September 30, 2026
IP enforcement in China: why is the informant-led model failing?Human sourcesare indispensable in anti-counterfeiting. Nobody maps a supply chain in Chinafrom a desk, and every serious investigation runs on boots on the ground.
The problem is the commercial model that outsources the investigative function itself to people paid per lead. That model is failing for the following reasons:
The paid tip was worth its price when counterfeiters stockpiled. One warehouse, one hundred thousand finished goods, one raid, one seizure figure in the annual report. The lead carried the entire value of the case, because the case was the stock.
That market has gone. Networks now produce to order, hold as little inventory as they can, and split production, packaging, storage and dispatch across separate sites so that no single address is worth raiding. A tip now buys you one node of an operation that has four, and the other three relocate within the week.
Pay per actionable lead and you buy what can be raided this month: a retail outlet, a small assembler, an online seller who holds stock. These seizures will have low impacts, which is precisely why the counterfeiting industry survives.
Consider what that criminal referrals cannot buy. It cannot buy six weeks establishing that a dry good manufacturer supplies eleven assemblers across three provinces. It cannot buy the discipline to leave a visible target in place because raiding it would alert the supplier behind it. It cannot buy the trip between Guangzhou and Xinjiang to find the real target. Nobody paid per tip will do this, and it would be unreasonable to expect them to: their asset is the information, and their interest is in selling it quickly. So you receive the same tier of case indefinitely while the dry-goods producers, wholesalers and export-facing suppliers behind them are never reached.
There is a structural reason for that. Unbranded dry goods and genuine empty bottles are not unlawful in themselves; the criminal offence crystallises at assembly. Against those targets, the IP enforcement team needs to build a documented case, which sometimes requests to identify the supply chain of the counterfeiters. Informants do not do that.
The third failure is related to compliance matters.
An informant network is a group of third parties acting in connection with your brand, paid on results, dealing with counterfeiters and sometimes with public authorities, whose methods you do not control and whose payments you cannot audit. That is third-party risk with low due diligence capacity: evidence of uncertain provenance that will not survive scrutiny if a matter turns criminal or has to be used outside China; inducement, where a source arranges the very transaction he then reports; payment flows nobody has tested against Sapin II, the UK Bribery Act or the FCPA.
None of this requires anyone to have done anything wrong for it to be a problem. It requires only that you be unable to demonstrate that they did not.
We believe in leads treated as the beginning of a search rather than its conclusion, and consolidated into a central intelligence base so that their value compounds instead of expiring with the raid. We believe in in-house employees working the leads, whose conduct is the provider's own liability.
A purchased tip is consumed by the raid it produces: the informant keeps what he knows, sells it again, and your programme starts from zero on the next case. The result is a series of isolated transactions, not a body of knowledge. An in-house investigation team works the other way. Every lead, test purchase, supplier link and seizure is recorded in a consolidated case-management and data-intelligence backbone. Each new investigation starts from everything the previous ones established: recurring actors, addresses, component suppliers and logistics routes, cross-referenced from one case to the next. Informants sell you information; an in-house team builds an information-based system, and the value of that experience compounds every year.
The obvious objection is budget: an in-house team looks more expensive than a fee per lead. In practice, the informant model is the one that inflates the cost of enforcement. A lead is not sold to one buyer. The same factory or warehouse is offered to several brands, or to several agents working for them, and its price rises with the number of bidders. You are competing with other rights holdersfor the same piece of information, and sometimes paying for a target that has already been shown to someone else.
The cost also recurs. The fee per lead stays visible; the cost per network actually dismantled is never calculated.
An in-house team reverses that equation. Its cost is fixed and spread across every case it handles, the intelligence it gathers is reused rather than repurchased, and the cost of reaching an upstream target falls as the case base grows. The right measure is not the price of a raid, but what it costs to put a supplier out of business.
• Who conducted the investigation behind this sighting report, and are they your employees?
• In case you are using an informant or a criminal referral, how can you ensure that your investigation is going upstream in the counterfeiting supply chain?
If the answers are uncomfortable, the difficulty is not the provider's integrity. It is that you are paying for a model designed for a market that closed several years ago.
Trademark Defender conducts offline IP enforcement in China with its own in-house team, authentication specialists and lawyers under a single structure. We are glad to look at how your current programme's targets are being generated.
Contact us: Bruno Grangier or Benjamin Dupuy d’Angeac
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