Fake goods ring that netted 70m yuan is busted

Shanghai police have arrested 25 suspects on charges of selling counterfeit goods to overseas customers through more than 200 websites.

Officers confiscated more than 60 computers and servers, together with 1.75 million yuan ($282,000) in cash in an operation launched on April 1. The sums involved amount to 700 million yuan, local media reported.

French luxury brand Louis Vuitton contacted the Shanghai public security bureau after learning there were websites based in China selling fake LV handbags. Some of the counterfeit goods were sent from Shanghai.

Fake goods were offered at 10 to 20 percent of the cost of real ones on the websites meaning a fake LV handbag could be bought for 1,000 to 2,000 yuan while a real one cost 15,000 yuan.

Police discovered more than 200 websites with similar layouts, pictures and descriptions of products during the investigation. They also tracked down a gang of young people.

The gang had set up English-language websites, selling fake handbags, suitcases, watches and accessories in more than 10 countries including the United States, Canada, Great Britain and Greece. Most of the counterfeits were branded LV, Qian Honghao of Shanghai police told the Shanghai Morning Post.

The suspects launched a company named Tengchuang in Fujian province under the guise of an information technology company in 2009. They rented servers from a tech company in Shanghai and operated the websites from Fujian.

The gang used fake IP addresses pointing to overseas servers, according to police.

Once a website was investigated or complained about by customers, the gang would shut it down and open a new one on another server with a new name, Qian said.

Most suspects are college graduates born in the 1980s and 1990s with backgrounds in IT related areas. The business was registered as a start-up with shares distributed among the leadership and team members, Qian said.

They posted a group photo of more than 30 members on social media which helped police nail nine key members.

The business had a structure similar to any normal company, including customer service, technology, finance and executive departments.

The gang used pop-windows and Pay-Per-Click on search engines for product promotion.

After receiving payment from customers through international transfers and third party international credit card payment platforms, goods were shipped to cities such as Beijing, Shanghai and Guangzhou. From there they were sent to overseas destinations in order to make the faked goods appear authentic.

The gang was very clear about their target customers and all the websites were in English and all the customers foreigners, said Qian.

In recent years China has intensified its fight against counterfeiting with people's increasing awareness and protection of intellectual property rights. Police raided more than 200 workshops making and selling fake goods last year alone in a joint campaign with Taobao.com, the largest online retail platform in China, according to a report released by Taobao late last year.

The company has also cooperated with the administration on intellectual property rights protection in Zhejiang province where its headquarters has been based since 2010, having handled over 3,000 cases.

The case remains under investigation.