China Arrests 103 Accused of Making Counterfeit German Adhesive

(Bloomberg) -- Police in Shanghai have arrested 103 suspects for alleged involvement in counterfeiting German adhesive brand Loctite, the official Xinhua news agency reported on Wednesday, as China seeks to increase punishment of violations over intellectual property rights.

The police seized more than 470,000 fake Loctite adhesive products and labels, worth more than 50 million yuan ($7.1 million), in a raid carried out on Dec. 12, according to Xinhua. The Loctite brand is owned by Germany’s Henkel AG.

Foreign companies have long complained about a lack of protection of intellectual property rights in the world’s second-largest economy, and the issue has been at the heart of the U.S. trade dispute with China. Earlier this month, the two countries agreed to the first phase of a broader trade agreement that will see tariff reduction and China raising penalties on IPR violations.

China has been strengthening the protection of intellectual property rights over the years, the Xinhua report said, adding that a total of 19,060 counterfeiting cases were solved by public security organs in the country in 2018, with nearly 28,000 suspects detained.

The Shanghai police received a tip-off in April that fake Loctite products were being sold on the market and found that two gangs had been manufacturing and selling the counterfeit products in several Chinese provinces since October 2018, Xinhua reported. A former employee in Loctite factory’s quality inspection, surnamed Du, led a group to set up a clandestine company with assembly lines and laboratories for producing fake products. Another gang recycled waste packages and labels for re-processing.

To contact Bloomberg News staff for this story: Emma Dong in Shanghai at edong10@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Charlie Zhu, John Liu

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With assistance from Bloomberg