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OpSec News Round-Up 11/15/2011

Posted by admin on Nov 15, 2011 7:38:54 AM
Procurement: Death by Counterfeit


The United States recently announced that it had uncovered 1,800 instances of suspected counterfeit parts (involving over a million individual components) sold to suppliers of weapons and equipment to the Department of Defense. China was the largest source of such counterfeit parts, partly because corruption in China prevents the government there from cracking down. Then there's the growing number of Chinese companies that will try to improve their profits by putting more and more of the cheaper counterfeit parts in shipments of legitimate ones to customers they have established relationships with. This may seem counterproductive, but it appeals to many Chinese businessmen.

This counterfeit parts scam is not just directed at the United States. It's a growing problem for the Russian military, and even the Chinese armed forces. Counterfeiting of luxury goods (perfume, women's accessories, music CDs, etc.) is pretty well-known. While this poses a threat to the profits of some high-end businesses, it generally doesn't rise to the level of a national security issue. But that has been changing. Each year, American customs officials are seizing over a billion dollars in counterfeit goods that were shipped to the United States. The amount keeps rising each year, despite energetic efforts to curb counterfeits. The stuff is just too profitable. A lot of this stuff consisted of items the military buys. That included such diverse stuff as electronic chips and metal fasteners.

While there have been no Americans killed because of counterfeit parts, there are a growing number of maintenance problems related to the sub-standard parts (which fail sooner). Eliminating that problem is expensive, as it means spending more to inspect Chinese parts, or buying more expensive parts from more reliable non-Chinese suppliers.

For full story, please visit Strategy Page.

China Plans State Office for Anti-Counterfeiting, IP Protection


China has announced its intention to set up a national office to handle intellectual property rights (IPR) infringement and counterfeiting, according to the Xinhua state news agency.

The State Council said last week that a national body needed to be formed to coordinate administrative and enforcement operations, particularly in the food, pharmaceutical, cosmetics, agricultural, construction, machinery and electronics sectors.

The announcement comes just ahead of the 10-year anniversary of China's accession to the World Trade Organization (WTO). Over that time, the country's share of global exports has risen from 4 per cent to nearly 11 per cent, but that success has been mirrored by complaints that the country has become the primary hub for manufacture of a host of counterfeit products.

To read more, please visit Securing Pharma.

Global Automotive Brake Friction Products Sales (Aftermarket) for Light Vehicles to Reach $4.25 Billion by 2017, According to New Report by Global Industry Analysts, Inc.


Counterfeit parts remain a major concern for the automotive components industry, primarily in the aftermarket sector. Counterfeit aftermarket products steal a share of more than US$10 billion from American Automotive suppliers per year. Brake parts are highly susceptible to counterfeiting as they need continuous replacement. Additionally, the standard low value friction parts market is the most affected segment, which is an easy catch for the counterfeiters to operate. China, India, Taiwan, Malaysia, and Japan are few countries in which most of the counterfeiting takes place. The number of counterfeiters is likely to increase in the near future.

For full coverage on this story, please visit SF Gate.

Chinese Police Raid Cigarette Counterfeiters, Arresting 78


hinese police have broken up 122 criminal dens and arrested 78 suspects in a cross-provincial raid on a cigarette counterfeiting ring, the Ministry of Public Security said Monday.
About 80,000 cartons of bogus cigarettes and 10,000 units of counterfeit logos and cigarette cases were confiscated, according to a statement.

Police also seized four pieces of manufacturing equipment and 25 vehicles used in the operation, the statement said.

The raid involved more than 1,500 officers from nine provincial areas, and a well-knit underground network for cigarette counterfeiting and distribution, it added.

To read more, please visit The Philippine Star.

Senate Investigates Counterfeit Parts in Military Equipment


WASHINGTON—This past week, the Senate Armed Services Committee released the findings of a months-long bipartisan probe that revealed 1,800 cases of counterfeit electronic parts in the DOD supply chain, with the total number of suspected counterfeit parts exceeding 1 million. According to committee Chairman Carl Levin (D-Mich.) and ranking minority member John McCain (R-Ariz.), the vast majority of the parts originated in China.

“In more than 70 percent of cases, the trail led to China, where a brazenly open market in counterfeit electronic parts thrives,” said the senator in a statement released two days after the initial hearings were held on Tuesday. “In most of the remaining cases, the trail led to known resale points for parts coming from China.”

For full story, please visit The Epoch Times.

Topics: Pharmaceuticals, Legislation, In the Headlines