January 4, 2008: One reason China
tolerates the widespread manufacture of counterfeit products is because some of
them have some military benefit for China's Cyber War effort. This came to
light recently when the FBI arrested two Americans for running a computer parts
company that was selling counterfeit computer parts (especially Cisco router
components), manufactured in China. The phony parts had counterfeit labels, and
were delivered in counterfeit boxes. The two brothers had a contract to sell
these parts to the Department of Defense and other government agencies.
Actually, the Chinese got lucky with
this one. Normally these counterfeit parts are sold by transitory operations.
Eventually, the user has reason to contact the manufacturer of the shoddy part.
At that point, the buyer discovers that, say, Cisco, has no router component
with the serial number the scammed buyer is reading over the phone. It is then
that the buyer realizes they have been screwed.
Counterfeit computer parts can be made
to very low standards. They will work for a while, but not for the long periods
of time that justify the high price of the authentic parts. The Chinese
manufacturer sells the counterfeit parts at, say, 20 percent of what a real
part would cost, to a foreign distributor. This guy then peddles the
counterfeit parts to dealers who may, or may not, know they are getting cheap,
but fake, parts at a deep discount. The dealer can then sell the counterfeits
at a discount. Discerning buyers can check serial numbers on these high price
components (some have a list price of thousands of dollars), but others are
more trusting, and get burned.
Counterfeit high-tech items are a
growing business, and a growing danger. In addition to computer gear, auto and
aircraft components are also being faked. Some aircraft and auto accidents have
been traced to the fakes, which makes it a public safety issue. But with the
Department of Defense installing counterfeit computer components, it becomes a
national security issue. There's also the fear that the Chinese, or some other
hostile nation, might get their hands on real computer components, and replace
some of the chips with modified ones that will make government networks easier
to hack. Yes, it just gets worse.
