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Getting Real About Fakes

Leading citizen consumer rights advocate Wang Hai says fakes and fraud are as rampant in China as they were 20 years ago, and he has taken the fight online

By Li Jing Updated May.1

Wang Hai, China’s most famous consumer advocate, has come to the rescue of shoppers once again.  

His latest campaign was against popular livestreamer Xin Youzhi in December 2020. Known as Simba to his more than 71 million followers on short video platform Kwai, Xin was accused of hawking fake cubilose, better known as edible bird nests.  

Made from the saliva of swifts, bird’s nests are a pricey delicacy in China and believed to have health benefits.  

Wang posted a lab analysis results of a sample of Xin’s wares on microblogging platform Sina Weibo which proved that Xin’s nests were made of nothing more than sugar syrup.  

The campaign ended with Xin publicly apologizing to his followers and refunding each customer three times the purchase price of 40 yuan (US$7) per box.  

Wang’s consumer crusading began in 1995, when his quest to get a refund from a Beijing department store for two pairs of branded earphones that turned out to be fake became nationwide news. Ever since, he has exposed fake products by buying them and filing compensation claims according to the law. Many have praised him as an advocate for consumer rights, while critics call him a profit-seeking opportunist.  

Wang does not deny he is out to make money. In fact, he has made a career out of it. In 1996, Wang started companies and hired a team of lawyers to help file his claims. He has since taken his fight online. Wang told NewsChina that counterfeiters are just as rampant in China as they were 20 years ago, and they are still using the same old tricks.  

“Nothing changes under the sun,” he said.  

Origin Story 
In March 1995, Wang bought two pairs of Sony earphones at a big department store in Beijing. On closer inspection, he found they were coarsely sealed and the packaging had a different company name listed in the fine print. The earphones were counterfeit. He turned to the municipal quality and technology supervision bureau and Sony’s Beijing office, to no avail.  

Instead of giving up, he doubled down. Wang bought 10 more pairs of the earphones from the same store and filed a report with the Dongcheng District branch of the Beijing Administration for Industry and Commerce.  

Wang was armed with the Consumer Protection Law that took effect in 1994. Article 49 of the law called for a refund of twice the purchase price as compensation for any transaction involving fraudulent sales or services.  

The clause was controversial when it was first proposed in 1986. Opponents argued that people would buy fake products on purpose, a criticism that Wang faced after his case caught national attention. Some said that people who deliberately buy fakes to file compensation claims should not be protected under the law.  

He Shan, a civil law expert and co-drafter of the Consumer Protection Law, voiced support for Wang. In a 2002 interview with China Youth Daily, He said Article 49 was designed to punish counterfeiters and encourage consumers to fight back, and Wang was a consumer.  

But Wang’s case was rare. At the time, most Chinese consumers had little awareness of their rights. After more than a month of deliberations, Dongcheng District authorities concluded they had no power to enforce the law in Wang’s case as they were only an administrative bureau. Instead, they offered to mediate.  

The department store agreed to compensate Wang for the earphones he bought initially, but refused to pay for the other 10 pairs, because he already knew they were fake.  

Wang turned the store down. He believed that the 1994 law empowers any consumer to supervise and report vendors selling counterfeit products.  

Wang continued his fight several months later when Beijing issued rules on how to implement the Consumer Protection Law, which ultimately held vendors responsible for sales of fakes. Emboldened, Wang returned to the capital from his home in Qingdao, Shandong Province, and has been a consumer rights advocate ever since.  

After China embraced the market economy in the 1980s, fakes and counterfeits flooded the increasingly open market. According to annual random inspections by the former State Bureau of Quality and Technical Supervision, the authenticity rate of Chinese products was 80 percent in 1991, which dropped to nearly 70 percent between 1992 and 1994, and fell to 65.9 percent in 1995. Data from the former General Administration of Quality Supervision, Inspection and Quarantine showed that from 1992 to 1995, Chinese authorities had confiscated 10.4 billion yuan (US$1.6b) worth of fake merchandise.  

Wang was a self-appointed watchdog in the fight against fakes. “Drivers still run red lights despite traffic rules, but what if we install cameras?” he said.  

His actions stoked the ire of violators. Wang endured verbal abuse and physical threats. “The curses and threats never stopped, but I’m no longer mad at them,” Wang told NewsChina.  

“I’ll sue them, and have already sued more than 50... I post the court rulings online to let others see what kind of people they really are,” he added.  

Promoting Legislation 
To better protect himself, Wang started a company in 1996 focused on exposing commercial fraud. His business expanded into real estate in 1998 in time to ride China’s commercial housing boom, and he worked with other consumer rights advocates and lawyers.  

In 2002, Wang and his partners set up a team to study the draft regulation on real estate management issued by China’s Ministry of Housing and Urban-rural Development.  

“We were all young and hungry back then... We hoped that we could promote legislation and help society,” Qin Bing, a real estate lawyer who worked with Wang, told NewsChina. During the 2003 two sessions, China’s annual political meetings, Qin and Wang proposed a draft legislation on real estate management. Thirty-one delegates from the National People’s Congress, China’s legislative body, co-signed the proposal.  

During those years, Wang’s company mainly provided consultations to residential communities in Beijing and Shenzhen in setting up homeowner associations. Chen Youhong, a distinguished professor of public administration at the Renmin University of China in Beijing, invited Wang to share his ideas with students.  

But Wang was not satisfied. “Homeowners are still at a disadvantage because they don’t have the same access to information as developers, and they are much less powerful,” he said.  

One of Wang’s recent projects was assisting homeowners in a residential community in Xi’an, capital of Northwest China’s Shaanxi Province, in a fraud claim against their property management for heating services. Wang informed them of their rights to a full refund for heating fees plus compensation of at least 500 yuan (US$74). According to a revision to the Consumer Protection Law in 2014, the compensation was increased to three times the paid price with a minimum cap of 500 yuan.  

“We included that minimum cap in our proposal for the law’s revisions in 2004,” Wang told NewsChina.  

“Five hundred yuan is a fair amount, especially in rural areas, so I think it will really encourage more consumers to protect their rights and deter sellers,” Wang added. “In that area, the law has made progress, albeit a little slow as it didn’t take effect until 10 years later.”  

‘Limited Justice’ 
Since the 2000s, Wang shifted his focus to online shopping. “Consumers were a lot more tolerant of online sellers back then. But fakes are fakes no matter where they’re sold. As long as there’s buying and selling, it’s very simple – sales should be transparent and fair everywhere,” he said.  

In 2006, Wang reported Hangzhou-based tech giant Alibaba to the commerce and industry bureau of Zhejiang Province, where the e-commerce giant is headquartered. He filed five violations against Alibaba’s Taobao, China’s earliest and largest online shopping platform. The charges he leveled at them included false advertising, not requiring sellers to provide proof of purchase, turning a blind eye to fraud and illegal sales, and advertising fakes and low-quality products.  

Taobao accused Wang of never using the platform and not understanding how online shopping works. Several months later, however, Taobao announced a 100 million-yuan (US$14.7m) campaign to fight the sales of fakes on the platform. In 2011, Taobao pledged another 200 million yuan (US$29.4m) to protect consumer rights.  

Wang said that livestreaming provides an easier channel to peddle fakes, since sales often depend on celebrities who do not always perform due diligence. “Livestreaming can’t stand up to scrutiny,” Wang said. “The industry depends on faking it: fake personas, fake brands... even the discounted prices they claim to offer are not real discounts.”  

In addition to Xin, Wang exposed businessman and key online influencer Luo Yonghao for selling fake wool sweaters and fake Britishbranded mouthwash. Luo, according to Wang, allegedly used photos of actors and claimed they were industry experts. Luo made a public apology and compensated his customers.  

Wang was also a target for lawsuits. In 2014, he was sued by a traditional Chinese medicine (TCM) supplier for claiming their product did not function as advertised. A court in Qinghai Province, where the company was based, ruled in favor of the supplier, saying that Wang provided no evidence proving his allegation. The court found Wang guilty of defamation, requiring him to delete all posts about the company from his social media and pay 12,100 yuan (US$1,780) in compensation. 

“Evidence is crucial, or the sellers will take any chance to counterattack you,” he told NewsChina. Wang now has staff perform detailed background checks and tests on all products before taking his cases public.  

With 25 years of experience in the consumer rights game, Wang has learned to choose his battles more carefully. “Take fake cigarettes for example. Some villages survive on making fake cigarettes and will prevent their practices from being exposed at all costs... We won’t pursue such cases without local police support. We are not willing to risk our employees’ lives,” he said. 

Costs and benefits are major considerations. “We wouldn’t target a street vendor who, for example, claims their roast chestnuts are the ‘best in the world.’ That is meaningless. We must consider whether the seller can afford to pay compensation,” he said.  

This approach has been a point of criticism in the past. Wang was called “ruthless” online for posting that he charged clients 50 percent of their compensation payouts. In a widely circulated online commentary in November, blogger “Da’erbudang” condemned Wang’s for-profit advocacy and alleged that he had blackmailed vendors for hush money.  

Wang said that while he must fund his work, he prioritizes social benefits. Wang described how his team’s undercover investigations into 20 private clinics in 1998 led local authorities to crack down on medical fraud and unlicensed clinics. “Before our investigations, I predicted that it might cost us 200,000 yuan (US$29,412). I thought I could afford it, so I did it... If I had gone over budget, I would have stopped,” he told NewsChina.  

However, fraud at private hospitals and clinics soon rebounded and went unchecked for years until a case in 2016, when 21-year-old Wei Zexi died of soft-tissue cancer. Before his death, Wei posted online that the private hospital he turned to had used obsolete treatments and delayed his recovery.  

When asked whether he had regrets about not fully eradicating fraud at private hospitals, Wang paused. “We had different expectations for each case... All we could do with those clinics was expose them,” he said.  

“What we are pursuing is actually limited justice. We have to be rational and face the fact that with limited resources in hand, that was all we could pursue,” he added.  

Wang owns four consulting companies in Beijing, Tianjin, Nanjing in Jiangsu Province and Shenzhen in Guangdong Province that focus on compensation cases against larger vendors and platforms, helping consumers protect their rights and aiding enterprises to take action against manufacturers. Wang told media that he sees several million yuan in profit annually.  

“I don’t fight fakes, I fight fraud,” he told NewsChina. “Fraud hasn’t changed in China over the past 25 years. They use the same old tricks and the same old ways... It’s the channels that have changed,” he said.  

“Even consumers haven’t changed. Many of them remain ignorant and ripe for the picking,” he continued. Wang cited the wool sweaters Luo Yonghao sold for 79 yuan (US$12) each as an example. Factoring in total commissions and logistics costs, the factory price should be between 30 and 40 yuan (US$4.4-5.8). This is a tell that the sweaters are not real wool. However, most consumers did not trust their common sense. Instead, they trusted a celebrity. “That’s why I say that sometimes hunting fakes is so easy that you don’t even need to test them.”  

Wang claimed that thousands of netizens from across the country contacted him seeking help in filing fraud claims following Xin Youzhi’s case. He is having trouble keeping up. “I hope everyone comes out to fight fakes... unified efforts would spur improvements in the quality of Chinese products and services. When that happens, I will no longer be needed,” he said. 

An accused counterfeiter exchanges words with Wang Hai (right) in Xi’an, Shaanxi Province, February 27, 2005