Washington DC – An unclassified government PowerPoint presentation documenting Chinese counterfeiting of Cisco routers has been published on the net.  The Federal Bureau of Investigation document was produced on January 11, 2008 and discusses how counterfeit routers, switches and interface cards make it inside of American companies and government organizations.

While contractors are supposed to use genuine Cisco parts, the low price of counterfeits – in some cases one-fifth the price of a genuine Cisco part – is just too irresistible to many companies.  The FBI says the government procurement process which uses layers of contractors and subcontractors adds to the problem.

The bureau says it has raided several companies around the nation which sold and installed counterfeit Cisco gear.  In many cases, the equipment can cause network failures because of shoddy wiring and workmanship, according to the FBI.  The power point presentation outlines several cases where the counterfeit networking gear caused duplicate MAC addresses and one case where a router caught fire because of a faulty power supply.

In addition to counterfeit gear being purchased through subcontractors, the FBI says Chinese gear is making its way to online auction sites like eBay.  Cash strapped companies needing Cisco gear will often purchase these components for their network closets.  Of course, shifty government contractors can also purchase the same gear and profit handsomely by charging full genuine Cisco prices.

You can view the PowerPoint presentation on AboveTopSecret.com here.

FBI accuracy

Apr 24, 2008 08:12     

Just how accurate do they think this report is? On the 5th slide of the presentation on abovetopsecret.com, they don't even know what cities they executed search warrants in. They have the map marked for Cincinnati but label it Columbus.
Nick B report abuse vote down vote up Votes: +2

Pay now, or pay later.

Apr 24, 2008 08:57     

But you will pay, if you actually want quality. This is not at all surprising. Of course, the fun part will be the next generation of Chinese knock-offs, which will be of much higher quality, still 'bout as cheap, and ignoring those pesky patent laws that are supposed to help those companies stupid enough to "invent" things. :p
Steve report abuse vote down vote up Votes: +4

No Surprise, Even funny!

Apr 24, 2008 11:15     

I'm not even surprised the contractors knowingly use the stuff. Anyone who can get away with it will do so. They make more money. Isn't that the American way? That's what they get for using contractors. Cisco probably makes the product in China where the workers steal all the designs and the knockoffs probably come out the same time as the originals. That's the price corporations like Cisco pay for getting sweatshop slave labor and then play little or no tarifs to import the stuff. Then they cry to the government to do something about it. I don't feel bad. Tell your stockholders to pay for the legal expenses. They're the ones who voted to move the manufacturing to China!

J. Doe report abuse vote down vote up Votes: +2

Money Waste

Apr 24, 2008 13:43     

What a ridiculous waste of tax payer money that it! Don't the FBI have better things to do?
Wired report abuse vote down vote up Votes: +1

Spy Chip

Apr 24, 2008 14:37     

Do those come with integrated Chinese spy chips as well, and GPS tracking? Make sure we put those in all the top secret locations. Smart work government(and contractors), way to sell out and put the the US at risk to save a couple bucks. Of course they could always buy the ones built in Russia instead. Those come with pre-loaded malware for gathering identity information for organized crime... lmao So many choices.... ;)

Da Man report abuse vote down vote up Votes: +3

outsource.

Apr 24, 2008 15:18     

that's the problem of outsource to china and outher asia countries. the factories workers/boss steals the design and make the same non-licensed product on the factory next door. electronics, clothers... That's why the japanese are now acting smart and does not let the high end electronic to be make in china so that there is no knock off.
ha report abuse vote down vote up Votes: +2

Re: No Surprise, Even funny!

Apr 24, 2008 16:07     

I agree. This is exactly what we get for the massive exodus of jobs and outsourcing that we've allowed in our country. They need to lower coporate tax rates so business don't see the US as one of the most expensive places to do business (2nd most expensive in the world). We make it easy for businesses to leave then wonder why they left. We practically give them no choice. As a senior network engineer with a well-known .com company, I can tell you that counterfeits are no joke. They threaten our ability to keep systems up and downtime low. Try calling in a fake serial number for an RMA to cisco during an outage and see what happens.

Fredo report abuse vote down vote up Votes: +2

Re: No Surprise, Even funny

Apr 25, 2008 00:58     

Business taxes are not really the problem. Outsourced manufacturing is all about cheap labor, cheap energy, no environmental concerns, no regulations to worry about, etc. Unfortunately, it's the legions of brain-dead, materialistic Americans demanding cheap Walmart crap that ultimately form the root of the problem. If Americans would demand that their money go to products manufactured in the United States or other similar countries that respect workers rights and respect the environment, then the chinese outsourcing would stop. American's should feel obligated to do so due to China's support of genocide, dictatorships, civil wars, human rights abuses, etc.

loosely_coupled report abuse vote down vote up Votes: +2

Now Your Starting to Get it!

May 05, 2008 13:45     

For all those who read this and like articles over the past 2-3 years are starting to understand how devastaing it was for large US manufacturers, such as Cisco, to move the manufacturing (and jobs) out of the US and into China. Cisco got cheap labor and lower manufacturing costs in return for a MASSIVE counterfeit problem, which, in the end will cost Cisco and other manufacturers more from the bottom line profits than they expected to gain. Compounding this issue is the fact that Cisco invested $17,000,000 to purchase a stake in the largest Asian online counterfeit proliferation site...which is ALIBABA.COM. Compunding that issue is the fact that Cisco refuses to assist secondary market resellers in detecting counterfeit equipment, even after numerous attempts by organizations such as UNEDA.COM requesting to work with Cisco on this problem. Its too bad that most Cisco stockholders are not as well informed as most of us in the industry....I sold my Cisco stock quite a while back.

The man behind the curtain report abuse vote down vote up Votes: +0

Combating Counterfeit Cisco

May 16, 2008 14:42     

A good way to guarantee that you do not purchase counterfeit equipment is to work with companies who are associated with organizations such as UNEDA. The United Network Equipment Dealer Association (UNEDA) is a worldwide alliance of more than 300 of the leading marketers of pre-owned networking equipment. Members represent the entire spectrum of the secondary market, from companies with hundreds of employees and millions of dollars in inventory to small, entrepreneurial organizations. Together their combined yearly buying clout exceeds $1 billion, representing the sale of millions of pieces of equipment to tens of thousands of customers. UNEDA members must adhere to a strict code of ethics that includes a firm policy against selling any equipment that is not legitimate.

John Stafford report abuse vote down vote up Votes: +0