-parts importer, said his purchases are just a ``drop in the bucket'' against total U.S. consumption of counterfeit goods. ``The U.S. government should focus on stopping counterfeit goods at the U.S. borders,'' he said. ``Leave markets like Silk Street alone. It's for our shopping pleasure as tourists.''

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