A Chinese company imitating Commax door phones hurriedly removes products from the shelf as police arrive at the Hong Kong Electronics Fair in April 2006.

Chinese producers are increasingly churning out fakes to capitalize on the improved competitiveness and brand value of Korean products.

Once even a quick glance was enough to distinguish real and counterfeit goods since the fakes merely imitated design features while the quality was way inferior. But now, equipped with cutting-edge technology, Chinese replicas sold everywhere seriously undermine Korea's export market.

According to the Korea International Trade Association (KITA), Chinese fake goods cost Korean export around US$14.2 billion (W1.3 trillion), equivalent to 5 percent of total exports. Maxman found that as many as 53 stores or 60 percent of around 80 stores in China's four major cities -- Beijing, Shanghai, Guangzhou and Shenzhen -- carried fake Korean products.

Small and medium-sized startups can sometimes lose their markets altogether because of fakes. A case in point is A Electronics, which produces set-top boxes for satellite TV. In early 2005, the firm introduced a low-end set-top box costing US$75 in the Middle East.

Only a month later, Chinese imitations of similar quality flooded the market at only half the price, or around $35-40. The firm's products were immediately taken off the shelves. The firm appealed to local governments to ban the sales of Chinese fake products but gave up within a month. "Even local retailers told customers Chinese fake goods were made in Korea," a staffer said. "We withdrew from the market, since it was pointless to fight on."

Chinese imitations called Sammeng, Amycall and Samesong can be difficult to distinguish from real Samsung goods at first glance. This DVD player even features Samsung model Lee Hyo-ri.

◆ State-of-the-Art Fakes

Backed by rapid technological progress, Chinese imitations are eating away at Korea's export markets for MP3 players, cell phones and home appliances. Samsung Electronics recently released a report that claims Chinese counterfeits account for 12 percent of the sales volume of its Anycall mobile phones in the Chinese market, or 6.5 million units, causing around US$1.1 billion (W1 trillion) of losses for the firm. LG Electronics last September found a plant that produced fake LG air conditioners and TVs in a remote village near Urumqi in western China.

The counterfeits were also sold in neighboring countries including Kazakhstan and Mongolia. After suffering seriously from Chinese counterfeits for a few years, manufacturers of MP3 players like Reigncom and Mpio now hesitate to show off their latest models at the big consumer expos, Germany's CeBIT or the U.S.' CES, because once their latest developments are unveiled, Chinese makers start to roll out imitations at only half the price.

An ad for Sammeng, a Chinese copycat of Samsung. The Chinese company found itself in controversy after advertising its 17-inch TFT LCD monitor with a photo of Korean star Song Hye-kyo on its Website.

◆ Without Borders

Chinese producers pirate Korean steel, auto parts, electric machinery, snacks and foods. The Korea Intellectual Property Protection Association said "Two or three years ago, fake goods were found only in China and South East Asia where Korean pop culture was wildly popular, but these days counterfeits are everywhere: in Japan, North and South Americas, Australia, the Middle East and eastern Europe." 

Last year, the QQ by Chinese automaker Chery Automobile was the bestseller in Venezuela. The car is suspiciously similar to GM Daewoo's Matiz. Priced at W3-4 million(US$1=W940), 20 30 percent cheaper than its Korean counterpart, the QQ swiftly dominated the light-vehicle markets in South America. It is estimated that Chinese imitations cost Korean auto parts makers such as Hyundai Mobis around W200 billion a year.