Chinese Counterfeiters Thrive in Africa

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Legitimate manufacturers themselves can't always spot a fake (at right)

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African governments realize they have a problem, but they have a hard time fixing it. "Protection of intellectual property rights in developing countries...is a new thing," says Wycliffe Swanya of the Kenya Association of Manufacturers. Kenya and Uganda have floated anti-counterfeit legislation, but the measures haven't passed yet. Even if they become law, inexpensive consumer goods won't likely be a top priority. "The authorities say, 'If we have to go after either someone selling counterfeit drugs or someone selling fake shoe polish, the choice is clear,'" Ouma says.

That means brand owners are left to fight the problem on their own. Sara Lee, Nice, Haco, and others often sue importers of counterfeits under a hodgepodge of existing regulations. But those outfits tend to be shell companies that fold after bringing in just one or two shipments, making it tough to find the owners. Sara Lee has found dozens of factories in China that counterfeit its products, and says it has made progress in fighting the problem. But while Sara Lee can sometimes impound the goods it finds, it's much harder to seize manufacturing equipment. "Have we really shut them down? No," says Sander Bakker, a Sara Lee anti-counterfeit executive. At the Canton Fair, a twice-yearly confab in the Chinese city of Guangzhou, Bakker says he has seen catalogs from counterfeiters offering products masquerading as various global brands.

As for the product itself, Sara Lee says the counterfeiters take shortcuts that make for inferior polish. They use kerosene, while real Kiwi is based on a more refined petroleum byproduct called white spirits, which Sara Lee says better protects shoes. Ouma sniffs a tin of fake Kiwi and turns up his nose, but a less discriminating sniffer can't discern a difference.

At Haco, meanwhile, workers pour plastics through injection molds to form the components of a BiC. Other employees assemble pens by hand and sort them into boxes for shipping. Can Haco keep providing those jobs? Igathe says the counterfeiting might eventually force the company to outsource its production to China. "It's a real question in our strategic plan," he says. "But it would make me bleed."

Rocks is the senior editor, Global Business, for BusinessWeek. He traveled to Uganda on a Gatekeeper Editor's fellowship from the International Reporting Project, based at Johns Hopkins University. Alex Halperin is a fellow with the Phillips Foundation