To Catch a Counterfeiter Nearly all the world’s fake products come from China. America’s oldest private detective agency is on the case.

Four plainclothes officials from China’s Market Supervision Bureau emerged from a van and headed toward an unmarked concrete building in an industrial park in Changzhou, a hundred miles northeast of Shanghai. Azim Uribe, a 30-year-old solidly built American, strolled behind them, wearing dark sunglasses and a surgical mask that filtered the polluted air and, more importantly, concealed his identity.

The MSB officials inspected the building one room at a time. On a makeshift loading dock beneath a tin roof, they found pallets of unused cardboard boxes and other shipping materials; in the next room, semiconductors; and throughout the warehouse, hundreds of what looked like Ford truck bumpers, but weren’t. Farther down the main corridor, in a room the size of a two-car garage, the officials found a pair of middle-aged women in aprons, assembling headlights. The operation seemed to be dealing in knockoffs, which infringe on a company’s intellectual property, but not its trademarks (China’s Jianghuai Auto Corporation, for instance, built a clone of Ford’s F-150 with a blue-and-silver JAC emblem on its front bumper instead of the Ford logo). But Azim’s informants had told him there was evidence of black-market counterfeiting, a scourge that costs the automobile industry an estimated $12 billion annually. Right next to the women, Azim, at last, found the proof he needed. Piled inside a cardboard box were oval hunks of plastic emblazoned with fake Ford emblems, ready to be attached to the bumpers. The MSB officials loaded the counterfeits into trucks and vans headed for a warehouse, where they would be cataloged and then destroyed. Counterfeiting is a $400 billion industry in China. Factories churn out real Nike shoes just a handful of subway stops from illicit markets selling fake ones, and counterfeit versions of the latest iPhone are hawked in the Shanghai airport before the real ones reach many rural Americans. There are real car dealerships selling knockoff cars and fake Apple Stores where the employees aren’t in on the scam. And black-market goods are a lucrative export, too: China sends millions of pairs of counterfeit shoes to the EU and billions of dollars’ worth of counterfeit pharmaceuticals to Africa and Southeast Asia. Counterfeits have long been considered a cost of doing business in China. Manufacturing in the country involves contracting with various middlemen and suppliers — often a single supplier can’t, for example, handle the amount of labor and raw materials needed. Sometimes different factories specialize in different things. As a result, many people have access to technical specifications and trade secrets. So when Ford invests billions in Chinese manufacturing, as it has since 2014, knockoff Fords end up at legit-looking dealerships throughout China, and counterfeit Ford parts make their way to countries as far away as Ireland. Fakes account for some 20 percent of all the name-brand products sold in China each year, damaging the reputations of legitimate retailers and taking a sizable bite out of their revenues. Microsoft generated $85 billion in revenue in 2016, but lost an estimated $10 billion in potential earnings to commercial piracy in China, where some 79 percent of all software is pirated. According to trade experts, China’s counterfeiting industry is the largest in the world. Some corporations that manufacture in China — Disney, Target, Coca-Cola, Apple, Mattel — rely primarily on in-house brand-protection agents to seize fake goods, investigate counterfeit manufacturers, and take legal action. And as evidenced in various news reports, a slew of other Fortune 1000 companies — reportedly including Dell, Intel, Microsoft, Procter & Gam­ble, and Ford — hire Pinkerton, America’s oldest detective agency, to deploy agents like Azim Uribe.

When I met Azim for dinner on the final day of Ramadan last July, he waited to order until the sun disappeared below Shanghai’s skyline. Despite the 90-degree heat and the fact that he hadn’t eaten all day, he kept smiling, even when venting about his life in China. He calls his irritations “China stuff,” a broad category that includes slow internet, government surveillance, and the necessity of haggling over the price of everything from neckties to taxi rides. “China stuff,” however, is also his sole reason for remaining in Shanghai: He’s in charge of Pinkerton’s brand-protection division in the country.

The Pinkerton Agency got its start fighting counterfeiting nearly 170 years ago when Allan Pinkerton, a Scottish immigrant, busted a gang manufacturing fake money along the Fox River in Illinois. Abraham Lincoln credited the young agency with foiling an early assassination plot that was to take place during the train ride to his inauguration. Throughout the Civil War, the president relied on Pinkerton detectives to handle tasks now performed by the FBI, Secret Service, and CIA. In the 1890s, Pinkertons were notorious union busters. By the 1900s, they had transitioned to security (escorting the Mona Lisa across the Atlantic). And in the 1980s, they assumed their current iteration as a global risk-management firm. “We try to take a holistic approach,” Pinkerton president Jack Zahran told me. “Mitigating physical risk, financial risk, hard risk, operational security risk, information technology risk.” Since China’s manufacturing boom in the 1980s, one of the biggest risks for brands has been counterfeiting. In the ’90s, Pinkerton began offering brand-protection services from its offices in Hong Kong and Taiwan before opening locations in Beijing, Shanghai, and Guangzhou, the capital of a major manufacturing province. Azim first joined Pinkerton when he was living in New York. While working toward a master’s in sociology at Queens College, he answered an ad for an entry-level position at a small Wall Street firm that specialized in serving subpoenas. His interviewer turned out to be Stephen Ward, a managing director at Pinkerton, which was absorbing the smaller company. By the end of the interview, Azim had a job. He was initially assigned to investigate insurance-fraud cases. (“I caught a guy pulling a tree stump out of the ground — I filmed him and everything — while he supposedly had a broken neck.”) Later, Ward singled out Azim for brand-protection work in New York, getting fake products off the market and curbing after-hours production in otherwise legal factories. After nearly two years at Pinkerton, Azim quit and flew to Yiwu, China, one of the world’s main trading hubs for cheap goods. “I just told myself I needed to grow and leave this bubble,” Azim said. He didn’t speak Chinese and didn’t have a job lined up. But his cousin co-owned a small trading company there and agreed to take Azim on as an apprentice. Azim spent three months learning the industry and then struck out on his own. With family in Afghanistan, Colombia, and New York, he was able to drum up plenty of business sourcing cheap “Made in China” products for overseas retailers. Azim located everything from SanDisk memory cards for his uncle in Colombia to surgical gloves for a man in Bolivia. “I had one guy asking me to make him digital menus,” Azim said. He went from factory to factory cobbling together a supply chain that could produce an iPad-like device that would serve as a menu for the client’s chain of restaurants. Azim made as little as a hundred dollars on iPhone chargers and as much as $7,000 on an order of display cases for a jeweler in Long Island. The longer Azim was in Yiwu, the more he learned how black- and gray-market goods were traded. A friend’s father made a living selling fake Paul Frank clothing. Azim’s Mandarin instructor had several family members who worked in a dubious electronics factory. The counterfeits with the highest margins, Azim learned, were pharmaceuticals, costume jewelry, sex products, and pet clothing. When Pinkerton’s Asia manager heard about an ex-agent who had been trading in Yiwu for three years and spoke Mandarin, he offered him a job. Azim accepted and has since become an authority on what is real and what isn’t. Back on the rooftop, the buildings along the skyline were now lit and Ramadan was officially over. Azim bit into a $45 hamburger made with beef that had been imported from Australia. But he wasn’t impressed. “Burger King is better,” he smiled.

On a hot afternoon last summer, Azim led me through the vast under­ground market beneath Shang­hai’s Science and Technology Mu­se­um. His boss, Angelo Krizmanic, joined us, posing as a foreign businessman interested in some luggage for his girlfriend. “Most of these stores cater to Western tourists who come here specifically to buy knock­offs,” Angelo told me. “Tourists don’t know how to spot a quality fake, so the stuff on the shelves in these shops is garbage. But if you know the difference between a shit knockoff and a really shit knockoff, you can get yourself invited into a shop’s backroom. That’s where the real business goes down.” We approached an upscale shop selling luxury handbags that Angelo visited, undercover, semiregularly. A salesman in shorts and a navy T-shirt named Kevin bounded toward us, gold chains bouncing off his chest. He spoke to Angelo like an old friend. Kevin led us into the store and pushed against a part of the wall that gave way to reveal a hidden room, roughly 8 feet by 10 feet, with deep shelves that overflowed with counterfeit Dolce & Gabbana, Gucci, and Louis Vuitton luggage, purses, and wallets. Kevin said the market gets raided weekly, but he isn’t concerned. “I pay every month, so no trouble.” He used to be able to bribe police with counterfeit Louis Vuitton, but since China’s president, Xi Jinping, intensified anti-corruption measures in 2012, bribes are increasingly cash only. Every bag in the room looked real to me, but Azim and Angelo were not impressed. Lately, the police had been raiding shops more often than usual, so the truly superb fakes, Kevin told us, were now kept somewhere else. Angelo would have to choose a bag from among the stock around us, then a matching, higher-end knockoff would be retrieved from a different backroom that we were not allowed to visit. “I’ve never seen them this cautious,” Angelo whispered. When the bags arrived, Angelo unzipped them and Azim grinned broadly at what he said was “the sound of quality.” Along with poor stitching and gold-plating that chips over time, cheap zippers are the most obvious markers of a shoddy fake bag. “This is a good fucking copy,” Azim told me. “Even the inside is nice.” Just then, Angelo loudly insulted the very same bags for shoddy craftsmanship. Kevin offered to lower the price if one of us bought a watch. “Just 4,000 RMB (roughly $600),” Kevin said, tapping the timepiece wrapped around his wrist. It was modeled after the watches of a Swiss manufacturer called ETA, and Kevin claimed that it had been made with Swiss machinery that a Chinese counterfeiter had bought on the black market. Then, sensing our ambivalence, Kevin told us a certain world tennis champion player and a particular NBA Hall of Famer had bought fake watches from him, and before we could challenge him, he produced an iPhone from his pocket and began scrolling through photographs. One showed Kevin posing with the tennis player, who he claimed paid 10,000 RMB per watch (about $1,500). The two of them seemed to be standing in the very same backroom. Next, he displayed a picture of the 7-foot-tall basketball star, smiling as he hunched low enough to drape an enormous arm around the shoulders of a woman working in Kevin’s shop. The NBA legend had purchased enough fake watches to fill a large suitcase, Kevin boasted. But he was outdone by a Brooklyn Nets player, who, Kevin said, bought between 500 and 600. It was hard to believe that these three athletes would have a need for fake watches. But Azim said that there are people — some of them very wealthy — who go to men like Kevin to help them cultivate an illusion of generosity at a fraction of the price. Gardeners, housekeepers, and distant cousins outside China have no way of distinguishing real luxury items from fake ones. I told Kevin his watches reminded me of something I’d seen on television a few weeks earlier. Charlie Sheen was on a talk show, recounting the time Donald Trump gave him a pair of diamond-encrusted platinum cuff links that he claimed were from Harry Winston. An appraiser later told Sheen they were nothing more than “cheap pewter and bad zirconia.” No one was surprised by the story, least of all Kevin. When the haggling was finished, Angelo paid just under $300 for two large bags that would have cost more than $4,000 if they were real. “They say it’s made in the same factory [as the real ones], but it isn’t,” Angelo said. “These bags will hold up for one or two business trips, then they’ll fall apart. The real thing is made to last because someone’s reputation is behind it.” While we navigated Shanghai traffic back toward Pinkerton’s headquarters, Azim’s phone began buzzing wildly. Jack, one of Azim’s informants, was messaging him, reminding him about a shipment of counterfeit circuit breakers that had been sitting in a warehouse at the Port of Yiwu. The window to confiscate them was closing. We needed to leave for Yiwu the next morning.

Shortly before Xi Jinping took office in late 2012, public polls showed that corruption and counterfeiting were seen as the two biggest stains on China’s national image. Xi shrewdly launched campaigns against both. Five months after assuming power, he sent officers on a number of coordinated raids in which they seized more than 21 million fakes, valued at $217 million. In Guangdong province alone, some 500 illicit factories were shut down, and more than 1,100 suspects were arrested for producing counterfeits ranging from wine and cigarettes to garments and shoes. Before the year was out, the Chinese government had brought 234,000 criminal cases against counterfeiters. In 2013, Xi expanded consumer protection laws, giving citizens who reported counterfeiting a reward worth ten times the value of the black-market goods. Hundreds of thousands of people — everyone from supermarket owners irked by being sold fake food to former workers in counterfeit factories — became informants. (Azim contracts with 68 of them, and he’s always assessing new prospects — presenting potential informants with counterfeits and asking questions to gauge their knowledge.) In 2014, the National People’s Congress under Xi established specialized courts in Beijing, Shanghai, and Guangzhou to settle civil suits over intellectual property matters, and it’s clear that they’ve had some impact. Before 2014, damages averaged 80,000 RMB (or $12,000). Now they average 1.4 million RMB ($206,500). And this year, Xi set up intellectual property tribunals in smaller cities, like Nanjing, Suzhou, Chengdu, and Wuhan, not only to handle damages but to issue criminal sanctions against violators. In the end, though, Xi’s efforts amount to a game of whack-a-mole. So long as there’s a demand for knockoffs, counterfeiters will find a way to supply them. Usually it’s not that hard. Local officials, who are poorly paid and often restricted from moving into the private sector, are susceptible to bribes, as are investigators hired by companies. Plus, the internet makes it harder to trace illegal operations and seize illegal goods. “E-commerce websites give the perfect opportunity for people to manufacture on an ad hoc basis,” said Stephen Chan, an intellectual property lawyer at Oldham, Li & Nie in Hong Kong. The fact that many counterfeiters manufacture only when there’s an order to fill limits their exposure. Illegal goods aren’t often just sitting around in a warehouse. There’s also the fact that counterfeiting is ingrained in the economic fabric of China. “If Xi could wave a magic wand and end counterfeiting without social disharmony, he would,” Dan Harris, the lawyer behind the popular China Law Blog, told me. “But in Yiwu, think how hard that would be — they’d have to crush the whole town. And then there’s the aftermath — what happens to the schools? The tax base? Transportation?” The consequences, Harris argued, would be devastating. “Let’s say, hypothetically, that 25 percent of Yiwu’s economy comes directly from counterfeiting and illicit trade,” he said. “Well, that means that the rest of its economy depends in part on the money those counterfeiters and traders spend. So, could Beijing do more to fight counterfeiting in places like Yiwu? Sure. But at what cost?” One of Azim’s informants who used to work in a counterfeit factory told me he was proud to now be on the right side of the law. Though he certainly didn’t want too many other counterfeiters to go straight, concerned that such a move would jeopardize his livelihood. The end of counterfeiting in China, he said, “wouldn’t be good for anyone.” So while Xi has ramped up the war on fakes, his campaign will only be successful so long as it doesn’t completely work. “China’s government has studied the Arab Spring closely, and they understand that social unrest of any kind could turn out to be the spark that sets off the next big upheaval,” said Harris. Which might be why Chinese authorities generally arrest counterfeiters only when they are caught with more than 150,000 RMB ($22,000) worth of fake goods, leaving small and midsize operations relatively undisturbed. And even though China’s illicit global trade accounts for between 3 and 8 percent of its GDP, by 2016, China’s government reported that just 3,800 people were arrested for intellectual property crimes. As for Yiwu, “the local government turns a blind eye,” said Li Qiang, director of the nonprofit China Labor Watch. There’s another complicating factor. “The so-called crime statistics in China show 100 percent enforcement because they won’t take any cases that they aren’t sure they can win,” Brian Seow, the former head of Pinkerton’s Shanghai office and a former Singapore police officer, told me. In Hong Kong or Singapore, the police cannot reject cases. But in mainland China, they will reject one outright if it’s too challenging. Pinkerton and other brand-protection agents put counterfeiting cases together for their clients. If the client approves, then the agent, authorized to act on behalf of the brand, presents the case to the MSB officials, who schedule a raid. “Once the police are engaged in a case, we have to stop everything we do. We cannot work in tandem,” Seow said. “We hand it off to them, so that they can put a bow on it.”