Forgeries, counterfeits and taxes

I’ve just returned from China and I’ll admit it… in the past I’ve bought a few $1 DVDs of “still in the theatre” films but I stopped doing this a few yeas ago. I also once bought a “North Face” jacket in a market in Beijing for $20. I’m sure these transactions were “a bit dodgy” and know that the RIAA and the Interpol are likely hot on my heels… well, maybe not. I swear I’ve changed my ways and I’m sure there are bigger offenders out there.

However, I’m in Beijing in December and the Christmas season is in full swing with all the trimmings… fake trees, fake wreaths, plastic bells and Santas abound. Forgeries and fakes in China? … come on now…

On the front page of the “Metro” section of the China Daily (December 15, 2009) two of the four featured stories seem relevant to this theme…. First, an auction of Chinese paintings and artworks by a well known Beijing auction company was cancelled because some of the artworks were deemed “controversial”. Now in the U.S. I would assume that the art has been viewed as offensive in some way… perhaps the art offends some because it's focused on taboo subjects or the artist goes too far in portraying political or religious icons in some offensive postures… but in this case “controversial” means “fake”… quite simply it appears that many of these artworks (which were expected to fetch high prices) are “forgeries” and not very good ones.

Yes, I’d say “controversial” is a word that could be used in this case although it appears an odd choice at first… apparently it’s not illegal for art auction companies to pass off forgeries as the real thing here… according to the article “there is no sound regulation yet” but the artists and their relatives feel the auction company “should at least have a sense of morality.” The artists also report they are offended by the low quality of the forgeries... feeling the counterfeits which bears their name will drive down prices for the "real things."

The second story is more prominent, “above the fold” and focuses on vendors brazenly hawking fake invoices for employees. In this case the advertisements can be seen pasted to trash bins, on the ground and all over the place in public transportation areas (yes, the image that appears here is one of the many pasted on the ground near the Tsinghua Research Park). Apparently it’s the time of the year for workers to turn in receipts for reimbursement and the pressure to buy fake or second hand receipts (called fapiao in Chinese) is intense as people juggle their finances. As if it wasn’t bad enough even these forgeries (as most seem to be) are not very good ones… like the artwork, accountants at companies are quite competent at detecting and rejecting counterfeits.

However, it’s bonus time in China and many employees are desperate to get enough receipts for expenses that are not taxable by the government and account for a good percentage of their annual salaries.

According to the China Daily, when informed by the newspaper of this very visible and illegal activity, the local police reported they had not noticed but would send some officers over to check it out. My friends tell me that sometimes the police actually do show up and enforce the law in a rough fashion… in response, the local counterfeiters have begun using women with babies and small children as fronts… the police tend to respond less harshly when confronted with this activity by women and children!

The national government recognizes this is a problem and has announced that they will print new tax invoices (presumably more difficult to counterfeit) next year. Good luck! I expect to see the same red and white stickers next December.