Catching Counterfeiters Early: Timing of IP Theft in Asian Manufacturing and How STU Addresses It

Counterfeit goods pose a significant problem in Asia, impacting brand reputation and consumer trust. This intellectual property theft tends to follow patterns that are a mystery to many brands and IP holders, where counterfeiters exploit gaps in manufacturing oversight, turning legitimate supply chains into engines for fake goods.

Their methods of production range from crude opportunistic branding to highly sophisticated cloning of genuine products; however, they share the same fact that each stage of production offers a distinct window where IP can be stolen and transformed into marketable counterfeits. 

Understanding when and how these thefts occur is essential for designing effective enforcement strategies. With the right timing and intelligence, brands can intervene before counterfeit goods ever reach the end market.

Part 1: How and When IP Gets Stolen In Asian Production Lines

A strong enforcement action is only as effective as the IP rights it's based on and the time of enforcement at the stage of theft. 

1. The Several Types of Operations Conducting IP Theft

Various operators steal IP for different reasons, budgets, and levels of quality relative to the original. At the lowest level are wholesale opportunists in the product supply chain who will buy a few hundred units of a generic product which do not necessarily resemble an original brand much at all from a design standpoint, but the counterfeiter will use a pad printer or leather embossing kit and will put a brand’s logo onto the wares and sell these onward to beach and street hawkers.

Above these are mass-produced fakes, containing some obvious tells for anyone who has handled the original product, but still result in something that might sell for CHF 100–200 as an “impulse buy.” These producers have some knowledge of the original product itself and work with a loose network of less technically savvy suppliers to achieve their end products, which would sell in open-air bazaars or tourist markets across Asia and Europe.

At the top end are dedicated “factories,” with leadership who have a deep understanding of and access to the genuine articles, and weaponize that knowledge to produce convincing counterfeit items using identical materials, manufacturing processes, and clone components that function like the genuine parts. For watches, these functions could be a complication, such as a tourbillon, flyback chronograph, or calendar function. These operations work with high-end component suppliers who often moonlight in the counterfeit trade but are normally producing items for other genuine brands during the day at acceptable quality levels.

2. Semi-Finished Parts Allow for Near Completion of the Counterfeit Prior to Theft

Counterfeit products have to start as components and subassemblies, which will eventually contribute to the final product. During this stage, factories reverse engineer to create their goods, often from original samples, and contract out to numerous smaller suppliers who focus on one specific part. Typically, word marks are not applied at this stage, due to either the factory producing the sub-components not wanting to take the risk of the parts bearing the mark, or simply being unaware that the buyer of these parts intends to put them into a counterfeit product. Not applying a word mark at this stage allows for the orchestrator to get the product closer to a finished good while having a lower threat of discovery or enforcement.

3. Application of the Word Mark is a Critical Moment of Transformation

When the subcomponents are finished and ready, they will be moved to the “factory,” a final assembly workshop where the parts are made into a good that can be considered counterfeit. Right before this stage, or while at the factory, is typically where the word marks would be applied. In the case of watches, this would be on the dial, movement, crown, clasp, and any faux documentation that would be shipped with the watch to further attempt to fool a downstream buyer. 

What Happens Once the Goods are Finished?

When goods reach the stage of final assembly, they are often not on hand for long and must keep moving to evade detection. Factories will want to offload these goods into B2B wholesalers’ stock as fast as possible.

From that point, the wholesalers will go on to either move bulk shipments in bulk to markets out of China, or promote the goods on e-commerce and social media channels. While these online channels are often banned for a short time, the sellers will continuously make new accounts and promote the counterfeits.

Part 2: Where Can We Step In?

When it comes to IP rights enforcement, which will tangibly slow the proliferation of fake goods, it is not enough for a component to have a similar shape, size, color, or finish to a genuine part.

The opportunity to take action starts the moment a mark has been stolen, i.e., applied to the parts or finished article, even while the products are still in production or in a warehouse; the counterfeiter does not have to try to sell the goods to get caught.

How Can STU Help You Combat This?: 

At the surface level, the ways counterfeit goods and components move is non-obvious by design, meaning the fight against counterfeiting in Asia is one of strategy, experience, and applying pressure to a specific point in the supply chain rather than brute force.

STU brings decades of experience in studying how counterfeiters operate and move their goods, an institutional knowledge resulting from thousands of investigations and enforcement actions taking place since 1984.  

By understanding and systematically addressing the opportunities for enforcement in production, assembly, logistics, and sales, STU can help brands shift from a reactive, defensive posture to a proactive, offensive one.

The STU framework is a sustainable system to continuously uncover and close the pathways that counterfeiters exploit, resulting in a strategic, intelligence-driven campaign that protects your revenue, your reputation, and most importantly, the integrity of our brand.