Chinese Counterfeiter Or Victim?Author: John Honovich, Published on May 01, 2012
Explosive allegations are rocking the international wireless and surveillance markets. Chinese authorities allege that fast-growing American manufacturer, Ubiquiti, hired gangsters to terrorize and destroy a Chinese competitor's office. However, Ubiquiti denies these charges, charging that the Chinese company is counterfeiter who attempted to blackmail them. In this note, we break down the details, providing images of gangsters attacking a Chinese company and translation of a Chinese only video.
According to the Chinese press and the company claiming to be attacked, here is what happened:
On multiple occasions, including April 1st and 10th, gangsters broke into a Chinese company's office. The image from the company's surveillance video shows the gangsters assembling:
Are these really gangsters? Is that what gangsters in Shenzhen look like? We are skeptical.
In any event, the TV program claims that the gangsters, carrying multiple weapons including swords and stun guns, rushed the office while employees were still inside. The image below shows one of the gangsters brandishing a sword:
The gangsters trashed the office, destroying as well as stealing some products. The image below shows the resulting trashed office:
The TV program showed a sample of the company's products, displaying the brand name of 'Zonewave', as shown below:
While little relevant information about 'Zonewave' is available on Google, a website named 'Zoneworknetworks.com' appears to match. Another company, Kozumi, may be related. Overall, the company looks like a fairly small player.
A representative from that company suspects the gangsters were hired by a rival who produces a similar product (i.e., Ubiquiti). The representative said that they had an ongoing dispute with Ubiquiti.
The program displayed a Chinese document with a word that roughly translates to 'trademark'. In addition, the company representative also referred to it as a trademark dispute. However, in English, this does not make much sense unless Ubiquiti's rival was using Ubiquiti's name or product names.
A Bulletin Board Allegations
In addition to the TV program, some are citing a Chinese Bulletin Board post (Update: the post appears to be down, here is a PDF cached copy we saved). This post argues that Ubiquiti is inexperienced and afraid of strong Chinese competition, claiming, "their 'unique technology' is a software protocol that they built inside their software and it seems that their competition in Asia already are providing products that are similar or even superior at much lower cost."
Our Chinese sources say that Tianya, the bulletin board that posted this, has a reputation for attacking foreigners and being sensationalistic.
UPDATED: Ubiquiti Denies the Allegations
Ubiquiti says counterfeiters are blackmailing the company using this 'attack' as a prod to make Ubiquiti back off pursuit of them. Forbes reports: "[The CEO] denies all the allegations and explains that they were spread by counterfeiters in China that the company is pursuing. One of the counterfeiters was previously jailed but was released early, the CEO’s memo said. 'I had recently received emails from the criminals threatening to damage our public reputation if we continue to pursue them. I refused. It appears that in the past several days, they have made good on their threats.”
Last year, Ubiquiti worked with the Shenzhen authorities to arrest counterfeiters and confiscate 1,700 pirated routers. This may be part of this situation.
A memo claiming to be from Ubiquiti's CEO is being forwarded on the Internet:
"We have been battling counterfeiters in China. The criminals are very clever; both former Ubiquiti distributors. One is Chinese living in DongGuan, China where are contract manufacturers (CM's) are based , the other is Taiwanese living in the United States running a WISP distributor in Argentina. They are working as a team. [Editor's note: this appears to match the description of Zonewave/Kozumi]
In 2011, we stopped doing business with both individuals because they broke our distributor agreement rules.
Later that year, we discovered they had setup a factory in DongGuan producing exact 100% identical versions of our products. We believe they had paid someone inside our CM's, stole our PCB design files, schematics, BOM's, artwork, Factory CD; everything. They even hired former production engineers from LIteOn (our largest CM) to setup their manufacturing testing and processes. And, they used their Ubiquiti reseller connections to blend the counterfeit products into the Ubiquiti sales channel. Because the counterfeit products were based on our designs, artwork, and manufacturing processes; customers were not able to tell the products were counterfeit. They thought they were buying genuine Ubiquiti products.
When we discovered what was going on, we hired legal counsel in China to aggressively shut them down. We were successful and the Chinese individual (based in DongGuan, China) went to jail where he stayed awaiting trial.
We tried our best to make the case public to remove the possibility the criminal could pay his way out of trouble, but unfortunately, the criminal was able to pay off the judge in DongGuan and was released early this year.
Following the release, the criminals now feel empowered and are attempting to ramp up their operations."
Now, Ubiquiti has announced a 'Worldwide Campaign to Protect its Intellectual Property Rights'. While the release does not add any new details, it does officially confirm Ubiquiti's counterclaims of being a victim of a counterfeiter's attack.
What's Going On
Something obviously happened but who did what and for what reasons is hard to tell, especially since the allegations are coming from the wild west of the Shenzhen electronics market.
However, what is clear is that Ubiquiti continues to grow like a rocket ship. Turning in their Q1 2012 results today, the company announced nearly 80% year over year growth and are on pace for an incredible ~$400 Million 2012. This growth is hurting many of its rivals, certainly in the Western world and we would suspect in Asia as well.
Overall, we are skeptical about the veracity of the Chinese companies claims, especially given the comical surveillance video of the attack.
Other Recent China Reporting
Last month, we reported how Chinese government officials were attempting to block out foreign surveillance manufacturers. While we see no direct relationship between this and the Ubiquiti allegations, both relate to tensions between China and foreign manufacturers.
Author: John Honovich, Published on May 01, 2012
Other Updates on Ubiquiti
Ubiquiti UniFi Pro Video Surveillance on May 13, 2014
In 2011, Ubiquit got the attention of the video surveillance industry with their launch of sub $1...
Ubiquiti Rebounds From Counterfeiting Crisis on Jan 29, 2014
The Chinese 'mobsters' have been beaten. Less than 2 years ago, super fast growing Ubiquit was t...
airVision 2.0 Reviewed on Jun 12, 2013
After disrupting the wireless industry, Ubiquiti launched its attack into video surveillance. How...
What's Next for Ubiquiti Surveillance? on Nov 18, 2012
Last year, Ubiquiti hit the surveillance market hard with a line of $100 HD cameras that generate...
Ubiquiti Counterfeiting Crisis Deepens on Aug 14, 2012
It started off with a bizarre seemingly staged 'mob hit', got worse a few months later and now ha...
Ubiquiti ToughSwitch on Jun 28, 2012
Ubiquiti's lack of standard PoE compatibility has been one of few integrator complaints against t...
Ubiquiti Crisis - Plunging Stock, Lawsuit and Accusations on May 22, 2012
Things are getting worse for Ubiquiti. What started as a shocking and seemingly fabricated story ...
Ubiquiti AirFiber Gigabit Wireless on May 06, 2012
Can Ubiquiti translate their success in the wireless market to high-capacity carrier class backha...
Ubiquiti Wireless Surveillance Review on Dec 12, 2011
Ubiquiti's wireless radios have become a popular choice for video surveillance applications. Whil...
Most Recent Industry Updates
DVTel Hires Avigilon and Genetec Sales Leaders on Aug 28, 2015
DVTel Raised $9 Million this year and now they are starting to put that money to work, hiring sal...
Panasonic's Video Insight Really Really Wants To Take Over Your VMS on Aug 25, 2015
Video Insight has always been aggressive. And after being acquired by Panasonic this year, they ...
Camera Calculator Data Export Released on Aug 25, 2015
Pick the manufacturer and model you want. Name the camera. Add notes. Get the right FoV, coverag...
Here's What Avigilon Should Do Now on Aug 24, 2015
An Avigilon partner asked: "What would be your Goal if you run Avigilon?" Given Avigilon's 60% ...
$28 Million Funding for Doorbell Cam Startup on Aug 21, 2015
Yep. Would you spend $200 to see who it at your door on your phone? Well, investors, including ...
The Next Failure in Wireless Video Surveillance: $18 Million Funding on Aug 21, 2015
Wireless video surveillance is one of the most difficult niches in the industry. Tens of million...
Panasonic System President is Out on Aug 19, 2015
The architect of $1+ Billion Panasonic North America 'solution' oriented business is out. In thi...
Live Video Monitoring Usage Statistics on Aug 19, 2015
What percentage of video surveillance users have humans (guards, operators, monitors) watching li...
Genetec: We Do NOT Support Avigilon on Aug 18, 2015
Two of the most significant surveillance manufacturers in the world, countrymen even. No love lo...
Security 'Invention': Bullet-Resistant Furniture on Aug 14, 2015
Do you lose sleep at night worrying your love seat will be murdered? Do you fear that your sofa ...