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Chinese Construction Industry Perceptions of Counterfeiting of Constrction Materials and Products in China

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Title:
Chinese Construction Industry Perceptions of Counterfeiting of Constrction Materials and Products in China
Physical Description:
1 online resource (105 p.)
Language:
english
Creator:
Corona Chacon, Fernando
Publisher:
University of Florida
Place of Publication:
Gainesville, Fla.
Publication Date:

Thesis/Dissertation Information

Degree:
Master's ( M.S.B.C.)
Degree Grantor:
University of Florida
Degree Disciplines:
Building Construction
Committee Chair:
Minchin, Robert E, Jr
Committee Co-Chair:
Issa, Raja Raymond A
Committee Members:
Walters, Russell C

Subjects

Subjects / Keywords:
china -- construction -- contractor -- counterfeiting -- industry -- manufacturer -- supplier
Building Construction -- Dissertations, Academic -- UF
Genre:
Building Construction thesis, M.S.B.C.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract:
The construction industry can be categorized as one of themost important Industries in modern society. Unfortunately, these days, theconstruction industry has been affected by a misfortune called counterfeiting. Previous,authors have found that counterfeiting has become a significant and growingproblem within the construction industry. From those investigations, China has beenidentified as the main source for the production and commercialization ofconstruction counterfeit commodities worldwide. In order to analyze the impact and reality ofcounterfeiting in the People’s Republic of China, a total of five members ofthe Chinese construction industry were analyzed. The general population soughtwas analyzed as a whole and also, the opinion of the: Contractors-Owners,Manufacturers, and Suppliers was individually taken into account. Theinvestigation analyzed the responses of the interviewees to a total of 23questions that covered three main categories within counterfeiting: Basic information about the counterfeitingproblem in the construction industry · The awareness and prevention of counterfeitingin regard to counterfeit items in the construction industry · The effect of counterfeit products on theconstruction industry supply chain The research found that there is a medium to high risk ofcounterfeiting in the Chinese construction industry; it was found that threeout of four respondents have heard or suspect the existence of victims inprojects with which they have been associated. The Chinese supply chain has been affected at almost everylevel, it is necessary to increase the already existing prevention methods. Inaddition, it is also necessary to implement inspection procedures before duringand after the purchase of a good as well as a constant improvement of procedureswith lessons learned about counterfeiting prevention.
General Note:
In the series University of Florida Digital Collections.
General Note:
Includes vita.
Bibliography:
Includes bibliographical references.
Source of Description:
Description based on online resource; title from PDF title page.
Source of Description:
This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Statement of Responsibility:
by Fernando Corona Chacon.
Thesis:
Thesis (M.S.B.C.)--University of Florida, 2013.
Local:
Adviser: Minchin, Robert E, Jr.
Local:
Co-adviser: Issa, Raja Raymond A.
Electronic Access:
RESTRICTED TO UF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE UNTIL 2015-08-31

Record Information

Source Institution:
UFRGP
Rights Management:
Applicable rights reserved.
Classification:
lcc - LD1780 2013
System ID:
UFE0045688:00001

MISSING IMAGE

Material Information

Title:
Chinese Construction Industry Perceptions of Counterfeiting of Constrction Materials and Products in China
Physical Description:
1 online resource (105 p.)
Language:
english
Creator:
Corona Chacon, Fernando
Publisher:
University of Florida
Place of Publication:
Gainesville, Fla.
Publication Date:

Thesis/Dissertation Information

Degree:
Master's ( M.S.B.C.)
Degree Grantor:
University of Florida
Degree Disciplines:
Building Construction
Committee Chair:
Minchin, Robert E, Jr
Committee Co-Chair:
Issa, Raja Raymond A
Committee Members:
Walters, Russell C

Subjects

Subjects / Keywords:
china -- construction -- contractor -- counterfeiting -- industry -- manufacturer -- supplier
Building Construction -- Dissertations, Academic -- UF
Genre:
Building Construction thesis, M.S.B.C.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract:
The construction industry can be categorized as one of themost important Industries in modern society. Unfortunately, these days, theconstruction industry has been affected by a misfortune called counterfeiting. Previous,authors have found that counterfeiting has become a significant and growingproblem within the construction industry. From those investigations, China has beenidentified as the main source for the production and commercialization ofconstruction counterfeit commodities worldwide. In order to analyze the impact and reality ofcounterfeiting in the People’s Republic of China, a total of five members ofthe Chinese construction industry were analyzed. The general population soughtwas analyzed as a whole and also, the opinion of the: Contractors-Owners,Manufacturers, and Suppliers was individually taken into account. Theinvestigation analyzed the responses of the interviewees to a total of 23questions that covered three main categories within counterfeiting: Basic information about the counterfeitingproblem in the construction industry · The awareness and prevention of counterfeitingin regard to counterfeit items in the construction industry · The effect of counterfeit products on theconstruction industry supply chain The research found that there is a medium to high risk ofcounterfeiting in the Chinese construction industry; it was found that threeout of four respondents have heard or suspect the existence of victims inprojects with which they have been associated. The Chinese supply chain has been affected at almost everylevel, it is necessary to increase the already existing prevention methods. Inaddition, it is also necessary to implement inspection procedures before duringand after the purchase of a good as well as a constant improvement of procedureswith lessons learned about counterfeiting prevention.
General Note:
In the series University of Florida Digital Collections.
General Note:
Includes vita.
Bibliography:
Includes bibliographical references.
Source of Description:
Description based on online resource; title from PDF title page.
Source of Description:
This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Statement of Responsibility:
by Fernando Corona Chacon.
Thesis:
Thesis (M.S.B.C.)--University of Florida, 2013.
Local:
Adviser: Minchin, Robert E, Jr.
Local:
Co-adviser: Issa, Raja Raymond A.
Electronic Access:
RESTRICTED TO UF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE UNTIL 2015-08-31

Record Information

Source Institution:
UFRGP
Rights Management:
Applicable rights reserved.
Classification:
lcc - LD1780 2013
System ID:
UFE0045688:00001


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1 CHINESE CONSTRUCTION INDUSTRY PERCEPTIONS OF COUNTERFEITING OF CONSTR U CTION MATERIALS AND PRODUCTS IN CHINA By FERNANDO CORONA A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN BUILDING CONSTRUCTION UNIVERSITY OF FLORIDA 2013

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2 2013 Fernando Corona

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3 To m y grandfather who always said: Que linda es la vida, q uien pudiera vivir cien a os ( How beautiful life is who could live a hundred years).

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4 ACKNOWLEDGMENTS I would like to thank all my family members and specially my parents for their continuous support throughout my education and in every step that I take in my life, without them I would not be here. I also would like to thank the University of Florida, and especially all the faculty and staff of the Rinker Hall School of Building Construction. Lastly, I would like to thank Dr. Edward Minchin who encouraged me and mentored m e through the development of the present investigation.

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5 TABLE OF CONTENTS page ACKNOWLEDGMENTS ................................ ................................ ................................ .. 4 LIST OF TABLES ................................ ................................ ................................ ............ 8 LIST OF FIGURES ................................ ................................ ................................ .......... 9 ABSTRACT ................................ ................................ ................................ ................... 10 CHAPTER 1 INTRODUCTION ................................ ................................ ................................ .... 12 2 LITERATURE REVIEW ................................ ................................ .......................... 15 The Counterfeiting Phenomenon ................................ ................................ ............ 15 Definition of Counterfeiting ................................ ................................ ............... 15 Counterfeiting Through History ................................ ................................ ......... 15 ................................ ................................ ........ 16 Different Classes of Counterfeiting ................................ ................................ ... 16 ................................ ................................ ... 17 The Chinese Counterfeiting Products ................................ ................................ ..... 17 The Influence of Imperial China ................................ ................................ ........ 18 The Influence of Confucianism ................................ ................................ ......... 18 The Influence of Communism ................................ ................................ ........... 19 The Chinese Gover nment and Counterfeiting ................................ .................. 19 Chinese Counterfeit Products in Construction ................................ ........................ 20 ................................ ................................ ... 20 and ................................ ................................ ............ 21 Manufacture and Distribution of Chinese Counterfeits ................................ ..... 21 Chinese Construction Products Overseas ................................ .............................. 22 The 48 Routers Case ................................ ................................ ....................... 23 The Terex Demag Case ................................ ................................ ................... 23 The Nuclear Industry Case ................................ ................................ ............... 24 Counterfeiting Prevention ................................ ................................ ....................... 24 The U.S. Army Corps of Engineers Preve ntion Guide ................................ ...... 24 The Incubation Period ................................ ................................ ...................... 25 The Price ................................ ................................ ................................ .......... 26 Chinese Cou nterfeit Products and the United States ................................ .............. 26 The Existing Laws ................................ ................................ ............................ 26 The Chinese Government and Counterfeiting ................................ .................. 27 Counterfeiting in the Near Future ................................ ................................ ..... 27 The Chinese Construction Industry ................................ ................................ ......... 28 ................................ ................................ .. 28

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6 Contract Management ................................ ................................ ...................... 28 The Construction Phase ................................ ................................ ................... 29 3 RESEARCH METHODOLOGY ................................ ................................ ............... 30 The General Purpose ................................ ................................ .............................. 30 Data Acquisition ................................ ................................ ................................ ...... 30 Questions Analyzed ................................ ................................ ......................... 31 Analysis of the Answers Using the Scale Method ................................ ............ 33 4 DATA ANALYSIS ................................ ................................ ................................ .... 39 Overview ................................ ................................ ................................ ................. 39 The Mandarin English Data Translation ................................ ........................... 39 The Open Ended Data Format ................................ ................................ ......... 39 The First Group of Questions ................................ ................................ .................. 40 The Scale ................................ ................................ ................................ ......... 41 General Population Analysis ................................ ................................ ............ 41 ................................ ................................ ... 43 ................................ ................................ ........................... 45 ................................ ................................ ................... 46 Second Group of Questions ................................ ................................ .................... 48 The Scale ................................ ................................ ................................ ......... 49 General Population Analysis ................................ ................................ ............ 49 ................................ ................................ ... 52 ................................ ................................ ........................... 54 ................................ ................................ ................... 57 Third Group of Questions ................................ ................................ ........................ 60 The Scale ................................ ................................ ................................ ......... 60 General Population Analysis ................................ ................................ ............ 60 ................................ ................................ ... 62 ysis ................................ ................................ ........................... 63 ................................ ................................ ................... 64 5 ANALYSIS OF RESULTS ................................ ................................ ....................... 87 Over view ................................ ................................ ................................ ................. 87 The First Category: The General Perception of the Counterfeiting Problem ........... 87 Perception and Awareness of Counterfeiting ................................ ................... 87 Counterfeiting Direction ................................ ................................ .................... 88 Recognized Victims of Counterfeiting ................................ ............................... 88 ................................ ................................ ........ 89 The Second Category: Awareness and Prevention of Counterfeiting ..................... 90 Ensuring Product Integr ity ................................ ................................ ................ 90 The Reality of Quality Assurance/Quality Control ................................ ............. 91 Supply Chain Protection ................................ ................................ ................... 92 Approved Vendors ................................ ................................ ............................ 93

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7 The Third Category: Effect of Counterfeit Products in the Supply Chain ................ 94 Number of Co unterfeit Products Discovered ................................ .................... 94 The Level Entered into the Supply Stream ................................ ....................... 94 The Discovery of the Counterfeit Item ................................ .............................. 95 Approved Vendor ................................ ................................ ............................. 95 6 CONCLUSIONS ................................ ................................ ................................ ..... 97 Overview ................................ ................................ ................................ ................. 97 First Category: General Perception of Counterfeiting ................................ ............. 97 Second Category: Awareness and Prevention of Counterfeiting ............................ 98 The Third Category: Effect of Counterfeit Products in the Supply Chain .............. 100 Suggested Measures to Be Taken in China in Order to Prevent Counterfeiting ... 100 Suggested Prevention Tips for Foreign Investors ................................ ................. 101 LIST OF REFERENCES ................................ ................................ ............................. 103 BIOGRAPHICAL SKETCH ................................ ................................ .......................... 105

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8 LIST OF TABLES Table page 3 1 Questions selected for the first category. ................................ ........................... 34 3 2 Questions selected for the second category. ................................ ...................... 35 3 3 Questions selected for the third category. ................................ .......................... 35 3 4 Scal e used for the first category. ................................ ................................ ........ 36 3 5 Scale used for the second category. ................................ ................................ .. 37 3 6 Scale used for the third category. ................................ ................................ ....... 38 4 1 Scale used to analyze the first group of questions. ................................ ............ 66 4 2 Results found on questions. ................................ ................................ ............... 67 4 3 ................................ ................................ ...... 70 4 4 ................................ ................................ .............................. 70 4 5 ................................ ................................ ...................... 71 4 6 Scale used to analyze the second group of questions ................................ ........ 72 4 7 Results found on questions. ................................ ................................ ............... 73 4 8 ................................ ................................ ..... 76 4 9 ................................ ................................ ............................. 78 4 10 ................................ ................................ ..................... 80 4 11 Scale used to analyze the third group of questions. ................................ ........... 82 4 12 Analysis of general population ................................ ................................ ............ 82 4 13 ................................ ................................ ...... 84 4 14 Analysis of the suppliers ................................ ................................ ..................... 86 4 15 nalysis ................................ ................................ ...................... 86

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9 LIST OF FIGURES Figure page 3 1 Interviewee Type. ................................ ................................ ............................... 34 4 1 Victims of cou nterfeiting known to the interviewee ................................ ............. 68 4 2 Victims of counterfeiting on an unaffiliated project. ................................ ............. 68 4 3 What the local governme nt thinks about counterfeiting ................................ ...... 69 4 4 Government capacity to identify counterfeiting ................................ ................... 69 4 5 Supply chain verification level. ................................ ................................ ............ 74 4 6 Origin of materials specification and list of excluded countries. .......................... 74 4 7 Responsibility for QC ................................ ................................ .......................... 75 4 8 Supply chain verification level. ................................ ................................ ............ 77 4 9 Origin of materials specification and excluded countries ................................ .... 77 4 10 Supply chain verification level. ................................ ................................ ............ 79 4 11 Supply chain verification level. ................................ ................................ ............ 81 4 12 How the counterfeit was dis covered. ................................ ................................ .. 83 4 13 How the counterfeit was discovered. ................................ ................................ .. 85

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10 Abstract of Thesis Presented to the Graduate School of the University of Florida in P artial Fulfillment of the Requirements for the Degree of Master of Science in Building Construction CHINESE CONSTRUCTION INDUSTRY PERCEPTIONS OF COUNTERFEITING OF CONSTRUCTION MATERIALS AND PRODUCTS IN CHINA By Fernando Corona August 2013 Chair: R. Edw ard Minchin Jr. Co c hair: R. Raymond Issa Major: Building Construction The construction industry can be categorized as one of the most important Industries in modern society. Unfortunately, these days, the construction industry has been affected by a mis fortune called counterfeiting. Previous authors have found that counterfeiting has become a significant and growing problem within the construction industry. From those investigations, China has been identified as the main source for the production and co mmercialization of construction counterfeit commodities worldwide. Republic of China, a total of five members of the Chinese construction industry were analyzed. The general popu lation sought was analyzed as a whole and also, the opinion of the: Contractors Owners, Manufacturers, and Suppliers was individually taken into account. The investigation analyzed the responses of the interviewees to a total of 23 questions that covered t hree main categories within counterfeiting: Basic information about the counterfeiting problem in the construction industry The awareness and prevention of counterfeiting in regard to counterfeit items in the construction industry

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11 The effect of counterfeit products on the construction industry supply chain The research found that there is a medium to high risk of counterfeiting in the Chinese construction industry; it was found that three out of four respondents have heard or suspect the existence of victim s in projects with which they have been associated. The Chinese s upply chain has been affected at almost every level it is necessary to increase the already exis t ing prevention methods In addition, it is also necessary to implement inspection procedures before during and after the purchase of a good as well as a constant improvement of procedure s with lessons learned about counterfeiting prevention.

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12 CHAPTER 1 INTRODUCTION The construction industry can be categorized among the most important industrie s in modern society. The positive economic impact of the construction industry on the global economy cannot be measured easily. The construction industry provides many benefits to the global market the creation of jobs, the building of new infrastructure, economic expansion, and advances in science. Unfortunately, the construction industry recently has been affected by the misfortune of counterfeiting. The counterfeiting of products was defined by Bloch et al unauthorized copying of tradema rked or copyrighted goods, [which] harms legitimate counterfeit products in the supply chain of the construction industry. This issue affects the quality of the projects under taken, leads to monetary losses, and risks lives in the process. Many authors have identified mainland China as the principal source of global counterfeit items, from tennis shoes to digital music. With an existing background of enormous counterfeiting act ivity, China was a likely candidate to be involved in the counterfeiting of construction goods. posed some China, more than half of the interviewees have been or know some people who have been victims of counterfeiting, a fact which indicates that the overall environment is not

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13 the construction industry. It is absolutely necessary to reduce counterfeiting activity in the Chinese construction industry, which in turn will l ead to a reduction of counterfeit activity worldwide. The humanist, Catholic priest, social critic, teacher, and theologian Desiderius Erasmus (1466 be applied almost five hundred years later to c ounterfeiting activity in the construction industry. In order to prevent it, the source of the counterfeiting problem, China, must be understood. Due to the lack of intelligence and the huge volume of import/export, it is almost impossible for the author ities to seize all the fakes. The best way to address the counterfeiting problem is by understanding it and spreading the information; as a result, a general awareness of the problem will be created. If contractors, suppliers, owners, manufacturers, and wh oever is involved in the construction industry are familiar with the Chinese counterfeiting means and methods, fewer items likely will be disseminated to legitimate construction projects. A research team sponsored by the Construction Industry Institute (C II) collected a large amount of data regarding the industry of counterfeiting in seven countries, including China. Due to the nature of the research, data were collected using interviews with open ended questions and an average of 40 questions per intervie wee. In most cases, subjects were interviewed personally; in only a few isolated cases, the interviews were conducted over the phone. In China, 70 interviews were conducted, providing information that set the basis for future analysis and investigation.

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14 Th e existence of a good amount of data points collected in mainland China leads to the possibility of cross examination between different categories. As a result, it will be possible to determine a pattern that will help identify the present and future count erfeiting threats. Once the threats are identified, one more battle in the war against counterfeiting will be won. The recognition of the threat, based on the responses of the interviewees, will establish a traceable relationship among the most likely item s to be counterfeited, the level of the supply chain at which they are likely to be produced, the modus operandi of the counterfeiters in regard to that specific item, etc. This will produce a better understanding of how counterfeiting in the Chinese const ruction industry works. This glimpse of the inner workings of Chinese counterfeiting will help the buyer identify with a higher degree of accuracy how likely an item is to be counterfeit. This new understanding of the Chinese counterfeiting industry in con struction will form the basis of a new consumer protection tool designed to help those in the construction industry.

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15 CHAPTER 2 LITERATURE REVIEW The Counterfeiting Phenomenon Definition of Counterfeiting The practice of counterfeiting can be defined as an unauthorized copy of trademarked or copyrighted goods. When the consumer pays for a false product, trusting that it is genuine, a victim of counterfeiting is created. Sometimes, however, the customer voluntarily acquires the fake (such as a low price luxu rious brand) and becomes more of an accomplice than a victim. One factor contributing to the market influx of counterfeit items was the existing demand for high profile brands. As lower priced knockoffs of famous brands became more widely available, the de mand went up as well because people wanted the luxury of owning products, however illegitimate, with instant brand recognition (Bloch et al 1993). Counterfeiting Through History Despite its complexity and dishonesty, the art of counterfeiting has been kno wn to humanity since ancient times. In fact, throughout history different instances of counterfeiting have been documented as early as the first century. For example, in the year 27 B.C., counterfeit seals that sought to pass off local wine as a more expen sive Roman import were discovered in France. During the Roman Empire, the Roman philosopher and military commander Pliny the Elder (A.D. 23 79) recorded how counterfeit coins were sold to collectors for several times their real value. In addition, during t he War of American Independence, the British Empire manufactured counterfeit dollars to create inflation and undermine the Continental Congress. As history progressed, the counterfeiting problem increased and expanded to almost every item

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16 imaginable. In to from sports jerseys, watches, liquors, and electronics to music, medicines, food, and software (Rutter and Bryce 2008). Even if the practice of counterfeiti ng is not new to modern society, the phenomenon recently has risen steeply and is rooted in almost every sector of the economy. The International Anti Counterfeiting Coalition (2009) in their publication conomy counterfeiting has reached. Pirated software is traded in excess of $12 billion annually. In 1982, the International Trade Commission estimated counterfeiting and piracy losses at $5.5 billion. In 1996, that number stood at $200 billion. Seven perce nt of world trade is in counterfeit goods, and the counterfeit market is worth $350 billion. Counterfeit automobile parts, such as brake pads, cost the auto industry alone more than $12 billion in lost sales. If these losses were eliminated, the auto indus try could hire 200,000 additional workers. The United States government loses millions of dollars in tax revenues, and tens of thousands of jobs are lost from the workforce because of the manufacture, distribution, and sale of counterfeit goods. The result ing decrease in retail sales and loss of jobs is devastating to the economy. Counterfeiters are affecting almost every member of society; they steal from the corporations, steal from the community, steal from the consumers they deceive, and are only concer ned with lining their own pockets (The International Anti Counterfeiting Coalition 2009). Different Classes of Counterfeiting The counterfeiting industry has a complex and diverse market when it comes to the quality of products. Cui (2010) classified the c ounterfeiting into three categories:

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17 infringement or other intellectual property fraud and are of similar quality to the do not pose a hazard. control procedures but fail to perform due to low quality. selling and purchasing parties. ources of Counterfeiting Counterfeiting activity has a negative impact on the economy. In 2005, the international trade of counterfeit and pirated products was near $200 billion. This amount does not include domestically produced fakes or digitally pirate d products. From this arose the question that if domestic items were not included, then who was responsible for generating such a vast amount of counterfeit products while remaining One hundred forty nine countries have been identified as main sources of counterfeit products, five of which account for more than the 80% of all counterfeit seizures, with China topping the list (OECD 2008). The Chinese Counterfeiting Products The role t hat China has played on counterfeit products entering the United States is enormous. A written testimony by Chow (200 6 66% representing over $62 million of the $94 million of all counterfeit and infringing goods seiz of that $94 million, China (66%) and Hong Kong (9%) together represented 75% of the total. This statistic carried even more weight when viewed in light of the third country on

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18 th e list, Korea, which accounted for only 3% of counterfeit products seized in 2003. The $94 million in confiscated goods was only a tiny fraction of what entered the United coun terfeiting and infringing product that enters the U.S. market, then the total value of counterfeits that entered the U.S. market in 2003 is approximately $10 billion, with dify The Influence of Imperial China A good reason behind the production of counterfeit products in China could be deep the Chinese in the imperial past did not consider copying or imitation a moral offense. of learning by copying and imitation has become openly accepted in China. Based on such a philosophy that copying could equal good, the production of counterfeits could have found a social and ethical niche in China. The Influence of Confucianism Confuci anism was a strong influence in ancient Chinese culture. Yu (2007) said: community, and the world was an outgrowth of that basic unit. Because the Chinese emphasize d familial values and collective rights, they did not develop a concept of individual rights. Nor did they regard creativity as individual property. Instead, they

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19 idea of not having individual rights and the view of the community over self could have led to a more accepted practice of counterfeiting in China. The Influence of Communism socia list economical system sponsored by the government. Perhaps such governmental philosophy has influenced how the Chinese culture sees the counterfeiting property belongs to t he State and the people, rather than private owners. Authors thus create literary and artistic works for the welfare of the State, rather than for the purpose to the mill enary culture, might have led the Chinese population to believe that it is right to freely reproduce or to tolerate the unauthorized reproduction of foreign works that would help strengthen the country and the community. The Chinese Government and Counter feiting Although China has made significant progress in providing protection for trademark owners, a number of problems continue to delay effective enforcement. The authori ty over counterfeiting. Such a distribution of responsibilities led to a series of parallel enforcement mechanisms that usually complicate rather than expedite the possible solution. Litigation could be another answer for a victim, but normally the evidenc e and the suspect have long disappeared from the scene before courtroom processes can begin. The system in China emphasizes enforcement of correction rather than prevention, focusing on imposing fines and penalties on the counterfeiter rather than protecti ng the rights and interests of the trademark owner (Chow 2000).

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20 Chinese Counterfeit Products in Construction Counterfeiting activity has come into contact with almost every trademarked item worldwide. Therefore, the possibility of the problem affecting the construction industry was in the mind of researchers and companies. Minchin et al (2011) demonstrated that counterfeiting has become a significant and growing problem within the construction industry. That research team was able to recognize counterfeiti ng activity in seven countries (China, United States, Taiwan, Canada, United Kingdom, Pakistan, and Hong Kong) where data were collected. These countries were selected based on their status at the top of the list of total counterfeit activity, as no data h ad been gathered on counterfeiting in the construction industry prior the investigation. Once the data had been analyzed, the research team was able to identify counterfeiting activity in the seven countries investigated. China emerged as the main source o f counterfeit construction commodities among the seven countries in which the investigation took place. Cui (2010) found that China is the main source of counterfeiting in the construction industry. The author believes that counterfeiting. Cui (2010) also believes that overall counterfeiting activity in China currently is common in the construction ind ustry and that an increase of problems due to counterfeiting ultimately could lead to increased tolerance of counterfeiting. Cui (2010) also identified the most commonly counterfeited items in the industry, with steel items sitting atop the list. Lastly, C ui (2010) determined that the detection methods used

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21 in the construction industry are to some extent ineffective or that some problems exist in standards of certification. and One reason that may have influenced counterfeiting acti and as a result many changes in design and structure occur throughout the construction made on the go and added to a not so accurate schedule and a short budget create a perfect scenario for counterfeiting. The large number of projects of a political nature also influence the prevalence of the DAF met hodology. lack specific goals and detailed plans, and provide no measures with which to quantify Manufacture and Distribution of Chinese Counterfeits Counterfeit ing activity can be divided in to two phases: manufacture and distribution. The manufacturing phase appears to be concentrated in the southern region of China that, coincidentally, doubles as the first region in China that opened to foreign investors. Crim inal organizations based in Hong Kong and Taiwan maintain connections with the southern region by providing financial support to the underground counterfeit factories. Part of the problem lies in the complexity of the laws regarding counterfeit items. It h as been complicated for the Chinese government to prosecute criminal organizations outside mainland China or as to accuse a criminal organization in Hong Kong or Taiwan for a crime committed in China. The distribution phase of counterfeiting is crucial in such illegal activity because unlike narcotics, which must

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22 constantly be hidden before sale to the consumer counterfeit goods, once smuggled, can be moved in plain sight, thus reducing the costs of warehousing and distribution (Chow 2003). Chinese Construc tion Products Overseas The counterfeit problem in China is reaching a domestic saturation level in many industrial sectors; therefore, the export of counterfeits from China to other countries is likely to increase significantly in the near future. Under Ch liability is possible for sale of counterfeit goods in China that fail to meet certain threshold levels of quality, but it is debatable whether criminal liability exists for exports of counterfeit goods. Such a loophole in the system could encourage counterfeiters to trade their fakes outside China and as a consequence reduce the risk associated with commercializing counterfeit items domestically. Furthermore, in 2004 China eliminated the state monopoly on trading rights, which gave any business operator (including counterfeiters) the right to import or export goods after it has registered with the state authorities. Such allowance has given counterfeiters a license to export on their own; as a result, the foreseeable future cou ld see a rapid increase in the export of counterfeits (Chow 2006). In the construction industry, most counterfeits represent an immediate and potential threat to the safety of workers, the public, and the environment. The most commonly counterfeited items are fasteners, circuit breakers, transformers, fuses, resistors, switch gears, metal struts, pipe components, fittings, flanges, valves, raw materials, and testing certification. In most cases, it is common to use inferior materials and processes to manufa cture substandard items. As a result, properties of the materials can significantly vary from established standards and specifications. The

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23 trickiest aspect of most counterfeit products could be the level of similarity to a consensus standard; regularly, f or an inexpert eye, it can be really challenging to identify the product as a fake. When counterfeit parts have been used, there is no accountability of quality or integrity; therefore, when a part fails, there is no warranty to back it up and no liability is incurred (DOE HSS 2007). The 48 Routers Case In 2006, the construction of a U.S. government installation in Europe fell victim to counterfeiting. The construction was performed by a well recognized American construction contractor; the scope of work in cluded the installation of 48 name brand telecommunication routers. The contractor purchased the routers from an authorized supplier that was a member of the prestigious Fortune 500 list; therefore, the contractor was buying from what should have been a re liable source. During the first few months after installation, 12 routers progressively failed. Such failure triggered an investigation which revealed that the 48 devices were counterfeit and had originated in China. The investigation was taken further, a nd the serial numbers were found to be genuine serial numbers from the original brand that had not yet been registered by their owners. This investigation among others revealed how detailed counterfeits could be (Minchin et al 2011). The Terex Demag Case Van Hampton (2009) wrote about two crane companies whose products were De mag was not the only company affected as Van Hampton (2009) ton

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24 endangerment of the lives of the workers handling such low quality equipment. The Nuclear Industry Case Nuclear facilities face constant economic and personnel challenges that in some way might lead to non conforming quality shortcuts such as counterfeit materials and items. A wide v ariety of counterfeits have been found in the nuclear industry, such as threaded fasteners, electrical/electronic components, piping components, speed governors and pumps, O ring seals, and elastomers. Such items have been discovered throughout the constru ction industry in locations such as cranes, forklifts, aircraft, vehicles, valves, compressors, pressure vessels, and cable tray rooms. As prevention measures, tracking and reporting with proper information could help the detection. Supplier selection rep resents a key part of the process, and the quality assurance processes have to be strictly implemented (IAEA 2000). Along the same lines, within the nuclear industry Minchin et al (2011) reported inch (5") stop check valves being fou nd at a Southeastern U.S. was already being installed while the other was in inventory. Minchin et al (2011) explained that a group of researchers from the Electric Power Research Institute (EPRI) conducted the research and a final interview with an executive of the company that owns the aforementioned power plant confirmed the findings. Counterfeiting Prevention The U.S. Army Corps of Engineers Prevention Guide The U .S. Army Corps of Engineers (2010) wrote a guide concerning the prevention of counterfeit electrical parts in construction projects. Although the guidance

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2 5 provided is specific to electrical parts, the principles can be extrapolated to almost all aspects of construction. Among these recommendations, some of the most important include: Check invoices to determine if material shipped is from unknown supplier or distributor. See if price is well below normal cost. Suspect any product whose name and address of m anufacturer is not on the box. Watch out for poor quality packaging. Be wary of labels or packaging with incorrect colors. Determine whether the country of origin is different from that of a known genuine part. Reject any product with incorrect shape or de sign. Verify UL label or other standard testing organization label. The recommendations are practical, simple, logical, and even boring, but they were established as the first barrier of protection that a contractor/owner/supplier might have against counte rfeiting. In electrical matters, the most commonly counterfeited items exposed by the U.S. Army Corps of Engineers were power cords, surge suppressors, smoke detectors, circuit breakers, fuses, control relays, electronic lighting, timers, switches, sockets lamp ballasts, and conduit fittings. The Incubation Period As the construction counterfeiting industry has grown stronger, the complexity and accuracy of the fakes has become even more deceptive and harder to detect. Van Hampton (2010) interviewed Univer sity of Florida professor Dr. Edward Minchin about

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26 in which a fake item works a six percent of the U.S. interviewees reported having a problem with counterfeits in the past, and 83% of the from approved vendors show s how deep in the supply chain the items have reached. The Price Another important point that had made identification of a counterfeit item in construction more difficult is the price. Tracy Garner, anti counterfeiting manager for Schneider Electric, Squa counterfeit circuit breaker may not reflect a dramatic enough price difference for the end some red flags have been i dentified and could assist in spotting a counterfeit item. explained Tom Grace, manager of anti counterfeiting and brand protection for Eaton important to be aware of the easy deals. (Van Hampton 2010). Chinese Counterfeit Products and the United States The Existing Laws Statistics have revealed that most counterfeit construction items come to the U.S. from China. It is important to understand the situation in China regarding counterfeit activity. The existing laws of China relating to intellectual property rights include the Patent Law, the Trademark Law, the Copyright Law and the Anti Unfair Compe tition Law. The Chinese government has recently come to actively promote Chinese policies on the protection of intellectual property rights. It is believed that the actions taken by

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27 the Chinese government were attempts to fend off demands from America and other countries, thus preventing further harder measures against China, rather than stamp out actual counterfeiting activity (Iteya and Endo 2006). The Chinese Government and Counterfeiting The two main countries involved in counterfeiting are China as a p roducer and the United States as a receptor. The two have had different points of view in regard to the counterfeiting activity. Minchin et al (2011) conducted interviews in the two countries. Most of the American respondents thought that the Chinese gove rnment could have done more to decrease counterfeiting activity; only 21% of the respondents thought that the government was actively fighting counterfeiting activity in the construction industry. On the other hand, 90% of the Chinese interviewees believed that the government would like to eliminate the counterfeiting industry but either lack of stopping the counterfeiting activity. Counterfeiting in the Near Future Counterfeiting is a problem that is affecting the construction industry, and it is never going to completely disappear as long as there is someone willing to deal in counterfeit products. The education of construction companies about the risk surrounding counterfeiting is a must in order to begin the prevention process. The counterfeiting issue will continue until every item or piece of equipment gets checked within a company; therefore, the problem of counterfeiting will never be completely eliminated from the construc tion industry (Dingman II 2009).

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28 The Chinese Construction Industry steel. The magnitude and growing rate of the Chinese construction industry has no precedent in Chinese history. In 2005, the industry comprised 15,545 design firms and 104,297 construction firms in China; consequently, the industry was employing upwards of 40 million people. One of the reasons behind such continuous growth is the strong and rapid process of urbanizati on within the mid size and big cities in the country. The residential construction industry was boosted in 1997 when the government lifted the regulation demanding minimal space and sparse luxuries (Sridharan 2007). Chin a represents a major source of business opportunities within the construction sector for local and overseas entrepreneurs; however, to be awarded a contract, the potential contractor has to go through a selection process. According to Zou et al he selection of a best suitable company for the construction work is criteria, including price, time, any bid below this price likely would not be awarded. The penalty for not meeting the ideal price affects the innovation and constructability of the projects. Contract Management From a contract management point of view, Zou et al contractual arrangements in China fall into three broad categories depending upon the means of arriving the contract sum, which are lump sum contract, measurement contract and cost rei

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29 be similar to those used in the United States, they represent relatively new methods in the Chinese industry and lots of bureaucracy and laws are associated with them. The Construction Pha se During the construction process, the contractor is required to have site supervision, as described by Zou et al site project supervision process is essentially the responsibility of the supervisory company, which is usually appointed by a c companies formally report to clients on a weekly basis through meetings and monthly construction industry in China has been the second most dangerous industry following

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30 CHAPTER 3 RESEARCH METHODOLOGY The General Purpose The intent of this investigation was to gain a better understanding of the counterfeiting problem in the Chinese construction industry. In order achieve this, the author analyzed of a group of questions that addressed different aspects of the counterfeiting industry in China. This investigation covered three main topics of counterfeiting in the Chinese const ruction industry: basic information about the counterfeiting, the awareness and prevention of counterfeiting, and the effect of counterfeiting in the Chinese construction industry. The results of this investigation were made based on the cross examination of the different responses within a topic. Although previous authors have already analyzed these data as part of other investigations, a representative relationship between the different answers given was not established prior this study. Data Acquisition The development of this research led to a new approach to a group of data collected previously. As part of a previous investigation, a research team designed and questionnaires ad dressed different uncertainties that the research team had about counterfeiting in the Chinese construction industry. The questionnaires were designed by a research team in the United States as part of an ambitious investigation of counterfeiting in constr uction. In order for the questionnaire was translated from English to Mandarin Chinese. The interviews were

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31 conducted face to face (two of them were over the phone), and the interviewee was allowed to express as detailed a point of view as desired to the open ended questions. Once all the data were collected, the answers were translated back to English so the research team could perform the data analysis. Each of the fiv e questionnaires was designed to encompass an average of 40 questions. The intent of the research team when designing the questionnaires was to address specific groups of interviewees: contractors and owners, government agencies, insurance companies, manuf acturers, and suppliers. Appropriate language on the questionnaires were designed. A distribution of the Chinese interviewees by percent can be found in Figure 3 1. In t his investigation, the total population sought for the data comprised 70 interviewees. Out of all the interviewees, 29 (42%) were contractors and owners. The manufacturers stood as the second biggest group with a total of 17 respondents (24%). The supplier s were the third big group with a total of 14 interviewees (20%). The last group comprised 10 representatives of government and insurance agencies (14%). Originally, data from that group were collected in two separate questionnaires (one for government and one for insurance). In this investigation, the groups were merged into one in an attempt to make their data more representative. Questions Analyzed The author of this investigation did not have control over the questionnaire design or the open ended quest ion format. In order for the author to determine a proper relationship among the different answers, three categories in which answers could be gathered were created. Within each category, similar questions were compiled, creating

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32 related topics that genera ted the basis for the cross examination analysis of the responses. The three categories selected by the author are shown below. 1. Basic information about the counterfeit problem in the construction industry 2. The awareness and prevention of counterfeiting in r elationship to the counterfeited items in the construction industry 3. The effect of counterfeit products on the construction industry supply chain From the total number of questions in a questionnaire, the answers to 23 were analyzed. The questions were sele cted based on the expected information that a question could contribute to a specific category. The selection of 23 questions to be analyzed boiled the information for this investigation down from the total data set collected by the research team using the questionnaires in China. The questions shown in Table 3 1 were selected to address the first category. For the second category, it was necessary to gather ten questions that represented the required information. The second category covered the awareness a nd prevention of counterfeiting in regard to items in the Chinese construction industry. The questions shown on Table 3 2 are the questions within the second category. One more category was analyzed one that represents the effect of counterfeit products i n the construction industry supply chain. In order to determine this, the questions in Table 3 3 were selected. Tables 3 1, 3 2, and 3 3 list the questions within each of the three categories. In order to analyze the responses to those questions, a scale system was implemented in the investigation.

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33 Analysis of the Answers Using the Scale Method Open ended questions encourage respondents to freely describe and express themselves from their personal point of view. Based on the open ended nature of the answe rs, the author implemented a detailed analysis in order to analyze the data and find the relationship between the responses. The analysis consisted of evaluating every answer given by every interviewee in regard to a specific question. In order to be able to evaluate the answers, the author designed a scale system that represented the intention of the interviewee when answering a specific question. The scale was based on the Likert scale system, in which the answer was compared to a predetermined scale and a value was given to the response depending on its strength. The scale for the first group of questions can be seen in Table 3 4. The scale evaluated the answer given by the interviewee versus five possible scenarios and determined the intent of the respo ndent in the context of what was asked. The scale used to evaluate the second category can be found in Table 3 5. Like the previous category, a value was given to the response depending on its strength. The third category encompassed the effect of counterf eit products in the Chinese construction supply chain. The evaluation of the answers of this category was made based on the scale shown in Table 3 6 in which the answers were evaluated with the same methodology as the previous two groups. In Tables 3 5 and 3 6, some of the categories had the option N/A; this category was given on purpose to those isolated cases in which the question was a yes/no type of question.

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34 Figure 3 1. Interviewee Type Table 3 1. Questions selected for t he first category. First Category: Basic information about the counterfeiting problem in the construction industry Q1: What is your perception of the current risk of counterfeiting to the local construction industry? To the global construction industry ma rket environment? Q2: How aware are your clients of this problem? Have they ever complained about this? Q4: Do you know or suspect that any party working on a project you were affiliated with has been victims of counterfeiting? What actions have they tak en? Q5: Have you heard from what you consider to be reliable sources that any party working on a project which you were not affiliated with has been a victim of counterfeiting? Q6: What does your local government think about counterfeiting? Have you ever discussed this problem with the local government? Q7: Have you discovered any warning signs or "tip offs" that an item is potentially counterfeit? Q8: Do you believe that your current processes or government processes are capable of identifying counterf eits? Any suggestions to improve the effort? Q9: Do you see this as a growing threat or one that is subsiding?

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35 Table 3 2. Questions selected for the second category. Second Category: The awareness and prevention of counterfeiting in regard to counterf eit items in the construction industry Q10: What process does your organization use to ensure product integrity? Does your company have a code to follow in this regard? Q11: What quality assurance/control processes do you have to mitigate counterfeiting? Q12: How far up the supply chain do you verify (such as subcontractors, subsuppliers)? Q13: Do you have an approved vendor list, and how do you screen the vendors? How could a new supplier join your vendor list? Q14: What methodology is used to approv e the vendors? Q15: Of the preventive actions you have taken, which have been effective? Which have been ineffective? Q16: Do you have an origin of material specifications? Do you have a list of countries that you exclude from your supply chain, and why? How do you decide the list? Q17: Who is responsible for the quality control in your organization, and to whom does this person report? How fast do they react? Q18: Do you classify your supply chain in terms of the critical nature of the item (or cost o f failure)? Q19: What type of statistical sampling do you do on bulk supplied material? Table 3 3. Questions selected for the third category. Third Category: The effect of counterfeit products on the construction industry supply chain Q20: Please desc ribe the counterfeit product or materials you have discovered. Q21: Where did it enter the supply stream? Q22: How did you discover the counterfeiting? Q23: Were the counterfeit items from an approved vendor?

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36 Table 3 4. Scale used for the first categ ory. 5 4 3 2 1 Q1 High risk Medium high risk Neutral Medium low risk Low risk Q2 Completely aware Somewhat aware Neutral Somewhat unaware Not aware Q3 Clear upward trend in level B Slight upward trend in level B Level B activity remains stable Sligh t downward trend in level B No trend noted in level B Q4 Know or suspect a victimized party Have heard of victims secondhand Have heard of victims thirdhand Have heard rumors of possible victims Don't know Q5 Know or suspect a victimized party Have hea rd of victims secondhand Have heard of victims thirdhand Have heard rumors of possible victims Don't know Q6 Fully knows the problem and has concerns about it Knows somewhat about the problem and wants to fix it Knows somewhat about the problem, no vis ible signs of wanting to fixing it Starting to realize the existence of the problem The government is unaware of the problem Q7 Has discovered warning signs for specific items Has seen what could be warning signs Capable of noticing warning signs on ir regular occasions Starting to identify possible warning signs Has not discovered any warning sign Q8 Fully capable of identifying counterfeits Fully capable of identifying counterfeits but can be improved The process is capable of identifying counterfei ts most of the time Capable of identifying counterfeits only on specific occasions The process is incapable of identifying counterfeits Q9 A growing threat Becoming a growing threat The threat remains stable A subsiding threat No threat

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37 Table 3 5. Sc ale used for the second category. Question 5 4 3 2 1 Q10 Have and apply a well defined process that ensures product integrity Developing a process that will ensure product integrity Have a reliable process that indicates product integrity Have a basic p rocess that does not address product integrity directly Doesn't have a process to ensure product integrity Q11 Have fully established QA/QC processes to mitigate counterfeiting Developing a QA/QC process that will mitigate counterfeiting Have a reliable Q A/QC process that addresses mitigation of counterfeiting Have a basic QA/QC process that does not address counterfeiting QA/QC processes are under development Q12 Verify all the way back to raw materials Verify all the way back to manufacturers Verify all suppliers Verify once item reaches the jobsite Doesn't verify Q13 Has an approved and updated vendor list Developing an updated approved vendor list Has an approved vendor list that is not often updated Has a group of vendors they trust from previo us experience Doesn't have an approved vendor list Q14 Has a well defined methodology to approve vendors In the process of upgrading the existing methodology Has a methodology that helps approve vendors Doesn't use a methodology to approve vendors Does n't have an approved vendor list Q15 All the preventive actions taken have been effective Most of the preventive actions taken have been effective Some of the preventive actions taken have been effective All the preventive actions taken have been ineffect ive Doesn't use preventive actions Q16 Have an origin of materials specification; have own list of excluded countries Have an origin of material specifications; use the State Dept. list of excluded countries Have an origin of materials specifications; no list of excluded countries Have no origin of materials specifications; do have a list of excluded countries Doesn't have origin of material specifications or a list of excluded countries Q17 Have an individual assigned to QC who reports to executive leve l N/A Single person responsible for the QC process; reports to an individual below executive level N/A People responsible for QC assigned at project level

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38 Table 3 5. Continued Question 5 4 3 2 1 Q18 Classify their supply chain N/A N/A N/A Doesn't classif y their supply chain Q19 Performs a detailed statistical sampling of all materials Performs a basic statistical sampling of all materials Performs a basic statistical sampling of critical materials Performs statistical sampling only if required by owner o r contract Performs an alternative test (different from statistical sampling) Table 3 6. Scale used for the third category. Question 5 4 3 2 1 Q20 3 or more N/A 1 or 2 N/A 0 Q21 At the raw material level At the manufacturer level At the supplier le vel At the interviewee level (jobsite, manufacturing company, etc.) know where the product enters the supply chain Q22 During inspection prior to purchasing the item During inspection after purchasing the item (storage) During the installation pr ocess After the installation process, before operation Failure during operation Q23 Yes, they were from an approved vendor N/A Not sure if the vendor was an approved vendor N/A No, they were not from an approved vendor

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39 CHAPTER 4 DATA ANALYSIS Overvie w This chapter compiles the findings from the answers given to questions selected from the questionnaires. As mentioned in previous chapters, a number of questions were divided into three representative categories. Each group or category represented a diff erent perspective of the counterfeiting problem in China. The first group embodied a general view of the counterfeiting problem in the Chinese construction industry. The second group represented the awareness and prevention of counterfeit items in the Chin ese construction industry. The third group illustrated the effect that counterfeit questions were asked to 70 interviewees from different backgrounds: owners/contractors, gove rnment agencies, insurance agencies, manufacturers, and suppliers. Analysis of their responses can be found in the following paragraphs. The Mandarin English Data Translation The data points were translated from the original Mandarin Chinese (the most spo ken language in China) to English for further analysis. The original data were in Mandarin due to the process by which the data were collected. In order to perform interviews, a researcher whose native language is Mandarin was selected to conduct interview s in China. Once all interviews were performed, the data were sent to the United States for translation and analysis. The Open Ended Data Format The data collected from the questions can be categorized as open ended answers. The interviewee gave opinions about a certain topic in this case, different

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40 aspects of counterfeiting in the Chinese construction industry. Open ended questions are ideal to gather vast amounts of information, as the respondent is unrestricted to say as much as necessary in order to ex press a complete answer to the question. The First Group of Questions of the counterfeit problem in the Chinese construction industry, in how the problem is evolving, and in t those topics, the following questions were selected from the questionnaires. Q1. What is your perception of the current risk of counterfeiting to the local construction industry? And to the global construction industry market environment? Q2. How aware are your clients of this problem? Have they ever complained about this? Q3. Have you seen a trend in the A, B, C levels of counterfeiting? Q4. Do you know or suspect that any party worki ng on a project with which you were affiliated has been a victim of counterfeiting? What actions were taken? Q5. Have you heard from what you consider to be reliable sources that any party working on a project with which you were not affiliated has been a victim of counterfeiting? Q6. What does your local government think about counterfeiting? Have you ever discussed this problem with the local government? Q7. counterfeit? Q8 Do you believe that your current processes or government processes are capable of identifying counterfeits? Any suggestions to improve the effort? Q9. Do you see this as a growing threat, or one that is subsiding?

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41 The Scale To evaluate the data, it was n ecessary to classify the answers within a common opinion of the selected population was identified. Every question was assigned a qualification grade from 1 to 5. Dependin was classified in the scale. The different scales used in the first category of questions are represented in Table 4 1. General Population Analysis Each individual response given by the general population sou ght was categorized based on the scale established in Table 4 1. As a result, Table 4 2 was created, in which a summary of the findings for each question was represented. The third column of Table 4 nts based on the value assigned to each question when evaluated using Table 4 1. The columns that follow the mean represent the number of respondents per level of the scale for each question. associated with counterfeiting in the local Chinese construction industry and the global construction market. As for risk, it also can be said that the clients of those interviewed 2 in the results of the analysis of the answers given for Question 2. The answers given to Question 3 revealed whether or not those within the construction industry believe that counterfeiting is trending in a general direction. The interviewees explained that they have seen a tendency toward growth mainly in level B of counterfeits.

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42 When the interviewees were asked in Question 4 if they know or suspect that any party working on a project with which they were affiliated has been a victim of counterfeiting, the majority of the general population claimed to have heard about it from a thirdhand source. As seen in Figure 4 1, 45% know or suspect of a victim of counterfeiting, 24% do not know of any victims, and the remaining respondents have heard of victims fro m firsthand, secondhand, or thirdhand sources. A particular tendency was noted when Question 5 was asked to contractors and reliable source that any party working on a projec t with which you were not affiliated has 2, 57% of the interviewees said that they know or suspect a party that has been a victim of counterfeiting. At the same time, 17% answered that they do not know or suspect any party, and the remaining 26% replied that they have heard of victims from secondhand or thirdhand sources. ed that the government knows somewhat about the problem but does not have visible signs of wanting to fix it. When analyzing Figure 4 knows about the problem and have concern about it majority believes that the government knows about t he problem; but there is a representative remaining who believes that the government is not fully aware of the reality.

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43 One of the easiest ways to prevent counterfeiting is to identify warning signs which let the potential victim know that something is a f ake product, a topic addressed in Question 7. With a mean of 4.24, it can be said that most of the interviewees agreed that they have found warning signs that an item might be counterfeit. Likewise, most tool required in mitigating counterfeiting. A total of 49 out of 59 respondents believe that they have identified warning signs; however, it seems that for some of them, it is a battle they are fighting alone without the help of their government. At the s believe that your current processes or government processes are capable of identifying governmen t processes; and, as in previous government related questions, polarized results arose. As shown in Figure 4 4, 62% believe that the government is capable of identifying counterfeiting while 29% deem the government incapable or capable only in specific occ asions. The remaining 9% believe that the government can identify counterfeiting most of the time. According to the general point of view of the respondents to Question 9, 46% believe that counterfeiting activity does not represent a threat or is a subsidi ng threat. Along the same lines, 23% believe that counterfeiting is a threat which will remain stable in the near future. The remaining 30% claimed that counterfeiting is a growing threat. Contractors and owners represent 33% of the total sample population and are the first group analyzed in the first category of questions. The results of the analysis of the answers given by this sector of the industry are shown in Table 4 3.

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44 Contractors and owners, as shown in Table 4 3, maintained the same pattern of answers given by the general population. The respondents were aware of the medium to high risk that counterfeiting represents (Question 1), and the interviewees reported that their clients also were somewhat aware of the cou nterfeiting problem (Question 2). In Question 3, contractors and owners identified an upward trend in level B counterfeiting activity. A total of 27 contractors/owners answered Question 4, generating a similar distribution to the data given by the general population; 55.5% know or suspect a victim of counterfeiting, while another 26% do not know of any victims. The remaining respondents reported firsthand, secondhand, and thirdhand rumors. As explained earlier in this chapter, Question 5 was asked only of contractors/owners, 57% of whom know or suspect a party that has been a victim of counterfeiting. On the other hand, 17% answered that they do not know or suspect any party, leaving the remaining percentage for firsthand, secondhand, and thirdhand rumors. r In Question 7, 70.2% of the respondents explained that they have discovered or with the general population, contractors and owners have an eclectic mix of opinions in

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45 regard to the from 58.3% never identifies counterfe Question 9 that counterfeiting activity is a subsiding threat. The suppliers represent an important part of the construction industry because of materials and equipment. The group of suppliers interviewed represented approximately 19% of the data sample, and the results can be seen in Table 4 4. It is important to pay particular attention to Question 2, the result of which differed from the prev ious groups analyzed. According to Table 4 4, the suppliers have a similar perception as the rest of the population of the counterfeiting problem. In Question 1, suppliers claimed that there is al construction industry. Two thirds of the suppliers explained in response to Question 2 that their clients were completely or somewhat aware of the counterfeiting problem, while the remaining 44.4% were either unaware, somewhat unaware, or had a neutral perception of the reality. on a project with which the respondent was affiliated (Q uestion 4), the suppliers presented a similar distribution of data to the previous groups. Although 26.6% of the

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46 irsthand, secondhand, or thirdhand rumors. Question 7, the suppliers process i in Question 9 that counterfeiting has become a subsiding threat rather than a growing one, an opinion that was common in the previously studied groups. Manufacturers produce the materials and equipment that will be used in the construction industry. Many of their items have been counterfeited by the dishonest whose operate outside the law. Of the total number of interviewees, 24% were manufacturers; in T able 4 5 the results of the analysis of the interviews is reported. A close look at the results in Table 4 were located in level three of the scale, many of which are close to level four. In Question 1, 30% of the respondents said that they believe the risk of awareness, the perception was that When asked about the possibility of the existence of a trend in level B

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47 regard to manufacturers knowing or suspecting a vict im of counterfeiting (Question 4), to have heard firsthand or secondhand rumors or to have never heard of a victimized party. Half of the manufacturers explained in regard five percent of the respondents explained t hat the government In Question 7, manufacturers were as ked if they have developed warning signs that help them identify possible counterfeiting. The majority of manufacturers claimed to manufacturers have different opinions in regar not be as capable as they desire or, even wo rse, might not be capable at all of identifying counterfeiting. In Question 9, manufacturers were asked if they see counterfeiting as a growing threat or as a subsiding one. The general consensus was one level further upstream than the other members of th e survey. Manufacturers believe that the counterfeiting

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48 the counterfeiting industry. Second Group of Questions The second group of questions analyzed the awareness and prevention of counterfeiting in relation to counterfeit items in the Chinese construction industry. This industry could be and the real impact that counterfeiting has on t he Chinese construction industry. When the second group was studied, the author selected the following questions to be analyzed. Q10. What process does your organization use to ensure product integrity? Does your company have a code to follow in this regar d? Q11. What quality assurance/control processes do you have to mitigate counterfeiting? Q12. How far up the supply chain do you verify (such as contractors, subsuppliers)? Q13. Do you have an approved vendor list, and how do you screen the vendors? How c ould a new supplier join your vendor list? Q14. What is the methodology used to approve the vendors? Q15. Of the preventive actions that you have taken, which have been effective? Which have been ineffective? Q16. Do you have an origin of materials speci fication? Do you have a list of countries that you exclude from your supply chain, and why? How do you decide the list? Q17. Who is responsible for the quality control in your organization, and to whom does this person report? How fast do they react? Q18. Do you classify your supply chain in terms of the critical nature of the item (or cost failure)? Q19. What type of statistical sampling do you do on bulk supplied material?

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49 The Scale To analyze the data contained in the second group of questions, it was n ecessary to create a scale that could set a classification for the answers given by the respondents. The scale used in the second group of questions can be seen in Table 4 6, in which the different categories covered any possible answer given to a question The scale consists of a qualification grade from 1 to 5, which encompasses any answer and the classification option within the scale shown in Table 4 6, a value from 1 to 5 was assigned to the answer. Once all answers were given from the interviewees to a specific question, it was possible to determine the general and specific point of view of the population in regard to the question asked. General Population Analysis In the analysis of the second group of questions, each response received a value from 1 to 5, based on the scale established in Table 4 6 as a parameter to evaluate a given answer. The results of the analysis can be found in Table 4 7, in which a summary of the findings for each question has been represented. A total of 63 interviewees talked about the process that their organization uses to ensure product integrity (Question 10). Out of the total, 44 interviewees claim to have defined pr represented 70% of the total population; as a result, it can be said that the majority of the Chinese construction industry believe that product integrity is ensured in their process, or at least the y are developing a process that will ensure product integrity soon.

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50 Question 11, according to Table 4 7, had a total of 46 data points collected. The control (QA/QC) proce perception toward the QA/QC process was inferred from the majority of the answers registered in levels three, four, and five. The high level answers revealed that the epending on the interviewee) was in the worst case (level 3) capable of addressing the mitigation of counterfeiting in a reliable way. In the prevention of counterfeiting, the verification of the supply chain when purchasing a product is a key method agai nst counterfeiting; and that was precisely what was asked in Question 12. The 48 interviewees that responded to the question answered a mean of 3.6, which indicates that the respondent verifies the direct supplier that provided the product. A closer look a t the data shown in Figure 4 5 revealed that although most of the general population verifies the supply chain up to the immediate supplier, 13 respondents claimed to verify the supply chain all the way back to raw materials. At the same time, 11 interview ees claimed to verify the supply chain up to the manufacturer level. A total of 52 responses were given to Question 13, with a mean of 4.23. As a The methodology used to approve vendors was asked in Question 14, and it was Furthermore, all respondents registered a three or higher level, which demonstrates that

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51 in the worst scenario, the general population uses a basic methodology to approve vendors. A total of 43 answers were collected from Question 15, re sulting in a mean of 4.51 Question 16 accounted for a mean of 2.68, which indicates that the general population analysis of Question 16 cannot be performed based on the mean; such a number is the result of a polarized distribution of the data, as demonstrated in Figure 4 6. As shown in Figure 4 6, 31% of the respondents reported the ideal situa tion of having an origin of materials specification and their own list of excluded countries. On the other hand, 42% of the respondents do not have an origin of materials specification or a list of excluded countries. The analysis of Question 17 and Quest ion 18 cannot be done by interpreting their means. As shown in Table 4 7, both questions had a unique scale in which the N/A option was included. In both questions, the options were limited to a fewer number of possible scenarios, which guaranteed a more r obust result in to the possible given answers. When Question 17 was analyzed, a total of 44 interviewees out of 46 answered either level 3 or 5 as shown in Figure 4 7. In both levels, the respondent claimed to have an individual in charge of the QC proces s; however, the person to whom the individual reports vary. A total of 26 answers were given in level 5, in which the QC individual reports to an executive level in most cases, the vice president. Additionally,

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52 in level 3, a total of 18 answers were record ed in which the person in charge of QC has to report to an individual below executive level. Another important source of information in regard to the supply chain was addressed in Question 18. The general population were asked if they classify the supply c hain in terms of the critical nature of the item. Out of the total number of respondents, 54% claimed to classify their supply chain in terms of the critical nature of the item. Perhaps one of the most common control methods used on bulk supplied material is statistical sampling, a subject that is addressed in Question 19. A total of 54 answers were analyzed, resulting in a mean of 3.5. The mean indicated that in general, the respondents perform a basic statistical sampling on critical materials. Contracto Contractors and owners represent 42% of the total population; therefore, it was necessary to take a closer look at the group. The results found for the contractors/owners are represented in Table 4 8. A closer look into the mean co lumn revealed that the opinion of the contractors and owners was very similar to that of the general population. apply a well uct integrity guarantees the authenticity of the product delivered; but in order to achieve it, QA/QC is ing a QA/QC product integrity reveals the commitment of contractors and owners to deliver a reliable and counterfeit free final product.

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53 In Question 12, a total of 24 contractors and owners were asked how far up in the supply chain they verify. The results are shown in Figure 4 8 in which it can be seen that 37% of the respondents verify up to the supply level. Another interesting datum was that 21% of the contractors/ owners will wait until the product reaches the jobsite before performing an inspection. On the other hand, contractors and owners according to Question 13 were highly involved in having an updated approved vendor list. The basis of that updated vendor list statement came from the result that out of the 26 interviewees who answered Question 12, 88% claimed to have an updated vendor list or to be in the process of updating the existing one. A reliable vendor list such as the ones the respondents claimed to h ave when answering Question 13 goes hand in hand with a good practice to approve vendors. Question 14 addressed the methodology used by contractors and owners to approve vendors. Seventy defined method Another important topic in which contractors and owners reported similar results to the general population was found in Question 15. When measuring the effectiveness of preventive actions taken by the respondents, 21 out of 22 reported that either all or most preventive actions taken have been effective. Question 16 addressed the origin of materials specification and the list of excluded countries. The results can be found in Figure 4 9 in which can be seen the polarized percentages

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54 Previous que stions already have addressed QA/QC; Question 17 however, covered who is responsible for it and to whom that person reports. Contractors and owners showed the same pattern as the general population; 92% of the respondents Contractors and owners were asked in Question 18 if they classify the supply chain in terms of the critical nature of the items. The scale had two options that encompassed the possible answers either they classify the supply chain or they do not. The 20 respondents were divided into 12 who classify the supply chain in terms of the critical nature of the item and 8 who do not classify the supply chai n. The results obtained from this group were similar to the results obtained when the general population was analyzed. The topic addressed in Question 19 was the type of statistical sampling used on bulk supplied material. The results reported from contra ctors and owners were highly similar to the ones obtained from the general population. In both groups, a mean of 3.5 was quantified, which indicates that contractors/owners and the general population perform a basic statistical sampling on critical materia ls something that should be improved. The second group analyzed within the second category was the suppliers, who represented 20% of the total population sample. Suppliers are the bridge that connects manufacturers and contractors; ther efore, they could affect positively or negatively the

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55 in Table 4 9. When analyzing the distribution of data found for Question 10, it was revealed that the percentage o f suppliers who claimed to have a well defined process that address product integrity d The 12 suppliers who answered Question 11 recorded a mean of 4.33, meaning defined r the most secure product possible to their clients. The verification of the supply chain was a topic addressed in Question 12, and a total of 11 suppliers gave their opinions. The distribution of the data obtained can be seen in Figure 4 10, in which data have been spread in three categories: 26% of the suppliers verify up to the manufacturer level, 37% verify up to the supplier level, and the remaining 27% verify up to the raw material level. Suppliers, like any other member of the supply chain, ought to have an approved vendor list; in Question 13, a total of 12 suppliers were interviewed about this topic. Two thirds of the respondents claimed to have an approved vendor list or to be in the process of updating it. Twenty five percent confessed to have a n on updated vendor list or a group of trusted vendors, which are not recommended practices of counterfeiting prevention. The remaining 8% confessed to not have an approved vendor list.

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56 Along with the approved vendor list, the methodology used to approve ve ndors also is highly important; this topic was addressed with 11 suppliers in Question 14. A defined methodology be said that all suppliers are on the right track when it comes to approving vendors, but in some cases this can be improved. The preventive actions taken by the suppliers and their effectiveness were a topic analyzed in Question 15. It is interesting to emphasize that on Question 15, only 5 suppliers responded. Nevertheless, the preventive actions taken by the respondents were that all or most of them are effecti ve. Unlike the previous groups, in Question 16 the origin of materials specification and the list of excluded countries the results presented some differences. Two thirds of the respondents reported to not have an origin of materials specification or a li st of excluded countries. However, 22.2% of the respondents claimed to have an origin of materials specification and their own list of excluded countries, a low percentage compared to the 31.3 % reported by the general population and the 33.3% reported by contractors and owners. The responsibility of the QC was analyzed in Question 17, which was answered or the QC process cases, the QC process is driven with responsibility.

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57 One interesting topic in the suppliers group was the classification of the supply chain in terms of the critical nature of the item (Question 18). Half the interviewees claimed to classify their supply chain by critical nature, while the other half classifies the supply chain using an alternative method. Also, when asked about the statistical sampling used on bulk supplied materials (Question 19), the distribution of data reported in previous groups was repeated. Therefore, suppliers should standardize their statistical sampling method in order to guarantee product integrity and prevent counterfeiting. The third group analyzed individually within the second category comprised the manufacturers, representing 24% of the total data. The results found in the analysis of 10, in which the format used in the opinion is highly important given their position in the supply chain. Manufacturers are in charge of the creation of the products that will be used; therefore if counterfeiting arises in their products, it will affect the entire supply chain. Product integrity was the topic addressed in Question 10, and a total of 16 manufacturers provided their opinions. Manufacturers reported a higher mean in comparison to t well Manufacturers were also asked in Question 11 about their QA/QC process used to mitigate counterfeiting. Unlike the outright agreement shown on Question 10, the data

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58 were more scattered. A total of 55% of the manufacturers were the group that has to work hardest to improve their QA/QC pr ocess given the The level of verification of the supply chain was addressed in Question 12, and 12 manufacturers provided an answer as is shown in Figure 4 11. It can be seen from the figure that manufacturers maintained the same data distribution as the other groups. Although it was predictable that manufacturers would answer with raw material level and manufacturer level, the wide ranging distribution of the data was maintained. A total of 14 man group of vendors they tru prone oversight, and manufacturers should always be aware of that. In Question 14, manufacturers were asked about the methodology used to well Question 15 evaluated the effectiveness of the preventive actions taken by manufacturers. A total of 11 manufacturers answered the question for a mean of 4.18.

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59 Based on the mean obtained, it can be said tha t most of the preventive actions taken by the manufacturers have been effective. The origin of materials specification and the list of countries excluded from the supply chain are important techniques in counterfeiting prevention. Question 16 addressed bot h techniques, and 13 manufacturers answered it. Thirty one percent of origin of mate specification; d Question 17 asked about the person responsible for QA/QC and to whom this assigned to QC who re person reports, it is important that he reports to somebody in the organization on a level higher tha n the manufacturing line supervisor. terms of the critical nature of the item. Sixty percent of the respondents specified that that they use an alternative classification parameter such as cost of failure. The

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60 The type of statistical sampling used on bul k material was addressed in Question 19. A total of 15 manufacturers provided information, 80% of whom perform either a detailed or a basic statistical sampling of all bulk material. The remaining 20% perform a basic statistical sampling on the critical ma terials. Third Group of Questions The third group of questions focused on the effect that counterfeit products have gather the data required for this group. Q20.Please describe the counterfeit product or materials you have discovered. Q21.Where did it enter the supply chain? Q22.How did you discover the counterfeit? Q23.Were the counterfeit items from an approved vendor? The Scale To examine the data gathered for the t hird group of questions, as in the previous two groups, a scale that could set a classification for the answers given was created. Table 4 1 1 shows the scale designed and the different categories covered by any possible answer given for a question. The sca le was used to analyze the answer given by the general population, contractors/owners, suppliers, and manufacturers. General Population Analysis The answers given by the general population were analyzed, and the results can be found in Table 4 1 2 For the examination of the data gathered, the scale represented in Table 4 1 1 was used as a reference factor. Due to the open ended nature of the responses given by the general population, the judgment of data was based merely on swering any question in particular.

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61 In Question 20, the interviewees were asked to describe the counterfeit product(s) or material(s) they have discovered. Given the enormous possible list of products that could have been produced, the author focused on th e number of products the respondent described as shown in Table 4 1 1 The mean shown in Table 4 1 2 explains that the majority of the population (71.1%) have discovered one or two counterfeit products. Less than 10% of the respondents have not discovered an y counterfeit products. population believes that the product entered at the supplier level. It i s interesting to compare this result with Question 12, in which 33% claimed to verify the supply chain up to the supplier level the highest for that particular question. In addition to Questions 20 and 21, it also was important to know how the counterfeit item was discovered; Question 22 was designed for that purpose. The data obtained from the respondents were represented in Figure 4 12, in which it can be seen that 49% of the general population discovered the counterfeit during inspection after purchasing the item. The fact that the majority of the population discovered the counterfeit item during inspection, after purchase, coincides with what was said in response to Question 12, where 33% of the general population claimed to verify the supply chain up to the supplier level. five percent of the population explained that the

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62 counterfeits were from an approved vendor list. In Question 13, 79% of th e respondents claimed to either have or be developing an approved vendor list. In Question 14, 72% of hat it is necessary to improve the vendor lists as well as the methodologies used to approve the vendors. The analysis of contractors and owners revealed the point of view of 42% of the data population. Likewise, contract ors and owners are at the end of the supply chain and therefore are more prone to experience counterfeiting. The results found in the third category of questions were represented in Table 4 1 3 Question 20, as explained in the previous paragraphs, was anal yzed based on the number of counterfeit items described. Out of the 21 contractors and owners who have experience counterfeiting, 15 claimed to have found 1 or 2 counterfeit items on their projects. The remaining 6 respondents claimed to have found 3 or mo re counterfeit items in their projects. The analysis of the responses given by contractors and owners in Question 21 resulted in a mean of 3.14. In addition to the mean, 76% answered that they had experienced one or two counterfeited items. This implies t hat the majority of contractors and owners believe that the counterfeit item entered the supply chain at the supplier level. The notion that counterfeiting entered the supply chain at the supplier level also was believed by the general population. In Ques tion 22, contractors and owners were asked how they discovered counterfeiting. The results of the analysis were represented in Figure 4 13, in which it

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63 can be seen that the majority of the respondents discovered the counterfeit during the inspection of the item after purchasing it. The results presented in Figure 4 13 reveal that contractors and owners found counterfeits in almost every stage of the purchasing installation process. In addition, the analysis of Question 23 revealed that all counterfeited pro ducts discovered by contractors and owners were provided by an approved vendor. Suppliers constitute the second individual group analyzed within the third category of questions. The importance of this group within the Chinese construct ion industry is based on their responsibility as a link between the contractors and the manufacturers. The result of the analysis of the responses given can be found in Table 4 1 4 where, like the previous groups, a scale was used as a reference for the exa mination of the answers. Of the 11 suppliers interviewed in Question 20, 73% (8 suppliers) claimed that they have found 1 or 2 counterfeit items. Two of the suppliers reported to not have found any counterfeits. The previous groups that answered Question 21 identified the suppliers as the level where the counterfeits entered the supply chain. When the data collected from the suppliers was analyzed, an interestingly even distribution emerged 33.3% of the respondents labeled the manufacturer level, 33.3% th e supplier level, 22.2% the jobsite level, and 11.1% do not know the level where it entered in the supply chain. The process of discovering the counterfeit was addressed in Question 22, and spection after

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64 the suppliers were asked if the counterfeits found were from an approved vendor, 60% of the r espondents said that they were. This percentage was relatively low in comparison with the 100% reported by contractors/owners and the 86% by the general an approved vendor Manufacturers represent the third industry member analyzed within the third category. Manufacturers represent 24% of the total data used in the investigation; therefore, their opinion could be a significant factor to understandin g the third category. 1 5 Question 20 requested the manufacturers to describe the counterfeit product or material they have discovered. The majority of manufacturers (58.3%) claimed to have found 1 or 2 counterfeit items. In addition, 16.6% have found 3 or more counterfeit items, and 25% claimed that they have never encountered a counterfeit product or material. counterfeit thirds of the manufacturers, represented by 8 respondents, claimed that the counterfeit item entered at the supplier level. In addition, 25% claimed that the counterfeit entered at the manufactur er level.

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65 This data distribution was shown by the majority of the groups in the third category of questions. The process of how the interviewees discovered counterfeiting was addressed in Question 22, in which out of 12 manufacturers, half answered the fo discovered while the product or material was in the storage area. Twenty five percent of lation process, Although the amount of data collected in Question 23 could be significant lower than the previous amount of data points, the data distribution remained similar. Out of the four manufacturers that answered whether the counterfeit items were from an approved vendor list, three of the respondents claimed that the items indeed were from an approved vendor. All interviewed group s and the general population affirmed with high percentages that the counterfeit items found were from approved vendors.

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66 Table 4 1. Scale used to analyze the first group of questions. 5 4 3 2 1 Q1 High risk Medium high risk Neutral Medium low risk Low risk Q2 Completely aware Somewhat aware Neutral Somewhat unaware Not aware Q3 Clear upward trend in level B Slight upward trend in level B Level B activity remains stable. Slight downward trend in level B No trend noted in level B Q4 Know or suspect a victimized party Have heard of victims secondhand Have heard of victims thirdhand Have heard rumors of possible victims Don't know Q5 Know or suspect a victimized party Have heard of victims second hand Have heard of victims thirdhand Have heard rumors of possible victims Don't know Q6 Fully knows about the problem and has concerns about it Knows somewhat about the problem and wants to fix it Knows somewhat about the problem, no visible signs of wanting to fixing it Starting to realize the existence of the problem Unaware of the problem Q7 Has discovered warning signs for specific items Has seen what could be warning signs Capable of developing warning signs on irregular occasions Starting to identify possible warning signs Has not discovered any wa rning sign Q8 Fully capable of identifying counterfeit Fully capable of identifying counterfeit but can be improved Capable of identifying counterfeit most of the time Capable of identifying counterfeit only on specific occasions Incapable of identifyin g counterfeit Q9 A growing threat Becoming a growing threat The threat remains stable A subsiding threat No threat

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67 Table 4 2. Results found on questions. Total interviewees Mean Interviewees who answered 5 Interviewees who answered 4 Interviewees who answered 3 Interviewees who answered 2 Interviewees who answered 1 Q1 65 4.12 27 26 6 5 1 Q2 64 4.02 35 10 12 3 4 Q3 59 4.02 26 17 8 7 1 Q4 63 3.54 29 6 12 2 15 Q5 23 3.83 13 1 5 0 4 Q6 61 3.33 18 16 6 10 11 Q7 59 4.24 34 15 4 2 4 Q8 58 3.53 21 15 5 8 9 Q9 52 2.81 12 4 12 10 14

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68 Figure 4 1. Victims of counterfeiting known to the interviewee Figure 4 2. Victims of counterfeiting on an unaffiliated project

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69 Figure 4 3. What the local government thinks about counterfeiting Figure 4 4. Government capacity to identify counterfeiting

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70 Table 4 3. Contractors and Owners Total interviewees mean I nterviewees that answered 5 Interviewees that answered 4 Interviewees that answered 3 Interviewees that answered 2 Interviewees that answered 1 Q1 27 4.37 14 10 2 1 0 Q2 26 4.12 14 6 3 1 2 Q3 26 4.23 13 8 3 2 0 Q4 27 3.67 15 2 3 0 7 Q5 23 3.83 13 1 5 0 4 Q6 26 3.42 9 7 2 2 6 Q7 24 4.04 13 6 1 1 3 Q8 24 3.5 11 3 2 3 5 Q9 23 2.61 5 1 5 4 8 Table 4 4. Suppliers Total interviewees mean Interviewees that answered 5 Interviewees that answered 4 Interviewees that answered 3 Inte rviewees that answered 2 Interviewees that answered 1 Q1 13 4.00 5 5 1 2 0 Q2 15 3.87 8 2 2 1 2 Q3 13 4.08 5 5 2 1 0 Q4 15 3.20 4 2 5 1 3 Q5 N/A N/A N/A N/A N/A N/A N/A Q6 12 3.33 3 4 0 4 1 Q7 12 4.33 7 3 1 1 0 Q8 13 3.62 4 5 1 1 2 Q9 10 2.80 2 2 1 2 3

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71 Table 4 5. Manufacturers Total interviewees mean Interviewees that answered 5 Interviewees that answered 4 Interviewees that answered 3 Interviewees that answered 2 Interviewees that answered 1 Q1 17 3.88 6 6 3 1 1 Q2 15 4.40 10 1 4 0 0 Q3 15 3.93 7 4 1 2 1 Q4 15 3.73 9 1 1 0 4 Q5 N/A N/A N/A N/A N/A N/A N/A Q6 16 3.38 5 3 4 1 3 Q7 14 4.43 10 2 1 0 1 Q8 12 3.00 2 3 2 3 2 Q9 15 3.13 4 1 5 3 2

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72 Table 4 6. Scale used to analyze the second group of questions 5 4 3 2 1 Q10 Have and apply a well defined process that ensures product integrity Developing a process that will ensure product integrity Have a reliable process that indicates product integrity Have a basic process that does not address product integrity directly Doesn't have a process to ensure product integrity Q11 Have fully established QA/QC processes to mitigate counterfeiting Developing a QA/QC process that will mitigate counterfeiting Have a reliable QA/QC process that addresses mitigation of coun terfeiting Have a basic QA/QC process that does not address counterfeiting QA/QC processes are under development Q12 Verify all the way back to raw materials Verify all the way back to manufacturers Verify all suppliers Verify once item reaches the job site Doesn't verify Q13 Have an approved and updated vendor list Developing an updated approved vendor list Have an approved vendor list that is not updated often Have a group of vendors they trust from previous experience Doesn't have an approved vend or list Q14 Have a well defined methodology to approve vendors In the process of upgrading the existing methodology Have a methodology that helps approve vendors Doesn't use a methodology to approve vendors Doesn't have an approved vendor list Q15 All pr eventive actions taken have been effective Most preventive actions taken have been effective Some preventive actions taken have been effective All preventive actions taken have been ineffective Doesn't use preventive actions Q16 Have an origin of material s specification; have own list of excluded countries Have an origin of materials specification; use the state dept. list of excluded countries Have an origin of materials specifications; no list of excluded countries Have no origin of materials specificati on; do have a list of excluded countries Doesn't have an origin of materials specification or a list of excluded countries Q17 Has an individual assigned to QC; person reports to executive level N/A Single person responsible for the QC process; reports to an individual below executive level N/A People responsible for QC assigned at project level Q18 Classify their supply chain N/A N/A N/A Doesn't classify their supply chain

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73 Table 4 6. Continued 5 4 3 2 1 Q19 Performs a detailed statistical sampling o f all materials Performs a basic statistical sampling of all materials Performs a basic statistical sampling on critical materials Only performs statistical sampling if required by owner or contract Performs an alternative test (different from statistical sampling) Table 4 7. Results found on questions. Total interviewees Mean Interviewees that answered 5 Interviewees that answered 4 Interviewees that answered 3 Interviewees that answered 2 Interviewees that answered 1 Q10 63 4.37 44 3 11 5 0 Q11 4 6 4.10 25 8 8 4 1 Q12 48 3.60 13 11 16 8 0 Q13 52 4.23 33 8 5 2 4 Q14 43 4.13 18 13 12 0 0 Q15 43 4.51 27 13 1 2 0 Q16 48 2.68 15 2 4 7 20 Q17 46 4.04 26 N/A 18 N/A 2 Q18 39 3.51 21 N/A N/A N/A 18 Q19 54 3.5 17 13 12 4 8

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74 Figure 4 5. Supply chain verification level. Figure 4 6. Origin of materials specification and list of excluded countries.

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75 Figure 4 7. Responsibility for QC

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76 Table 4 8. Contractors and Owners Total interviewees Mean Interviewees that answered 5 Interviewees that answered 4 Interviewees that answered 3 Interviewees that answered 2 Interviewees that answered 1 Q10 29 4.48 22 1 4 2 0 Q11 14 4.36 8 3 3 0 0 Q12 24 3.45 6 4 9 5 0 Q13 26 4.50 18 5 2 0 1 Q14 18 4.27 10 3 5 0 0 Q15 22 4.59 15 6 0 1 0 Q16 24 2.79 8 2 1 3 10 Q17 25 3.80 12 N/A 11 N/A 2 Q18 20 3.40 12 N/A N/A N/A 8 Q19 25 3.52 7 5 9 2 2

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77 Figure 4 8. Supply ch ain verification level. Figure 4 9. Origin of materials specification and excluded countries

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78 Table 4 9 Suppliers Question Total interviewees Mean Interviewees who answered 5 Interviewees who answered 4 Interviewees who answered 3 Interviewees who answered 2 Interviewees who answered 1 Q10 12 4.00 7 0 3 2 0 Q11 12 4.33 8 1 2 1 0 Q12 11 3.91 3 4 4 0 0 Q13 12 3.83 5 3 2 1 1 Q14 11 4.09 4 4 3 0 0 Q15 5 4.60 3 2 0 0 0 Q16 9 2.11 2 0 1 0 6 Q17 7 4.28 5 N/A 2 N/A 0 Q18 9 3.22 5 N/A N/A N/A 4 Q19 12 3.00 3 3 1 1 4

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79 Figure 4 10. Supply chain verification level.

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80 Table 4 Manufacturers Question Total interviewees Mean Interviewees who answered 5 Interviewees who an swered 4 Interviewees who answered 3 Interviewees who answered 2 Interviewees who answered 1 Q10 16 4.70 13 1 2 0 0 Q11 11 3.90 6 0 3 2 0 Q12 12 3.66 4 3 2 3 0 Q13 14 4.07 6 0 1 1 2 Q14 14 4.00 4 6 4 0 0 Q15 11 4.18 5 4 1 1 0 Q16 13 2.77 4 0 2 3 4 Q17 14 4.29 9 N/A 5 N/A 0 Q18 10 2.60 4 N/A N/A N/A 6 Q19 15 4.13 7 5 2 0 1

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81 Figure 4 11. Supply chain verification level.

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82 Table 4 11. Scale used to analyze the third group of questions. Question 5 4 3 2 1 Q20 3 or mo re N/A 1 or 2 N/A 0 Q21 At the raw material level At the manufacturer level At the supplier level At the interviewee level (jobsite, manufacturer, etc.) where the product entered the supply chain Q22 During inspection prior to purchasing the item During inspection after purchasing the item (storage) During the installation process After the installation process, before operation Failure during operation Q23 Yes, they were from an approved vendor N/A Not sure if the vendor was an approved vendor N/A No, they were not from an approved vendor Table 4 1 2 Analysis of general population Question Total interviewees Mean Interviewees who answered 5 Interviewees who answered 4 Interviewees who answered 3 Interviewees who answered 2 Interview ees who answered 1 Q20 52 3.19 10 N/A 37 N/A 5 Q21 50 3.10 0 13 31 4 2 Q22 47 3.06 3 23 5 6 10 Q23 26 4.46 22 N/A 1 N/A 3

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83 Figure 4 12. How the counterfeit was discovered.

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84 Table 4 1 3 Contractors and Owners Question Total interviewees Mean Interviewees who answered 5 Interviewees who answered 4 Interviewees who answered 3 Interviewees who answered 2 Interviewees who answered 1 Q20 21 3.57 6 N/A 15 N/A 0 Q21 21 3.14 0 4 16 1 0 Q22 1 9 2.94 2 7 3 2 5 Q23 12 5.00 12 N/A 0 N/A 0

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85 Figure 4 13. How the counterfeit was discovered.

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86 Table 4 1 4 Analysis of the suppliers Suppliers Question Total interviewees Mean Interviewees who answered 5 Interviewees who answered 4 Interviewees who answered 3 Interviewees who answered 2 Interviewees who answered 1 Q20 11 2.81 1 N/A 8 N/A 2 Q21 9 2.88 0 3 3 2 1 Q22 7 3.57 1 4 1 0 1 Q23 5 3.40 3 N/A 0 N/A 2 Table 4 1 5 Manufacturers Question Total interviewees Mean Interviewees who answered 5 Interviewees who answered 4 Interviewees who answered 3 Interviewees who answered 2 Interviewees who answered 1 Q20 12 2.83 2 N/A 7 N/A 3 Q21 12 3.08 0 3 8 0 1 Q22 12 2.75 0 6 0 3 3 Q23 4 4.00 3 N/A 0 N/A 1

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87 CHAPTER 5 ANALYSIS OF RESULTS Overview In Chapter 4, all data were presented and classified in the different scales proposed. From there arose the necessity of an analysis and interpretation of those results; this chapter is the response of tho se inquires. The study of the results was made based on the analysis and comparison of the questions within the three categories created in the previous chapters. The intent of this chapter is to share the results obtained from the data analysis, and conse quently allow a superior The First Category: The General Perception of the Counterfeiting Problem The first category of questions addressed the general perception of the inter perception was broken into subcategories that examined the general perception of the problem, the direction in which the problem is heading, the existence of victims, and the the reality and magnitude of the problem for the Chinese construction industry. Perception and Awareness of Counterfeiting The general population, the contractors/own ers, and the suppliers believe that there is an existing medium to high risk of counterfeiting, while the manufacturers believe that the risk is at a more neutral stage (neither increasing nor decreasing). The wareness of the problem, and they reported that their clients are somewhat aware of the existence of the risk; however, the suppliers reported that their clients believe that the problem is at a neutral stage.

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88 The medium to high perception of the risk tha t exists in the Chinese construction industry has forced the various members of the supply chain to be more aware of counterfeiting. As a result, the majority of the respondents claimed to have seen what they think can be warning signs that an item could b e counterfeit. The counterfeit risk and, thus, the need for awareness is present in every stage of the Chinese construction supply chain. Counterfeiting Direction All interviewees except the manufacturers explained the existence of a slight upward trend i n level B counterfeiting. The manufacturers found the trend to remain stable. An ascending or even stable trend in level B counterfeiting indicates that the actions which have been taken to reduce the problem might not have been completely effective. Perha ps the strength of the internal regulations within the different members of the supply chain could lead to a downward trend in level B counterfeiting. In regard to counterfeiting as a growing threat, responses were scattered among the different options po ssible. The results revealed four main scenarios: growing, stable, 33% to 52% of the answers given, depending on the responding group. The remaining percentages repres ented the perception of a threat that is either growing or stable. Regardless of the stage of the threat stable, growing, or even subsiding the fact that there is a recognized threat is enough to raise the awareness of how things have been done so far in c ounterfeiting prevention and how effective those actions have been. Recognized Victims of Counterfeiting In order to gather information about the possible existence of counterfeiting victims, the interviewees were asked if they knew or suspected that any party working

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89 on a project with which they were affiliated has fallen victim to counterfeiting. As shown options; the data distribution indicates that 24% do not know or sus pect a possible victim. The remaining 76% have heard of the existence of victims from firsthand, secondhand, or thirdhand sources or rumors, with firsthand being the option with the highest percentage (45%). The data for contractors/owners, suppliers, and manufacturers had a similar distribution. Contractors and owners were asked if they knew or suspected that any party working on a project with which they were not affiliated has fallen victim to counterfeiting. The data distribution again was similar to th at reported in the previous question; 82% of the contractors/owners have heard firsthand, secondhand, or thirdhand about a victim of counterfeiting. The remaining percentage have not heard or suspected a victim. The recognition of the existence of victims of counterfeiting from sources at various levels removed from the interviewee evidenced the reality that exits in the victims. These results bring to light how much o f a problem counterfeiting has become; victims were found in every stage of the supply chain. The results indicated that it has the Chinese construction industry. The G The answers of those among the general population affirmed that the government is aware of the problem and were spread among different levels from fully knowing the problem to starting to realize its existence. The polarized data di stribution

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90 also was maintained in the responses given by different groups analyzed contractors/owners, manufacturers, and suppliers. Along with the awareness of counterfeiting, the government has to be proactive in the early detection of counterfeiting. In order to address this topic, the interviewees identify counterfeiting and mitigate the threat. Once again, the results in every stage of the supply chain and consequently in the general population were polarized. While a becoming fully capable, or capable most of the time, a smaller percentage believe that of identifying counterfeiting. The Second Category: Awareness and Prevention of Counterfeiting The awareness and prevention of counterfeiting was the category covered by the second group of questions. The scope of this question group was to determine the awareness of counterfeiting among the different members of the supply chain, their prevention techniques (if any), and how well those techniques were working. In the previous chapter, the results of 10 questions were analyzed, and in the following paragrap hs the significance of those results will be explained. Ensuring Product Integrity The interviewees were asked about the process used by their organizations to ensure product integrity. The results analyzed in the previous chapter revealed that the majori ty of interviewees believe that they have and apply a well defined process which ensures product integrity. More importantly, there was not a single respondent who reported to not have a process to ensure product integrity, and only a few admitted to havin g a basic process that does not address product integrity directly.

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91 To have a process that ensures product integrity or which the interviewee believes ensures product integrity does not necessarily mean that such a process is fully capable of identifying counterfeiting; it already has been shown in the previous paragraphs that the same respondents called counterfeiting a medium to high risk with a slight upward trend. Along the same lines of product integrity, the interviewees were asked about the effect iveness of their preventive actions. A similar pattern to the product integrity was found in which the majority of interviewees claimed that all their preventive actions have been effective. Also, not one respondent admitted to not using preventive actions but the percentage who claimed to have ineffective preventive actions was substantial. Although their preventive actions could be defined as effective by the interviewees, the real effectiveness of those actions is debatable when previous answers have s hown the presence of counterfeiting in all the levels of the supply chain. It could be beneficial to use those preventive actions as a foundation for future development of more robust methods to counteract the counterfeiting industry. The Reality of Quali ty Assurance/Quality Control The majority of interviewees claimed to have a fully established or reliable quality assurance/quality control (QA/QC) process. The majority also explained that they have an individual assigned to QC who reports to someone eith er at or right below executive level. This pattern of responses was shown not only by the general population but also by contractors/owners, manufacturers, and suppliers. A reliable QA/QC process with a well established organizational structure could help the different members of the supply chain prevent counterfeiting. That seems to be the reality in the Chinese construction industry; however, a proper reinforcement of the

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92 process and organizational chart could lead to better results in counterfeiting pre vention. Along the lines of QA/QC, the statistical sampling performed on the bulk material would indicate the level of detail of counterfeiting prevention that the supply chain performs. The majority of the respondents claimed to perform statistical sampli ng on bulk material. The thoroughness of the statistical sampling method varied among the respondents with the manufacturers being the group with the most sophisticated technique applied to all materials. Some suppliers (33%), on the other hand, claimed to perform on bulk material a test other than statistical sampling. Supply Chain Protection The verification of the supply chain is one of the most effective methods of counterfeiting prevention. The interviewees were asked how far up the supply chain they verify, revealing a data distribution spread among different options. The majority of the data for the general population as well as contractors/owners and suppliers verify up to the supplier level. The manufacturer and raw material levels also were report ed by significant percentages. A slight difference in the data distribution was found in manufacturers, however, in which the verification level with the highest percentage was raw material. Given the nature of the manufacturing industry, this was predic table. Other verification levels such as manufacturer and supplier also composed an important percentage of the responses. Regardless of how high in the supply chain an organization verifies, constant verification and proper feedback is critical. In addi tion, interviewees were asked if they classify their supply chain in terms of the critical nature of the item. The distribution of

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93 responses was split almost perfectly in half between the options yes and no among all the groups. The classification of the s upply chain in terms of the critical nature of the item is entirely a decision of the company but must be applied properly in order to prevent counterfeiting. Lastly, for the supply chain analysis, the interviewees were asked if they had an origin of mat erials specification and a list of excluded countries. The results, which were similar in all the groups, were polarized; on average, 30% of the respondents had a list of excluded countries and an origin of materials specification. The lack of these two to ols could lead to low supply chain security and consequently could create the ideal conditions for counterfeiting. Approved Vendors The practice of having an approved and updated vendor list is one of the most effective ways to prevent counterfeiting; the technique allows the identification and removal of unethical vendors (counterfeiters) from the supply chain. The majority of interviewees claimed to keep an approved vendor list. Some respondents admitted to not having an approved vendor list or to trust a group of vendors based on previous experience. It can be said that the general practice of the Chinese construction industry is to maintain an approved vendor list. The frequency of updating, however, could be improved. The approved and updated vendor l ist defined in the previous paragraph has to be reinforced with a proper methodology to approve vendors. All interviewees claimed to have an established methodology for vendor approval. The efficiency of the methodology varied from a well defined methodolo gy to a developing methodology to a simple methodology that helps approve vendors. The first two levels accounted for the

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94 majority of the data points, which revealed that things are heading in the right direction in this matter; however, there always is ro om for improvement. The Third Category: Effect of Counterfeit Products in the Supply Chain The third group of questions was to determine the effect that counterfeit products had on the different levels of the supply chain. The questions addressed a variety of topics from where the counterfeit item entered the supply chain and how the counterfeit items were discovered, to the average number of items discovered by each entity and if the counterfeit item was purchased from an approved vendor. This important ca tegory of questions will reveal an inside the supply chain point of view on the reality of counterfeiting and its effects. Number of Counterfeit Products Discovered For the analysis of this particular question, a scale that represented the average number of discovered products was created. The majority of the interviewees claimed to have discovered one or two counterfeit products. Suppliers and manufacturers were the only two groups in which some respondents claimed to have not found any counterfeit produc ts, and those percentages were 18% and 23%, respectively. The results revealed an important part of the counterfeiting situation; on average, each respondent that experienced counterfeiting on a project had encountered one or two counterfeited items. The Level Entered into the Supply Stream Based on the finding that on each project in where counterfeiting was present, one or two counterfeit items were discovered, it was necessary to know where those products were most likely to originate. Almost all interv iewed groups identified the suppliers as the level in which the products were introduced. Additionally, the suppliers pointed to their suppliers and the manufacturers as the levels in which the products

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95 entered. All sectors seemed to agree that the supplie r level was the port of entry for counterfeit products; however, the same respondents had affirmed earlier that on average they verify up to the supplier level. Perhaps a more tightened verification system higher up the supply chain could modify the result s and reduce the counterfeiting problem. The Discovery of the Counterfeit Item Another important piece of information collected in regard to counterfeiting in the Chinese construction industry was the phase of the project in which the counterfeit was dis covered. On average, the interviewees claimed that they realized the item was counterfeit when an inspection was made after the purchase. The discovery of a counterfeit item in storage is early enough to prevent its installation and provide the necessary f eedback in the vendor list actualization. The downside, however, is that the victim already has purchased the item and most likely will not get its investment back. The identification of the counterfeit item after the purchase leads one to think that perh aps the QA/QC techniques were not as elaborate as described by the respondents and that the feedback of the supply chain as well as the warning signs might not be as effective as claimed. Therefore, it could be beneficial to entrench a reinforcement of all existing prevention techniques and the development of new and more efficient anticounterfeiting procedures within the supply chain. Approved Vendor Another group of data collected in regard to the counterfeit item discovered was whether it came from an a pproved vendor. The majority of respondents in all groups said that the counterfeit items discovered were from approved vendors. This indicated that the methodology used to approve vendors might not address the problem correctly.

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96 Along with new vendor appr oval techniques, a constant update of the vendor list is required as well as the reinforcement of the existing prevention techniques as mentioned earlier in the chapter. Also, the possibility of one rogue or inept employee within a good vendor is always la purchases from approved vendors.

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97 CHAPTER 6 CONCLUSIONS Overview The construction industry, one of the most important industries in modern society, recently has been affected by the misfortune of co unterfeiting. China, a suddenly prosperous nation with an active counterfeiting background in different industries (clothing, intellectual property, electronics, etc.) has been identified as the main source of counterfeiting in the construction industry. T he first step in the reduction of the vast amount of counterfeits that are commercialized daily in China is to understand the roots of the problem. A total of 70 members of the different sectors of the Chinese construction industry were interviewed, and t heir responses were translated from Mandarin Chinese into English. The answers were distributed into three main categories that addressed the counterfeiting reality from different but related perspectives. Once all responses were evaluated using a common s cale, the results were interpreted by a cross examination analysis that led to the conclusions presented in this chapter. First Category: General Perception of Counterfeiting It can be said that 81.5% of the general population interviewed believes that there is an existing medium to high risk of counterfeiting in the Chinese construction industry. Moreover, 70% of the interviewees believe that their clients are somewhat aware of the existence of the risk. Therefore, it is necessary to raise the awareness of the Chinese construction industry and their domestic and international clients. By spreading the word and explaining the risk, the investors would be aware of the latent hazard and would be able to address it in a more efficient manner.

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98 In addition to the perception of the risk, it also was reported by 73% of the population sought that level B counterfeiting is increasing slightly. The upward trend of level B represents an increment in the creation of products that look legitimate under normal quality control procedures but fail to perform due to low quality. These products can be sold easily to investors, contractors, manufacturers, or any other member of the supply chain without being detected, thus increasing the risk of counterfeiting. Counterfeiti ng has been recognized by 73% of the respondents as an existing threat and by 30% of them labeled a growing one. In addition, three out of four respondents have heard or suspect the existence of victims in projects with which they have been associated. Tho se two statements confirm what was said in regard to the necessity of educating the construction industry on the magnitude of the problem. It is important, though, that the information be followed by responsible actions which will lead to the prevention of counterfeiting. A majority within every segment of the supply chain believes that the government knows of the existence of the counterfeiting problem and has full or partial capability to mitigate it. This majority and possibly the entire industry demand s from the government actions that could lead to the prevention and reduction of counterfeiting activity. The response of the government to counterfeiting, however, is not clear, and there seems to be a long way to go in order for the government to improve its identification processes and enhance its preventive and corrective procedures. This will reduce a problem of which they most likely are somewhat aware. Second Category: Awareness and Prevention of Counterfeiting The different members of the supply cha in who were interviewed claimed to already have and apply a well defined process which ensures product integrity They

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99 believe that all their preventive actions have been effective thus far This belief is in contrast to clear evidence that counterfeiting is a growing problem. Regardless of the factor s that influenced the responses it is evident that the process used to ensure product integrity and all their preventive actions must be improved. Another organizational factor that has to be re viewed is the quality assurance/ quality control (QA/QC) process. The general consensus that exists among respondents is that they all have an efficient QA/QC process with a well established organizational structure. The reality may be far off as what is b elieved to be a reliable QA/QC process for an organization might not be good enough in the real practice This is especially true when traditional QA/QC processes are implemented in the identification and prevention of counterfeiting. Thus a full re eval uation of the QA/QC process es is necessary, r estructuring the existing QA/QC process es with a larger emphasis on counterfeiting According to the results obtaine d, when it comes to supply stream integrity verification it is a common practice to verify up to the supplier. It also is common for half the industry to classify the supply chain in terms of the critical nature of the item. Lastly, it can be said that maintaining a list of excluded countries and origin of materials specification is not a common pr actice. The three factors mentioned were: proper verification at high levels, a classification of the critical nature of the items, and a list of excluded countries and origin of materials specification W hen combined these could create a reliable supply chain security procedure, which the Chinese construction industry needs in order to reduce counterfeiting. Perhaps the most important counterfeiting prevention technique for the supply chain is to maintain an updated approved vendor list. Right now in the Chin ese

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100 construction industry, it is a common method to maintain a certified vendor list that is updated periodically. However, it is necessary to reevaluate how efficient the list is and, if possible, create a brand new one more oriented toward counterfe iting prevention. Ultimately, by having a secure supply chain distribution, the risk of counterfeiting will be reduced significantly, a direction toward which the construction industry should head in the near future. The Third Category: Effect of Counterfe it Products in the Supply Chain When counterfeiting is found in a Chinese construction project, it can be said that o n average, one or two counterfeit ed products are discovered. I n addition, the counterfeit item generally is discovered after the purchase d uring the first inspection of the product. Therefore, it is necessary to strengthen the prevention techniques in order to reduce the amount of counterfeits reaching the projects. In addition, it is essential to increase the inspection in the supply chain i n order to promote the early discovery of counterfeits. The su ppliers were labeled as the point of entry of the counterfeit products into the supply chain. In addition, the majority of items discovered were provided from approved vendors. As a result, the prevention techniques used in the supply chain and the approved vendor methods are not sufficient. It is necessary to implement more efficient and apply lessons learned from past counterfeiting incidents that enhance counterfeiting prevention in the suppl y chain. Suggested Measures to Be Taken in China in Order to Prevent Counterfeiting China, actions have to be taken. Based on the results fou nd in the present investigation the author has developed the following suggestions to be implemented. Although, the

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101 following suggestions will not eliminate the counterfeiting phenomena; if all are applied, they will at the very least be a first step in the resolution of this growing problem Raise the awareness of counterfeiting in the construction industry among the general population. The government ought to strengthen its counterfeiting prevention techniques, provide support to the construction industry in the early detection of counterfe iting, and educate the population about the unethical and dangerous nature of counterfeiting. Counterfeiting prevention techniques, product integrity techniques, QA/QC processes, supply chain verification methods, and the methodology used to approve vendo rs have to be strengthened and adapted for counterfeiting prevention. It is necessary for the organizations to create a counterfeiting prevention culture that involves all employees. It is a problem that affects everyone in the industry; therefore, everyo ne should be involved actively in the prevention. The government must work in conjunction with all members of the supply chain in order to develop directives that will lead to counterfeiting prevention in the To implement a more open communication system among the different members of the supply stream in regards to their counterfeiting findings, feedback, and prevention techniques. Suggested Prevention Tips for Foreign Investors on destination among global investors; consequently, they are not exempt from counterfeiting. The following list of prevention strategies were developed by the author, based on the findings of the present research and the main purpose is to raise the aware ness of the investors in regards to counterfeiting activity. Be aware of level B products. It is important to always evaluate the possibility of a product or material to be counterfeit, even if it comes from a trusted vendor. Understand that on average, o ne or two counterfeit products are found on every project in China; therefore, the awareness must be high all the time.

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102 Unfortunately, the government does not yet have the capacity to diminish the problem. Hence, an investor will be on its own in counterf eiting detection/protection. To maintain an updated approved vendor list, verify as high in the supply chain as possible and uphold an origin of materials specification and list of excluded countries. Do not think, by any means, that the procedures, techn iques, and even the culture of your own country are similar to those of China. Please get as much information as possible before doing business in China or any other country.

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103 LIST OF REFERENCES Counterfeiting: A Demand Vol. 10, Iss. 2, pp. 27 36. Chow, D. (200 6 testimony at the Ohio State Univers ity. Counterfeiting in the People's Republic of China University Law Quarterly, Vol 78, Number 1. 3 484. american perceptions of counterfeiting in the construction supply Thesis, University of Florida, Gainesville, Fl. counterfeit The International Anti Counterfeiting Coal Washington DC. Technology Leakage in China: A Comparison of Strategies Used in Japan, omic Research, Tokyo, Japan. Products from Low for a Sustainable Built Environment, Amsterdam, The Netherlands. Organ ization for the Economic Co 10.1787/9789264045521 en 1164 Collaboratory for Research on Global Projects Stanford University, Stanford, CA

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104 U. CECW CE. U.S. Department of Energy Health, Safety and Security (DOE SS) (2007). SS Rev. 6 http://enr.construction.com/products/equipment/2009/0304 FakeCranes.asp> (March. 7, 2012) http://enr.construction.com/opinions/editorials/2010/1013 CounterfeitConstructionGoods 2.asp> (March. 9, 201 2) Guanxi: The China Letter. Zou, P., Fang, D., Wang, Technology Manageme nt in China Vol. 2 No. 2, pp. 163 176

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105 BIOGRAPHICAL SKETCH Fernando was born in San Cristobal, Venezuela. He obtained a B achelor of S cience in mechanical engineering at the University of Tchira. After his graduation Fernando started working in the constru ction industry as a field and project engineer in several road and bridge construction projects in Venezuela. Fernando decided to move to the United States to obtain a building construction at the University of Florida. During his days at the M.E. Rinker Sr. School of Building Construction Fernando had the opportunity of taking an independent studies research class with Dr. Edward Minchin, that particular class was the launching point of the current investigation.