Raid shakes up China’s online fake goods sellers
Christmas came early last year for Brandon Lee King, a youthful online influencer who lives near Birmingham, England. An eagerly awaited shipment of luxury goods arrived just in time for the festive season, and, like many of his peers, he was keen to show off his haul.
In a video posted to his TikTok channel and viewed by nearly 2 million people, King unwrapped £2000 (NZ$4200) worth of seemingly high-end Nike shoes, new in their boxes. There were also what appeared to be a £2500 Goyard messenger bag, a rare Dior T-shirt (£600), a retro Manchester City FC jersey, a pair of Palm Angels sweatpants, and an £875 Kaws Companion figurine.
All told, the items would cost more than £6700 (NZ$14,000) at retail. But they came from Pandabuy, a Chinese e-commerce site offering “designer” fashions at a fraction of what the labels would charge.
The site, little known just two years ago, sits at the centre of a thriving online trade in allegedly fake branded goods, which are promoted on TikTok, Reddit and the socialchat platform Discord.
Earlier this month, Chinese authorities raided Pandabuy’s offices in Hangzhou and several warehouses, seizing goods amid allegations that it was distributing massive amounts of knockoff shoes, clothing and watches.
The crackdown marks a rare win for retailers who have been battling to shut down Pandabuy and stop online personalities from promoting the site. While it’s unlikely to be more than a temporary win, the raid sent shockwaves through the digital coterie of influencers and their followers, who pepper the video creators with questions on how they can obtain the same questionable loot.
“Thanks Pandabuy, it was fun while it lasted,” said a Discord user.
King, who didn’t respond to requests for comment, said on his TikTok channel that he received the items free for promotion purposes. He gave viewers links to specific listings, and offered tips on how to use photos to search for designer goods.
Pandabuy didn’t respond to requests for comment.
As a “shopping agent”, Pandabuy doesn’t make or sell the products itself. Rather, it acts as a middleman, providing a sales platform and services like photography and shipping to independent vendors of Chinese-made products – anything from tech gadgets to home furnishings to fashion items.
Anti-piracy advisory firm Corsearch, which aided in a British police investigation of branded products on the site, found none to be legitimate.
“In almost every instance it said replicas or reps, which means they were fake or counterfeit,” said Joseph Cherayath, a
Corsearch investigator whose team analysed the website and provided intelligence to support authorities. “And the buyers and the people who were obtaining the products very much knew that was the case.”
The raid on Pandabuy marks the latest twist in a decades-long cat-and-mouse game between counterfeiters and the copyright holders and law enforcement trying to quell a rising tide of knockoffs. Other shopping agent sites, including Sugargoo, CSSBuy and Wegobuy, didn’t respond to requests for comment.
“It’s just a never-ending cycle of trying to nail the bad guys,” said Julie Zerbo, a lawyer and founder of The Fashion Law website. “Counterfeiters are really quite agile.”
Over 30 people were detained in the raids, and parcels were seized from “over 200 brands’’, according to Cantoop, a Shanghai law firm that said it had filed a separate complaint about Pandabuy. It described the raid as “one of the largest online-to-offline cross-border IP cases handled by Chinese law enforcement in recent years”, and said it expected to take several months to clear all parcels.
Coordinating the six-month probe that led to the crackdown wasn’t easy. British police are limited on what they can share with foreign governments, according to Detective Inspector Andrew Masterson of the City of London Police Intellectual Property Crime Unit.
Authorities hosted information-sharing meetings, and provided intelligence to private-sector players, he said – including Corsearch, at least 16 rights holders, and the law firm Rouse, which passed evidence to Chinese authorities with its partner Lusheng.
Border agents also face a challenge intercepting more than a fragment of the volume, because many shipments now arrive in individual packages instead of cargo containers.
“Everyone talks about the private sector working hand in hand with authorities, law enforcement and governments to protect consumers, but that doesn't really happen in reality,” said Cherayath. “This is one of those cases where it was successfully done, where everyone involved was able to work closely. That’s unheard of.”
Nike, Adidas and Supreme were among the rights holders involved with the Pandabuy probe, people familiar with the matter said, asking not to be named discussing sensitive investigations.
Adidas declined to comment. Nike and Supreme’s parent, VF Corp, didn’t respond to requests for comment.
China’s Ministry of State Security didn’t immediately respond to a request for comment.
Pandabuy has grown rapidly since July 2022, based on Google Trends search data, with more than 20 million visitors in March, according to SimilarWeb. Its aggressive marketing – encouraging “Panda haul” videos, and giving discount codes spread by influencers – had helped to drive demand among young British people for knockoff luxury products, said Alastair Gray, a director at the International Trademark Association.
A British affiliate was formed in April 2022 with a London mail-drop address shared with 66,959 other businesses, based on Companies House data. Pandabuy’s website lists a north London business centre as its headquarters.
The raids “might lift the veil on what many brand owners didn’t know, in terms of the scale of the problem with these platforms”, Gray said. “There are at least four or five others like it.”
Nike has taken aim at Pandabuy before. In December, it sued New Hampshire YouTube influencer Eben Fox for promoting his purchases on the site to 120,000 followers on TikTok, and accused him of marketing knockoff versions of its shoes.
Fox didn’t respond to requests for comment. “We disagree with the allegations in the complaint, and we plan to cooperate with Nike to resolve their concerns,” his lawyer said in December.
Big retailers like Alibaba Group and Amazon have made progress removing counterfeit sellers, and are “seriously making attempts to stem the flow” of goods, said Phil Lewis, director-general of Britain’s Anti-Counterfeiting Group, an industry organisation. He said Pandabuy and Temu, which has also gained popularity for cheap goods, were less proactive.
“If we can’t engage, we can’t prevent the distribution of fakes from these companies,” Lewis said.
Temu, whose parent company is Chinese e-commerce giant PDD Holdings, works in a different way than Pandabuy. It features products that resemble but typically don’t outright impersonate name brands – though fake streetwear has reportedly been spotted on the site.
The company said it had been upgrading its intellectual property protections in response to feedback from brands and copyright owners, and resolved more than 98% of takedown notices within days.
The Pandabuy raid has caused uproar among its users. On its 416,000-member chat channel on Discord, many said they were “cooked”, or done shopping, and didn’t expect to receive recent orders that were potentially seized.
FashionReps, which bills itself as “Reddit's largest community for the discussion of replica fashion”, has stopped adding to its 1.7 million members after growing more than 10-fold since 2019. Similar pages have followed suit.
Stopping the suspect trade altogether will be a tall order. Already, Pandabuy workers are back at its warehouses, according to World Trademark Review, which first reported the raid. Fake goods have also migrated to other sites. – Bloomberg