E Commerce and Online Counterfeiters

According to the June 14, 2011 edition of Women’s Wear Daily, the well-known Pakistan based global ecommerce site Tradekey, is facing a lawsuit by four brands of the leading luxury goods group Compagne Financiere Richémont (Chloe SAS, Alfred Dunhill, Montblanc Simplo, and Officine Penerai AG). The lawsuit alleges that the firm knowingly sold counterfeit replicas of the four Richémont brands through unauthorized sellers manufacturers, suppliers, and distributors on its website. Furthermore, the complaint also alleges that Tradekey.com has “designed itself for counterfeiters” by encouraging and attracting the sale of “replica” goods and bogus merchandise.

Rob Holmes, CEO of IPCybercrime.com. LLC led Richemont’s investigation and testified in court. After paying only $3,000 to become a Goldkey member, Holmes was contacted by a Tradekey representative who helped him sell his “product” listings using certain keywords and would enhance his chances of being located by those searching for fake Chloe bags.
For example, one of his Chloe ads stated ‘We work directly with the #1 factory in China for perfect mirror quality handbags.” Another one openly stated. “The quality is mirror image and looks like the real thing!”

Tradekey.com, founded six years ago, has a page rank of eight out of ten, according to google. The website claims it sells “millions of goods in over 240 countries”, handles over 10 million visitors, serves over 5 million members, and receives over 32 million page views a month.
While luxury goods are often cautious about fighting counterfeit battles, Tradekey is unique in that it is a business-to-business site, and, unlike eBay, has no VERO (verified rights owners program) to safeguard customers from fraud.

The alleged Tradekey lawsuit illustrates the pervasiveness of counterfeit activity. According to the Customs and Border Protection Bureau and the Customs and Immigration Bureau – in fiscal year 2009, there were about 15,000 seizures in the U.S. with a combined value of value of about $261 million. Of that total, about $205 million were products imported from China.

Methods to avoid counterfeit items include being aware of the products' country of origin and keeping up with recalls. However, possibly the single best way to avoid unwittingly buying counterfeit items is to buy from only licensed distributors of the product.

WTC Arkansas Trade Mission to Korea

Following up from our last blog post about the effects of the Korea-U.S. Free Trade Agreement, our Director of Asia Trade Development, Mr. Boon Tan, has recently returned from an exploratory trade mission to Korea, accompanied by the Arkansas Economic Development Commission (AEDC) and the Arkansas Farm Bureau. The trade mission, lasting from June 21 to July 10, focused on building a strategic trade relationship between Arkansas and Korea and included many visits to various Korean companies for the purposes of exploring future beneficial trade opportunities for Arkansas business.




Boon Tan, Director of Asia Trade Development (center) visits World Trade Center Suwon, Korea to network. Suwon is a major educational center in South Korea as well as the headquarters location of Samsung Electronics.



Randy Veach, president of Arkansas Farm Bureau and his delegation meet with Ted Taeho Lee - Director General for Free Trade Agreement Policy, Korea Ministry of Foreign Affairs and Trade.

Boon Tan pays a visit to EMart in Seoul, Korea. EMart is the largest retailer in Korea and the first Korea retailer to advance into China.



Boon Tan viewing EMart grocery products


Boon visited Korean Trade Investment Promotion Agency (KOTRA). From left to right: Kim, Hyun Tae - Director Consumer Goods Industry Marketing Team, Boon Tan, Yoon, Jae Chun - Director General Overseas Research Department and Lee Jeong Seon - Manager.

Korea-US FTA: Implications for Arkansas

Negotiations for the Korea-U.S. Free Trade Agreement (KORUS FTA) have been underway since 2007, when President George W. Bush signed the agreement into existence.Since then, the Obama administration has taken proactive measures to ensure the agreement's final passage, having visited South Korea in 2009.

Once confirmed, the agreement will the first Free Trade Agreement ever signed between the U.S. and a North Asian country. In a White House press release from December of last year, President Obama stated of the KORUS FTA, "We are strengthening our ability to create and defend manufacturing jobs in the United States; increasing exports of agricultural products for American farmers and ranchers; and opening Korea’s services market to American companies."

Results from the KORUS FTA could be dramatic. According to the U.S. International Trade Commission, estimates indicate that the reduction of Korean tariffs and tariff-rate quotas on goods alone would add $10 billion to $12 billion to annual U.S. Gross Domestic Product and around $10 billion to annual merchandise exports to Korea.

Under the FTA, nearly 95 percent of bilateral trade in consumer and industrial products would become duty free within three years of the date the FTA enters into force, and most remaining tariffs would be eliminated within 10 years.

Yet, what of the implications for Arkansas? As detailed in our last blog post, Arkansas has benefited from steady increase in strong export shipments of merchandise. In 2009 exports totaled $5.3 billion; this was a gain of 36 percent since 2005, and Arkansas has almost doubled the U.S. goods exports over the same period.

Recent Arkansas trade statistics by category include the following below:

Chemicals- 51%
Food Manufactures- 15%
Metal Fabrication- 12%
Electrical Equipment,
Appliance and Components- 6%
All Other Categories- 18%

The effects of KORUS FTA include the elimination of consumer and industrial tariffs within five years, as well as portions of the U.S. agricultural exports tariffs immediately on entry. Consequently Arkansas is expected to see extensive growth in Chemical Manufacturing, Processed Foods and Agriculture, particularly soybeans, poultry and cotton.