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Annual Counterfeit Crab Harvest Underway in China

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Last November, MV contributor Keith Fitz-gerald offered a take on the strength of the Chinese consumer economy based on a rather interesting metric: hairy crab prices.

"As consumerism continues to supplant exports as an engine of growth in China," wrote Fitz-Gerald, "market watchers look high and low for the best gauges of the country's outlook for growth. My two decades of work in Asia has steered me toward some surprising -- and surprisingly accurate -- economic indicators. Hairy crabs is one example."

"When China's feeling pinched, hairy crab sales drop and prices plummet," he explained. "At the moment, they're up 30% from last year to a staggering 680-700 yuan per kilo (roughly $105) or more, which suggests just the opposite. Record prices, to be sure, point to prosperity."

So, what to make of the fake hairy crabs that flood the market each fall, indicating demand while simultaneously pushing prices lower, as one vendor complained to NPR's Frank Langfitt:

"Everything is being counterfeited," a "crab fisherwoman with the surname of Xing, who sells crabs by the side of Yangcheng Lake in the city of Suzhou," said. "There's nothing you can do about it. And you can't control it...The price for our Yangcheng Lake crabs could have been higher, but the fakes ones keep the price the down."

Langfitt reports that the "market in counterfeit Yangcheng hairy crabs is 10 times the market in real ones, according to the Yangcheng Lake Hairy Crab Association," and describes the effort to dismantle the trade in fake crabs as "a Sisyphean task."

One "unidentified hairy crab retailer" who spoke to Shenzhen Daily said, “All the so-called Yangcheng Lake hairy crabs in Shenzhen were from Anhui Province. These were put into the lake temporarily before being sold.”

However, Taiwan's Want China Times reveals how nebulous the definition of an authentic Yangcheng Lake hairy crab can be. If a transplanted crab calls Yangcheng Lake home for at least six months, it can be sold as a genuine Yangcheng Lake crab.

Real Yangcheng Lake crabs are now being tagged with individual serial numbers, which would, in theory, guarantee a hairy crab's provenance.

Naturally, the labels can be found online for about 1 yuan, or 15 cents, each.

Alas, hairy crab retailers argue that they "offer this service” to people who want to give the crabs "as gifts."
POSITION:  No positions in stocks mentioned.