As we continue our work to clear the market of illicit vapor products, Juul Labs is pleased to announce that a major manufacturer and international distributor of counterfeit JUUL devices and pods has been shut down and prosecuted by federal authorities in China.
Following a lengthy investigation last year by Juul Labs’ Brand Protection Team into counterfeit operations in the region, the company identified Shenzhen Kang Erqiang Electronic Technology Co. as a large player in the illicit global trade of counterfeit JUUL products. We shared this information with Chinese law enforcement and supported their efforts to conduct raids of the business. Officials seized a total of 14,600 units of counterfeit JUUL products, including counterfeit JUULpods, devices, and packaging. A computer was also seized, which provided authorities with critical information regarding when the illicit operation was launched as well as a rough estimate of counterfeit sales.
Federal authorities in China determined that the counterfeit operation began sometime in 2018, and over a 16 month period, sold roughly $324,000 worth of counterfeit JUUL products. While these are the numbers Chinese authorities used in court during prosecution, actual sales could be far more significant. Officials in China secured a conviction of the factory operator, who confessed to his involvement, and sentenced him to 3 years and 4 months in prison, along with a fine of $163,487.
Counterfeit JUUL products are designed and marketed to mimic authentic JUUL products and are largely imported from China-based suppliers. In conjunction with U.S. and international law enforcement, Juul Labs has cooperated with authorities to help shut down numerous illicit manufacturing operations, each of which were capable of producing hundreds of thousands of counterfeited products a month.
It is imperative that we continue to partner across stakeholders, including law enforcement, to address the illicit market of vapor products. These black-market products present additional health and safety risks to adult consumers given that they often are produced in unsanitary conditions without manufacturing and quality controls and lack ingredient testing and product characterization. They also may contain harmful chemicals not present in other, authentic products.
Furthermore, sales of counterfeit vapor products undermine underage-prevention measures through ease of access. For example, counterfeit products are often sold through nontraditional retail channels, such as social sourcing and online with inadequate age-verification. In addition, investigations run by Juul Labs through its Mystery Shop program have shown that where retailers are willing to carry and sell illicit vapor products, they are often willing to ignore age-verification requirements.
While we continue to make great progress in the fight against international and domestic counterfeit operations, Juul Labs remains committed to using our global enforcement program to aggressively disrupt the illicit trade of vapor products and to create a more responsible marketplace for current adult users. As a leader in vapor technology, it is our obligation to support enforcement against illicit and illegal products as we strive to reset the vapor category and earn a license to operate in society.