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Investigating Fake Goods: A Story of Lies, Greed & Betrayal



The woman called herself Flaming Lee, an English name she picked when she was 10 years old, long before she got into the dirty business of counterfeit goods. Her job as a private investigator sometimes took her to client meetings at Dubai’s seven-star Burj Al Arab hotel. Otherwise, she lived in apparent simplicity.

There were few signs of the deception that shaped her life. Officially, Flaming Lee hunted counterfeiters for Swiss power technology giant ABB Asea Brown Boveri Ltd. Unofficially, she herself sold counterfeit ABB circuit breakers for export — the very things ABB was paying her to track down.

It was a classic form of double-dealing in China’s murky anti-counterfeiting industry, which is itself plagued with fraud, an Associated Press investigation has found. Some of the cases documented by the AP involved potentially dangerous products: counterfeit auto parts, pharmaceuticals, personal care products and electrical components.

Investigative fraud is a problem few are willing to discuss publicly. Using previously undisclosed records from court cases in China and internal corporate investigations, as well as interviews with people directly involved in events, the AP documented multiple forms of wrongdoing:

  • Western firms paid investigators who were themselves manufacturing or selling counterfeit versions of their clients’ own goods.
  • Investigators doctored documents, fabricating raids that never took place.
  • Investigators colluded with factories to make counterfeit goods they could “seize” and present to their Western bosses for payment.

ABB believed it was a victim of all three varieties of fraud, according to court documents, as well as interviews with people involved in the lawsuit and an internal investigation.

As counterfeiting has flourished in China over decades, a lucrative, parallel industry has blossomed to fight it. Counterfeiting today is a multibillion-dollar business in China, which produces nearly nine of every 10 fake items seized at U.S. borders.

Chinese authorities have been getting better at fining counterfeiters and sending them to jail. But the momentum of reform that has led to the creation of dedicated intellectual property courts, new laws and a crackdown on local corruption has yet to reach the front lines of the fight against fakes. Here, private investigators operate with limited oversight, and powerful vested interests have little motivation to wipe out an illegal but highly profitable industry.

More than 15 investigators, lawyers and law enforcement officials all described a broken system, beset by endemic and underreported fraud, made worse by Western companies that have a poor command over how to successfully fight fraud.

“They think they’re spending $10 million a year trying to combat something. That $10 million is going down the drainpipe,” said Kevyn Kennedy, the founder of CBI Consulting, who has run investigations for over two decades. “A lot of times the counterfeiter will turn into the investigator’s informant: ‘Don’t get me. I know these other guys down the road.’ It’s a protection racket.”

The story of ABB’s battle against counterfeits in China shows how one corporation was undermined by the very firm it hired to fight for it — and then let down by the legal system it turned to for help.

ABB was exceptional in that instead of remaining silent, it took its fight to court in China and sued its investigations firm, China United Intellectual Property Protection Center, commonly referred to by its acronym CUIPPC. ABB lost its case in Beijing, despite the fact that Flaming Lee, a key China United employee, was herself convicted in Dubai of selling counterfeit ABB products. ABB was ordered to pay overdue investigation fees of more than $500,000, despite China United’s questionable billing patterns, including a $5,000 charge for a raid that uncovered $1 worth of fakes.

ABB, a $40 billion corporation whose products range from simple circuit breakers to sophisticated industrial robotics and automation, declined to comment for this story. But in Chinese court filings, it said that what it found was “astounding.” The very firm it had entrusted with all its brand protection work in China “directly participated in infringing acts against the ABB trademark.”

China United countered, in court documents, that Lee had acted without the management’s knowledge. China United’s chairman and its deputy general manager, reached on their mobile phones, declined to comment.

Like ABB, most brands privately hire investigators, either directly or through a law firm, to root out counterfeiters and assist Chinese authorities in running raids against them. Much of the work is then further subcontracted to shifting bands of poorly paid freelance informants on the ground.

Contracts are typically structured on a commission basis. More seizures mean higher fees — and sometimes rewards for in-house staff — creating powerful incentives to cheat. In response to questions from the AP, Shanghai’s Public Security Bureau took the unusual step of warning foreign companies to be more watchful.

“Those outsourcing companies are a mixed bunch, with good and bad, which is not conducive to anti-counterfeiting work,” the Public Security Bureau wrote. “Therefore, we very much hope that brand owners will pay attention and devote more manpower and material resources to ensure that the fight against counterfeiting is healthy and orderly.”

But the role of the government itself, particularly on the local level, is not always clear. The same people tasked with fighting counterfeiters — not just investigators but also local officials — sometimes protect them, according to investigators, lawyers, and company employees interviewed by AP.

Wang Hai, founder of Beijing Dahai Business Consultancy, said he once was barred from raiding a company that made counterfeit windows, even though he had a police escort. “The government has a list of protected companies,” Wang said. “They were on that list.”

Wang said he has seen golden government plaques posted at company gates, shiny markers of official untouchability. He pulled out a photo of one on his mobile phone. The red letters spelled out “key protected enterprise.”

A spokeswoman for the State Administration for Industry and Commerce, which helps oversee intellectual property enforcement across China, said that the agency “has investigated and punished a large number of regulation violators,” but declined to elaborate.



Flaming Lee’s employer, China United, was no fly-by-night operation. Its roots reached to the highest levels of the Chinese government and it boasted a client list stocked with Fortune 500 companies.

China United seemed like a solid partner back in 1996, when ABB made the agency responsible for all its anti-counterfeiting work in the country. By 2009, China was ABB’s largest market, accounting for sales of $4.3 billion. But as the market leader for circuit breakers, ABB was plagued by counterfeiting. The company calculated that sales of counterfeit ABB low-voltage circuit breakers — the very product Lee was peddling — topped 2 billion yuan ($314 million), according to ABB’s court filings.

Founded in 1994, China United was one of the country’s first professional investigations companies and grew to become one of the largest. Corporate filings show that it used to be a state-owned company, supervised by the research and consulting arm of China’s State Council, or cabinet. China United’s principals were members of a host of international intellectual property associations.

As ABB’s sole agent, China United handled everything: It hired investigators, ran cases, and filed complaints and lawsuits with authorities. All ABB asked for in return was an invoice and an investigation report, court filings show.

Like many other Western firms, ABB paid China United based on the number of anti-counterfeiting cases it handled. By that measure, the company’s performance was stellar. It provided ABB with a steady stream of successful raids all along the counterfeit supply chain, reporting actions against factories, packagers, warehouses, shops and exporters. China United charged $5,000 to $15,000 per case, court documents show.

But nine years into their partnership, ABB began to doubt that its money was being put to good use. In court filings, ABB said it heard that China United had been falsifying cases for another client, Panasonic, cooperating with a counterfeiter to manufacture fakes, which it then arranged to have seized and billed as a successful raid. Panasonic declined to comment for this article and the allegations were not substantiated in court.

Then, in early 2009, a whistleblower reported that China United was doing the same thing to ABB. The company was conspiring with a plant in Wenzhou, China, called Wenzhou Fulemu Electric Co., to manufacture fakes it could seize and bill to ABB, the informer said, according to allegations in court filings.

Alarmed, ABB began investigating its own investigators. But the head of China United’s Shanghai office blocked ABB’s independent investigator from raiding the Wenzhou firm and repeatedly threatened the man, who was subsequently attacked, ABB said in court documents.

“The investigator was brutally assaulted and badly beaten up,” said one person involved in the case who was not authorized to discuss it publicly. “Broken bones. He went to the hospital.”

China United denied having anything to do with the attack or the obstruction of the raid. It said in court documents that the firm had “faithfully carried out its duties as agreed.”

After an investigation that took over a year, ABB came to a startlingly different conclusion: China United was double-crossing the company and had faked anti-counterfeiting cases. ABB believed China United was protecting Wenzhou Fulemu, whose counterfeit ABB products were then marketed for export by the head of China United’s Dubai office, Flaming Lee, with the knowledge of the company’s top management.

In August 2009, Lee —whose real name is Li Yue — bragged about her position to an undercover investigator in a secretly recorded video reviewed by the AP.

China United, she said, did all of ABB’s anti-counterfeiting work in China. That meant she could sell as many fakes as she wanted and no one would catch her.

“That’s very good for you,” said the investigator.

“Ha, ha, ha, very good for me, ha, ha, ha,” she responded. “But of course my boss also knows…”

Dubai police arrested Lee three months later for counterfeiting ABB products. In May 2010, a Dubai court found her guilty and fined her for selling counterfeit goods, according to a copy of the verdict.

Lee did not respond to requests for comment via her blog or LinkedIn account.

Wenzhou Fulemu went out of business and its legal representative could not be reached for comment.

ABB went back and examined dozens of China United’s cases and said it found evidence of “systematic and large scale falsification.”

ABB said China United had fabricated government documents and targeted bit players to maximize fees. In some cases, China United didn’t report the names and addresses of counterfeiters, ABB said in court filings.

In December 2009, ABB sued China United for breach of contract in a Beijing court, seeking a refund of fees paid between 2007 and 2009 — a total of 5.7 million yuan ($900,000) — and an additional 1 million yuan ($157,000) in compensation. China United countered that it was not guilty of wrongdoing and that ABB owed it 3.4 million yuan ($540,000) in unpaid investigative fees.

China United dismissed ABB’s investigative findings as “groundless conjecture” in court documents and said all the cases it did for ABB were real. In defense of its reputation, China United told the court in Beijing that it had “received silk banners and trophies as gifts from its clients and has established a good reputation abroad.”



The trial did not go well for ABB.

Beijing Municipal No. 2 Intermediate People’s Court gave ABB such short notice of the hearing date it could not secure a visa for a key foreign witness, so his testimony was thrown out. Another witness feared for his safety and refused to appear in court, so his testimony was thrown out too. At the hearing, the chief judge walked out of the courtroom 10 minutes after ABB began delivering evidence, ABB said in court filings.

The three-judge panel decided the case with surprising alacrity. Despite the 1,500 pages of evidence ABB submitted, it took the judges just one working day to deliver their verdict.

Though the court acknowledged Flaming Lee sold fake ABB products while employed by China United, it ruled that “such acts were committed by her alone.” The court said ABB’s claims that China United was covering up for the Wenzhou firm were unsubstantiated, and dismissed its claim that China United had interfered with the work of an independent investigator and faked raids.

The court ordered ABB to pay China United 3.4 million yuan in investigation fees. The ruling was upheld on appeal.

China United’s legal victory, however, proved hollow. Its reputation had been damaged, and it disbanded after the lawsuit. But not for long.

China United chairman Li Changxu, is staging a quiet comeback, once again attracting a Fortune 500 clientele and advertising accolades from the Chinese government.

He and two partners from China United — Li Guorong and Fan Liming — bought stakes in a Shanghai intellectual property protection company called Sinofaith IP Group. Li Changxu registered a 7.9 million yuan ($1.2 million) investment in September 2013, making him the second-largest shareholder, records show. Public filings also show that Li Changxu is chairman of Sinofaith’s board.

None of the men responded to emails seeking responses to more than a dozen questions.

Sinofaith has attracted financing from a number of Chinese investment funds, including one that is owned by Beijing government entities. It has advertised a client list that includes GE, Toyota, 3M, Nike and Schneider Electric.

That was a surprise to GE, said spokesman Geoff Li.

“Normally if they want to put a company’s logo, they should let us know,” he said. GE and 3M said they had no plans to continue using the company. Nike said it has not been a client since 2013, and Toyota said it was no longer working with Sinofaith and had not authorized the firm to use its name. Schneider Electric said it dropped China United because of the ABB lawsuit.

Sinofaith did not respond to requests for comment. After AP began making inquiries, it removed all client names from its website.


This article has been written by Erika Kinetz, author at the Associated Press. see more.


Women on Top in Tech – Dawn Dickson, Founder and CEO of PopCom, Inc. and Founder of Flat Out of Heels



(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Dawn Dickson is the Founder and CEO of PopCom, Inc. (formerly Solutions Vending, Inc.), the company behind PopCom Kiosks and the PopCom API, which provides a software solution to make vending machines more intelligent. She created the company after her own struggles to find vending machines that could sell her roll-up flat products, Flat Out of Heels, at high-traffic areas like airports.  She was awarded First place in the PowerMoves NOLA Big Break pitch Competition and second place in the 2016 SBA Innovate Her Challenge.

What makes you do what you do? 
I love solving big problems and working with amazing people to get it done.

How did you rise in the industry you are in?
After working in the vending industry for three years selling Flat Out of Heels in vending machines in airports and nightclubs, I was frustrated with the lack of data I was able to collect from my hardware. I also wanted more engaging and interactive experiences for my customers and after speaking with several retailers they felt the same way. That is when I decided to focus on PopCom and developing a software solution to solve the data problem in self-service retail.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)? 
The fact that I am not the usual, leadership demographic is the main reason why I was up for the challenge. The industry is in need of a change and I believe someone with a unique and different perspective and experience is needed. I look forward to collaborating with the industry leaders and veterans to build a product that everyone loves and finds value in.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? How did you make a match if you did, and how did you end up being mentored by him/her?
I am involved in several different industries and sectors – retail, self-service retail, hardware, software…so I have to learn a lot of information quickly.  There are several people that I look up to, follow their career, and seek advice from. I was fortunate to be able to participate in some of the country’s top accelerator and entrepreneurship development programs, including Techstars, Canopy Boulder, and the BIxel Exchange – the mentorship and network I gained from these programs has been invaluable and very instrumental in our progress.

Now as a leader how do you spot, develop, keep, grow and support your talent? 
I have learned that spotting talent takes time, it takes patience, and building relationships with people and networks to meet new people, most of my connections come from introductions. I focus on finding the right fit for the company culture, there is a lot of great talent out there, but the culture is different, I want us to be on the same wavelength. I am fortunate to have met some great people through the programs I was in that came on as mentors, advisors, and eventually full time team members. I take time to get to know my team individually and understand what their personal goals and ambitions are, ask them what their dream job looks like, understand their needs so they can be happy at work and be fulfilled. I believe in self-care and making mental health a priority, if a person is good within themselves they radiate positivity and are more productive.

Do you consciously or unconsciously support diversity and why?
I am a black woman so I am diversity. Naturally, we attract people we can relate to and have things in common, so I found that my team was heavily female and my diversity initiative was finding more men…when I thought about it I found it funny. Now I have a balanced team of men and women from diverse backgrounds, experiences, and perspectives which is exciting.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb? 
To be a great leader you have to be a team player, my rule is I never ask someone to do something that I would not do myself. I also have a rule to give the team the freedom and flexibility to work when and how they are most productive. That means some of us working different hours and being in the office different days, but happy team builds the dream!

Advice for others?
My advice is never give up if you believe in it. I started my company selling shoes in vending machines in 2011, it took me 7 years, a few failed hardware attempts, and many people telling me it would not work because the market was not ready. I was patient and what I believed would happen is happening. In May PopCom is bringing the PopShop to market, a next gen smart vending machine to sell and sample products. Our API will be ready in July and for the first time vending machine and kiosk owners can understand their conversion rates and have the level of data and analytics available that eCommerce stores have, but better. It has been a long journey and I feel it is just getting started, but I am only here because I never gave up.

If you’d like to get in touch with Dawn Dickson, please feel free to reach out to her on LinkedIn:

To learn more about PopCom, please click here.

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Callum Connects

Elaine Zhou, Co-Founder of China Women Equipping Center



Elaine went on a journey of self discovery and once she knew her true self she could be successful in her own business.

What’s your story?
I am very proud of where I came from and I am grateful for where I am living and working today. Singapore is my adopted home and it is my aim to always contribute to and serve this country and its people.
Twelve years ago, I moved to Singapore for an internship opportunity. I was twenty one years old and I didn’t have any friends, I didn’t speak English, I didn’t understand the culture or the customs. Everything was new and strange to me. Everything was difficult, but my parents had tremendous faith in me.
My parents have worked diligently on the family farm to raise us and send us to college. My parents had a huge influence on me. The important things I learnt from them are to love, to never give up, to be a hard worker and to have a can-do attitude. These are the qualities that I embrace in my daily life.

What excites you most about your industry?
We offer more than just training. Our business is a resource to be leveraged for transformation, improved teamwork, leadership behaviours, communication skills, relationship skills, coaching skills and increased job satisfaction and productivity.
Our passion and purpose is to help people grow as leaders and to create tremendous results by serving others well. We take people to daring destinations, beyond their imagination.
My greatest joy is to see people grow, change and transform and live a purposeful life; this is what motivates me to do more and do it well.

What’s your connection to Asia?
I was born in China and I have spent all my adult and professional life in Singapore.

Favourite city in Asia for business and why?
Singapore and China.
Singapore is a very sophisticated and systematic country. It is a structured and highly efficient business environment and people are generally nice and honest. Also, the convenience and diverse culture is a great advantage for people who want to settle down there, no matter if they are from the East or West. You always feel at home in Singapore.
I also like China because of its fast growth. The population and the market is here. However, it takes time to settle in because of the language barrier and the very different traditional culture. But you will also find it is very interesting and you’ll want to learn more about China. The people are nice if you know them well. It is always about relationship first and business second, and when you are in a business meeting, you really have to master the skill of “reading the air.” It is a skill to let people know and understand you; your values, your background, why you think in that way or why you do or do not do certain things. Doing business in China is like swimming in the ocean; it is an abundant ocean and it is full of risks. Always know your values and stay true to yourself and make decisions close to your heart. It will help you see things more clearly and get things done in a way that doesn’t violate your values.

What’s the best piece of advice you ever received?
“Be yourself, Elaine.” That is the best advice I have ever received. It was a big ‘aha’ moment for me. It was also the moment I truly and honestly looked within myself. I realized that when I am being my true self, and not trying to be someone else, I am able to connect with people instantly in a genuine and authentic way. It is a great feeling.

Who inspires you?
There are so many people who encourage me, lift me up and challenge me everyday. My mentor, John Maxwell who helped me discover my purpose in life; Michael Griffin, for his passion for Christ which is contagious and Wayne Dyer, my spiritual mentor who passed away in 2016. Also, people who are living with a purpose and striving everyday for their dream, they really inspire me. My clients, mentees and students. When I see that joy and peace in them, that inspires me to do more and do well. My team inspire me, especially when they said, “Elaine, I joined the business because of you.” They inspire me to make it work for the team and the business because it is beyond my own self interest. I am grateful for having so many people in my life who inspire me.

What have you just learnt recently that blew you away?
China is a big country, we all know that, and it is also an internet giant. Recently on a team meeting, one of the directors who manages a successful beauty business, shared with us, that everybody is on the internet, especially on WeChat. People are obsessed with online communities – for ordering food, getting taxis, forging relationships, connections and friends. Almost anything and everything can get done online. But right now, there is a new trend; more and more people want the “offline” experience. It usually takes one to two hours from one place to another in Beijing, but people want to make the effort to have a real connection with other people, to attend networks, seminars, workshops and business meetings.

If you had your time again, what would you do differently?
I started my first business when I was 24 years old, it failed. One year later, I started my second business and after a year and a half, I closed down the operation. After several painful experiences and two failed businesses, I started to look within myself, and seriously and intentionally invested in my personal growth at the age of 28. If I could turn back time, I wish I could have grown a lot earlier. I strongly believe that the level of our success is determined by the level of our self growth and we are always learning, everyday. But I also understand it is not the only way to live. I also consciously and intentionally try to live in the now. It is a beautiful and great way to live. In fact, I am grateful for what I have gone through; the pains, setbacks and challenges in my earlier life.

How do you unwind?
I like to stay connected with nature. For example, taking a walk barefoot on the grass and smelling the roses on the street. Having a beer or coffee along the riverside with friends; reading a good book; hunting for nice restaurants; swimming or running.

Favourite Asian destination for relaxation? Why?
Thailand – nice beaches, food and people.
Bali – fantastic beaches and food, great people.
Malaysia – Nice food and people, particularly Langkawi, Penang and KK.
Of course Singapore, it is always a place dear to my heart. It’s my home.
There are a lot of other interesting places in China which I am still exploring.

Everyone in business should read this book:
The Law of Success by Napoleon Hill
The Science of Getting Rich by Wallace Wattles
The Power of Now by Eckhart Tolle
Tao Te Ching: Change Your Thoughts, Change Your Life by Wayne Dyer
Developing the Leaders Within You by John C.Maxwell
Start with Why by Simon Sinek
These are some of the books that truly transformed my thinking and shaped my values.
I used to read a lot of different types of books, from sales, marketing, branding and management to different business models. I found it is really hard to master all of it and I was not optimizing my own strengths.
Entrepreneurship is a skill to be learnt. But it is really important to recognize what we are good at and what we are not so good at. We can not be everything.
Entrepreneurship is a journey of self-discovery and soul searching. It is all about learning and striving. We should try and always remember why we started our business in the first place.

Shameless plug for your business:
The China Women Equipping Center, is something both my team are I are very proud. We have put our hearts and souls into it, to help women in China grow and transform. As a developing country and with the rise of China, people are not lacking in money, everywhere is full of opportunity, but the challenge is the civilizations, values and faith. In fact the Chinese government puts a lot of effort into improving and shaping the international image to ensure it is making progress. But people are still facing a lot of pressure, especially women.
One of our business partners who is runs traditional Chinese medicine retail stores, shared that 80% of his patients are female, and the reason they are coming to see him are anxiety and depression.
Our China Women Equipping Center creates a safe and comfortable environment for women to help build their values and characters. My local team and I are very passionate about our mission and purpose. Beijing is our headquarters in China. We are planning to take three to six months to establish our business in Beijing and grow and expand to other major cities in China after that.

How can people connect with you?

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
Download free copies of his books here:

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