Counterfeits Support Local Economies- crackdown leads to unemployment

The involvement of local governments in the support of the trade in counterfeit goods makes effective enforcement at the local level difficult, if not impossible. Local governments in China control all of the levers of power in law enforcement. For example, judges, police officers, and administrative enforcement officials are all appointed by and beholden to local government leaders, such as mayors and local Communist Party leaders.' 7 These law enforcement officials can be discharged, transferred to less desirable jobs, demoted, or suffer pay cuts and other setbacks to their careers if they act contrary to the wishes of local government and Party leaders.18 As a result, local enforcement officials generally follow the directions of local government leaders who are reluctant to enforce laws against counterfeiting because such enforcement will harm the local economy.' 9 In fact, counterfeiting often supports entire local economies because a host of legitimate businesses, such as hotels, restaurants, nightclubs, transportation companies, and warehouse and storage companies all depend on the trade in counterfeit goods."Counterfeiting also provides jobs; an urgent need at this time in China, where many jobs in the export industries have been lost to the global economic crisis. In addition, contrary to popular belief, many sellers and distributors of counterfeit goods pay substantial local taxes allowing local governments to provide for essential public services. The revenues and taxes generated by counterfeiting allow local governments to meet economic growth targets set by national authorities. The local governments are rewarded with government subsidies if those targets are met.2 2 Counterfeiting is a very lucrative, albeit illegal, economic activity. The importance of counterfeiting to local economies means that shutting down the trade in counterfeit goods would have serious negative repercussions for the local economy. Any serious crackdown would also affect the legitimate businesses that support counterfeiting, which could result in the shutdown of the entire local economy creating unemployment, social turmoil, chaos, and unrest-something that PRC authorities fear more than anything else.2 ' The importance of counterfeiting to local economies suggests that counterfeiting will be heavily defended at local levels.