Chinese Counterfeits Pose Growing Threat to U.S. Industry

DAFEN, China, Nov. 17, 2005 — -- In a week of travel across the country, an ABC News team found counterfeit watches, counterfeit Honda motorcycles and Jeeps, and even counterfeit Viagra. In Beijing, the team test drove a "Chery" mini-car, a rip-off of a Chevy that was perfect down to the last detail.

It is such an exact copy that the Chery's doors are interchangeable with the Chevy's. The Chinese company that makes the counterfeit version has even applied for a Chinese patent protecting the design of the fake.

U.S. products like these -- which cost billions of dollars to develop -- are routinely copied for virtually nothing, and then sold by Chinese companies for billions more.

"If you look at the levels of software infringement, movie infringement -- you're dealing with very competitive U.S. industries. Their market is ceded to the pirates," said Mark Cohen, the U.S. Embassy's intellectual property attaché.

China makes fakes with assembly-line efficiency. In the southern town of Dafen, known as "Mona Lisa village," masterpieces by Da Vinci and Van Gogh are copied by the thousands then sold all over the world, including the United States, for a few dollars a copy.

Some may notice that Mona Lisa's face looks just a little bit more Chinese.

"Yes, a lot of our customers complain," said copy artist Seth Wang.

Buyers in the painters' village know they're getting fakes, but the challenge with many products from China is telling the difference between the real thing and a less-than-perfect reproduction.

When it comes to counterfeit golf clubs, the issue is a nuisance for weekend golfers who cannot tell the difference between a $200 Calloway club and the $20 fake. But a real danger arises when the counterfeit products are brake pads and airplane parts.

The depth of the problem became clear at the counterfeit market in the southern city of Guangzhou, where stalls raided just two days before ABC News arrived were already back in business.

"They only face the risk of paying a monetary penalty, which in China is just considered a cost of doing business," said Nicholas Blank of Kroll Associates, a private detective agency.

Meanwhile, the profits from making fakes are piling up.

ABC News' Jim Sciutto filed this report for "World News Tonight."