An inter-provincial police operation led by Guangzhou police has uncovered a network of fraudsters that have been selling counterfeit Penfolds that are estimated to worth RMB 130 million (US$20.1 million), the biggest haul of fake Penfolds yet in the country.
The estimated value of the fake Penfolds, arguably the most popular Australian wine brand in China, uncovered in the operation is more than seven times of the last major bust in 2018, and is believed to be the biggest case of fake Penfolds reported yet in recent history. Police back then uncovered 50,000 bottles of the fake popular Australian wine worth about RMB 18 million in Zhengzhou.
The scale of the operation is shocking. Local media said it involves nine different counterfeit wine manufacturing workshops in Guangdong, Shanghai, Jiangsu and Zhejiang provinces in eastern China, as well as Yunnan and Guangxi provinces in southwestern China.
The network of fraudsters has developed what the police described as a “sophisticated and relatively stable” network of production, distribution and sales network, using a registered legitimate company as a shell to pedal the fake wines online through the country’s massive e-commerce platforms.
The police however did not name the e-commerce platforms involved.
According to the police, the fraudsters would purchase substandard wines ranging from RMB 50 to RMB 200 and resell them for as high as RMB 4800 through online platforms. Ironically, the fakes were also fashioned with anti-counterfeit stickers. In order to mislead law enforcement and consumers, the fraudsters set up legitimate wine companies with business registrations and forged invoices and certificates.
One of the main suspects, a 27-year-old man from Guangdong, confessed that he had been selling these fakes online since February 2020 and would profit tens of thousands a month.
His accomplice surnamed Xia started the illegal operation three years earlier and the two met online and decided to join forces to expand their operation.
Their fake wines raised suspicion when wine consumers saw unusually lowly-priced Penfolds sold on e-commerce platforms and reported it to police in Zhuhai, Guangdong.
The prices of these wines, according to police, are generally 30% lower than market price.
Penfolds have stepped up their efforts to stomp out counterfeit wines in its most profitable market in recent years, though with no shortage of setbacks. It was only in 2020 it finally gained its legal trademark in the country for its transliterate Chinese name 奔富.
The news was met with applause from the wine trade inside mainland China. One reader commended police work, “One is rooted out alas. It helped cleanse our wine market.”
The case is still under investigation. So far, Zhuhai police have detained 12 people in accordance with the law, and another nine have been detained by authorities in other provinces and cities. Sixteen have been arrested and five have been released on bail.