110 million defective condoms in Ghana: the latest example of China’s dangerous counterfeit trade

110 million defective condoms in Ghana: the latest example of China’s dangerous counterfeit trade

By Gwynn Guilford @sinoceros April 18, 2013

China’s $250 billion knock-off trade doesn’t just mean fewer handbag sales for LVMH, or a hit to the DVD sales market. It can also have potentially lethal consequences.

Take, for example, counterfeit condoms, 110 million of which the Food and Drugs Authority of Ghana has impounded over the last week due to poor quality. Testing revealed the condoms to have holes and break under pressure. It also found that they were unusually small and insufficiently lubricated.

And those hole-riddled, flimsy, undersized condoms were made in China, the FDA confirmed Tuesday, identifying Henan Xibei Latex Company Ltd. as the manufacturer. (Here’s the company’s Alibaba.com profile, should you be in the market for defective protection). On top of that, Yenghana reports that the leaky condoms are counterfeit, and that the purported manufacturer, BeSafe, has never sold its products in Ghana.

This isn’t the first time that a Chinese company has been implicated in selling faulty or knock-off condoms. They’ve been bedeviling global public health officials for more than a decade (examples hereherehere and here).The Chinese government has scrambled to keep up with shady manufacturers, as the industry has grown. Now the fourth-largest maker of condoms—after the US, the UK and Japan—China exports some 1.6 billion a year. Past crackdowns by the Chinese police have revealed shady techniques like lubricating the condoms with vegetable oil (which can rot the rubber) and recycling used condoms as hairbands.

And the cycle of counterfeiting is self-perpetuating, because China’s reputation for making shoddy condoms means that bona fide Chinese manufacturers earn a minimal premium compared with the markup for European brands.

Of course, faulty condoms up the chances of transmission of HIV and other sexually transmitted diseases, as well as the likelihood of pregnancy. “This is a huge, huge problem,” said Faustina Fynn-Nyame, director of Marie Stopes International in Ghana, told the Guardian. “There will be a lot of unintended pregnancies as a result of this, and that means maternal mortality and unsafe abortion. Commercial sex workers also use these products [so] the consequences could be enormous.”

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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