The few estimates that have emerged are disturbing. George Chen, a restaurateur who specializes in wine, told TimeOut Shanghai that his best guess is that up to 80 percent of the city’s alcohol isn’t genuine — either not meant for consumption or an inferior substitute marketed as a higher-priced brand. The chief executive of Brown-Forman, maker of Jack Daniels, has claimed that one-third of the alcohol consumed globally is produced illicitly. And the World Health Organization has found that in Southeast Asia, homebrew or other illegally procured beverages account for 69 percent of overall alcohol consumption.
Even anecdotally, it’s evident that fake alcohol is a big problem in China. Barely a month after the December 23 crackdown, Beijing police busted a bigger ring, arresting 88 suspects and confiscating counterfeit alcohol worth $861,000. The state-run media reported in February that a single public-security officer was responsible for monitoring the alcohol quality in more than 20 Sanlitun bars, and when I was there in March 2013, 10-kuai drinks were still abundantly available.
Nor is alcohol counterfeiting limited to Beijing. Last November, authorities in Zhejiang Province discovered 10,000 bottles of fake Château Lafite Rothschild, valued at around $16 million. China’s nouveau riche crave wine as a status symbol, and sometimes the flamboyant display of wealth is more pleasurable than taste; the BBC has reported that around 70 percent of the Château Lafite bottles sold in China aren’t the real thing.
Two years ago, Chinese police reported that at least $33,800 in fake booze had been sold around Shanghai before 25 people were caught and arrested. In Huaihua, Hunan Province, police found counterfeit alcohol valued at $675,000 in 2011; and in Shoaxing City, Zhejiang Province, police broke up a $305 million operation that had sold counterfeit alcohol in 97 Chinese cities. The China Daily reported that the suspects “had allegedly poured cheap liquors into real containers . . . that they had bought from liquor vendors and rag pickers.” And those are just a few examples.
Counterfeit alcohol is not only dangerous — it’s also harmful to businesses, which are already contending with China’s complicated and often corrupt economic system.
“It’s a nightmare. It’s an absolute nightmare,” says Charlie, a veteran bartender in China who works at The Stumble Inn in Sanlitun, who declined to give his last name. “The fake booze hurts. If you poured it in your car, it would probably work. I’ve siphoned petrol out of a car before, and it was a more pleasant taste. But it’s a roaring trade. It’s a 10-kaui mojito, and people are cheap.”
Charlie tells me that fake alcohol presents “a massive problem, especially when you’re trying to run a good, clean establishment.” There’s the competition factor — a rum and Coke at Stumble Inn costs about 45 yuan, compared to 10 yuan for a drink of questionable origin across the street. Moreover, customers bar-hop in Sanlitun, starting the night out at Stumble Inn and ending up at a less reputable establishment. The next morning, they show up with a brutal hangover, and they want to blame Charlie for selling them fake booze.
Stumble Inn has coped by establishing a reputation for an honest drink. Each bottle of liquor is examined. The latest labeling information from the company is scrutinized, and the liquor is taste- and smell-tested before it’s served. Whenever possible, the bar uses vendors recommended by the liquor companies. When it can’t, it instead consults with other expat bars to find a supplier with a good reputation. Stumble Inn also withholds 40 to 60 percent of suppliers’ payments for at least 30 days, and if even one fake is discovered, “we stop dealing with them immediately, and they will not be paid,” Charlie says. He estimates the bar spends more than $800 a month on quality control for food and drinks.
Vouching for the integrity of alcohol can be difficult for suppliers, too, though. Chinese manufacturers expert in forging have been known to produce not only counterfeit bottles and counterfeit liquor — some also counterfeit the customs stamps and certifications that are supposed to mark the real deal.
Consequently, China’s bartenders have come up with their own tests. One tells me that Jack Daniels “is the benchmark. If they’re using it, I can smell it and I can taste it. It’s the most unique-smelling alcohol there is.” An additional perk? If it’s real, Jack Daniels will leave a white band around the perimeter of a glass when it’s mixed with Coca-Cola. The fake version doesn’t. Bombay and tonic is also a good test, bartenders tell me, because it has a slightly bluish tint when exposed to light. And seasoned drinkers can often taste the difference, too.
Of course, the fact that bartenders and bar owners feel the need to do their own diligence is telling. China’s black market in counterfeit goods challenges not only the health of its people but also its legitimate economy. It’s essentially a short-sighted approach economics. And like fake alcohol, it can be expected to end in one hell of a hangover.
— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity.