Cablegate: South China Ipr: U.S. Companies Train Guangdong Customs How

VZCZCXRO0694
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0751/01 1830759
ZNR UUUUU ZZH
R 020759Z JUL 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6211
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 GUANGZHOU 000751

SIPDIS

SENSITIVE
SIPDIS

USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS KASOFF, HIJIKATA, GENERAL
COUNSEL'S OFFICE JOEL BLANK, AND GENERAL COUNSEL SULLIVAN
STATE FOR EB/TPP MASSINGA, FELSING
STATE PASS COPYRIGHT FOR POOR
STATE PASS USPTO FOR BOLAND
STATE PASS USTR FOR MARUYAMA, WINTER MCCOY, ESPINEL, CELICO
USDOJ FOR NEWBY
DHS/CPP FOR MACRAY
USPACOM FOR FPA

E.O. 12958: N/A
TAGS: KIPR ECON ETRD CH
SUBJECT: South China IPR: U.S. Companies Train Guangdong Customs How
to Identify Counterfeits

REFERENCE: Guangzhou 21191

(U) This document is sensitive but unclassified. Please protect
accordingly.

1. (U) Summary: At a recent post-organized seminar, five U.S.
companies and a music industry association trained 70 working-level
officials from Guangdong Customs on ways to distinguish genuine
products from counterfeits. The companies highlighted recent trends
in manufacturing and exporting. Guangdong Customs employs 37
percent of China's Customs officials; the province accounts for
one-third of China's exports. End summary.

Industry and Customs Attendees
------------------------------

2. (U) U.S. attendees at the June 29 product ID seminar were from
Pfizer, Eli Lilly, Microsoft, Wrigley, Coach, and the International
Federation of Phonographic Industries (IFPI - a music industry
association). Attending on the Chinese side were 70 Guangdong
Customs officers, representing all seven Customs jurisdictions in
Guangdong. Most of the officers in attendance were office
manager-rank and thus closely involved in day-to-day enforcement
activities. Also in attendance were one or two officials from the
General Administration of Customs (GAC) legal affairs department,
who had traveled from Beijing. Guangdong Customs officials account
for 37 percent of Customs officials in China, according to the
director of the training center.

3. (U) The seminar took place at the China Customs Education and
Training Center in Guangzhou. The training center serves all of
South China and is one of three such facilities in China, the other
two being in Shanghai and Tianjin. It provides training at all
levels of the Customs bureaucracy.

Presentations: How to Spot Fakes
--------------------------------

4. (SBU) Most representatives began their presentations with
background on their companies, introducing the brands and products
they manufacture. They described the identifying characteristics of
counterfeit products, including materials, labels and packaging, and
associated documentation. They also used numerous photographs of
legitimate as well as fake products in their presentations. Some
presenters identified "problem areas" in China and export
destinations. They sometimes quizzed the officials on whether a
product was legitimate or fake. Microsoft and IFPI discussed the
manufacturing process of optical discs. Pfizer, Eli Lilly, and
Wrigley emphasized the health risks associated with counterfeits in
their industries.

5. (U) All of the U.S. participants left a copy of their Powerpoint
presentation with the training center and distributed paper handouts
with product and anti-counterfeiting information for the Customs
officers to take to their district offices. They gave out their
contact information (including cell phone numbers and email
addresses) and encouraged the officials to contact them if they
found suspicious shipments. The seminar did not include a question
and answer period. Our Customs contacts nixed it as it would have
required an additional, burdensome approval process.

Guangdong Customs a Willing Partner Despite WTO Case
------------------------- --------------------------

6. (SBU) Post organized a similar product ID seminar in July 2006
with Guangdong Customs that included Nike, P&G, Disney, Mattel,
Acushnet, General Motors, and MPA (reftel). Previous attempts to
include a broader range of Chinese IP enforcement agencies proved
unsuccessful because of the complexities of interagency
coordination. Guangdong Customs has been cooperative and responsive
and clearly sees the benefits of this type of training (the 2007
Guangdong IPR White Paper made specific mention of the 2006 event).
The General Administration of Customs (GAC) took longer than usual
to approve the request - approximately one month - likely because of
the April U.S. WTO consultation request. Though it is difficult to
know, the MOU signed by DHS and GAC at the May Strategic Economic
Dialogue may have helped get the event approved.

GUANGZHOU 00000751 002 OF 002

Comment: Aiming for the Source
------------------------------

7. (U) Guangdong province is responsible for one-third of China's
overall trade and is an engine of China's manufacturing industry -
and the "heart of darkness" for IPR infringement. The export of
counterfeit products to global markets is a growing concern for U.S.
companies and, as the recent food safety scandals have illustrated,
U.S. consumers. Guangdong Customs, with its reputation for being
well-trained and its significance in terms of size, will remain an
important partner in post's anti-counterfeiting advocacy and
training efforts.

GOLDBERG

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