Apple tapped Pfizer expertise to tackle Chinese fakes

Faced with widespread counterfeiting of its iPod and other products in China, Apple hired a number of Pfizer security specialists in 2008 that had prior success fighting the trade in fake Viagra, according to a document obtained by the WikiLeaks website.

The document provides some fascinating insight into the strategies employed by Pfizer as it tackled the trade in counterfeit Viagra (sildenafil) towards the end of the last decade.

The cable, sent to the US Embassy in Beijing, reveals that the technology giant did not even have its own global security team in place when it hired the Pfizer team - led by John Theriault - away from its former employer.

According to the leaked document, Apple appointed Pfizer's Don Shruhan to spearhead its anti-counterfeiting drive in China and other Asia-Pacific markets, who reportedly said he was "starting more or less from scratch at Apple." The company had not even registered its trademarks in China or Hing Kong when he took over, it says.

Shruhan had been at the forefront of Pfizer's battle to curb the production of fake Viagra tablets in China, which involved targeting retailers in the first instance, alongside China's local Administrations of Industry and Commerce (AICs), to "raise their costs and get counterfeits off the street."

The next stage was to work with the Chinese authorities to crack down on manufacturers and distributors, and finally turning the spotlight onto online vendors. A similar strategy was to have been pursued within Apple, according to the leaked cable.

Shruhan is also cited in the leaked cable as saying that in 2008 almost 100 per cent of Apple's iPod and iPhone's circulating in China were fake, and mostly made in unlicensed facilities, rather than by official subcontractors in a so-called 'third shift' scenario. The volume of fake Apple goods produced at the time was estimated to be enough to supply the entire world.

Interestingly, the cable suggests that Pfizer was able to mobilise support from the Chinese government at least in part thanks to the heparin scandal which broke in 2008, which emphasised the health and safety issues associated with counterfeiting.

A key consideration was that the company had to accept that the corporate security team would carry out 95 per cent of the work, while China's Public Security Bureau would claim 100 per cent of the credit.

The collaboration often worked well though, with one case leading to a pharmaceutical counterfeiter sentenced to 10 years and given a $250,000 fine.