Pssst... Wanna Buy Some Clubs? Golfers spend millions a year on counterfeits and knockoffs. To find out how this burgeoning industry works, we went right to the source: southern China

May 25, 2003

The trap, months in the planning, had been laid. The quarry, a
beautiful Chinese businesswoman named Lily Wan, had taken the
bait. The sting, code-named Operation Tiger Lily, a joint venture
of Callaway Golf investigators and the Orange County (Fla.)
sheriff's office, was about to take place.

The site chosen for the meeting was symbolic of how brazen the
sellers of counterfeit golf clubs had become. It was the lobby
of the Rosen Centre Hotel in Orlando, host city of the biggest,
most prestigious golf show in the world. Large and small
clubmakers, component dealers, importers, distributors,
wholesalers and retailers, not to mention journalists and club
pros, congregate at the PGA Merchandise Show every January to
admire, sample and network, trying to get a handle on the Next
Big Thing. This year they also commiserated. The boom times are
over in the golf business. The low fruit has been picked from
the boughs.

Except in Lily Wan's end of the business. Counterfeiting has been
on the rise for about a decade, ever since U.S. golf companies
began subcontracting club production to China. Of the major
manufacturers, only Ping still makes most of its clubs in the
U.S. The other big brands--Callaway, TaylorMade, Titleist,
Cleveland, Nike, Adams, Cobra--make most of their clubheads in
China, in an area just north of Hong Kong called the Pearl River
Delta, where the combination of cheap skilled labor and technical
expertise has created manufacturing's Perfect Storm.

"It's a no-brainer to be there," says Chip Brewer, CEO of Adams
Golf. "The Chinese produce golf clubs of consistently high
quality at unbeatable costs. They are very good capitalists,
creative and hardworking. But that same entrepreneurial spirit
also creates other issues."

Issues like theft of intellectual property. "Where you have
legitimate manufacturing in China, you will always have problems
with counterfeiting," says David Fernyhough, a former Hong Kong
police officer who is a director of the private investigation
firm Hill & Associates. "It's worse now than it's ever been."

Counterfeiting is so ingrained in the Chinese business culture
that the perpetrators seldom feel they're doing anything wrong.
They make and sell products--CDs, clothing, toys, electronics,
golf clubs--more cheaply than the brand-name guys, offering
consumers a comparable product at a lower cost. What's wrong with
that? Plenty, according to the U.S. companies that spend millions
in research and development to design the products being copied.
For starters, Article I of the U.S. Constitution gives inventors
exclusive rights to their "discoveries."

Lily Wan was a new name in a game with endlessly rotating
players. A private investigator in the United Kingdom suspected
Wan's firm, Hong Kong Cedar International Investment, Ltd., of
shipping counterfeit Callaways to Europe and informed the club
manufacturer. So when the sleuth learned that Wan would attend
the PGA Show, Callaway's security director, Stu Herrington, began
plotting with the investigator's company, Intellekt, to shut her
down.

Intellekt set up a dummy corporation, Servitrade, Inc., which
purported to represent 400 sporting-goods stores in the U.S. and
Canada. Then Herrington enlisted the help of detective Ray Wood
of the Orange County sheriff's office, who posed as a Servitrade
executive. They contacted Wan to say they were interested in
placing an order. They'd be in Orlando for the show and wanted to
see some of her products. She promised to meet them on Saturday
night.

She arrived looking like a Bond vixen: 5'2", 105 pounds, stylish
and attractive in her dark tailored suit. She exchanged business
cards with Herrington and Wood, and after brief pleasantries she
laid counterfeits of a Callaway ERC II driver, a Great Big Bertha
II and a Steelhead X-16 iron on a coffee table, in plain view of
anyone strolling past. The men examined the copies carefully. "In
China everyone knows they are not real," Wan said.

"The Great Big Bertha was a very, very impressive copy," says
Herrington, who has been tracking down the Lily Wans of the
world for Callaway for the past five years. "She gave us a price
of $33 a head, delivered, or $32 with a volume discount." A
generic graphite shaft might cost an additional $6; a grip, 50
cents. Total outlay: $38.50 for a first-rate copy of a club that
retails for $499. Wan even volunteered to blacken the soles of
the clubs with water-soluble paint to hide the Callaway
trademark. Servitrade could simply rinse off the paint once the
clubs cleared customs. She also asked about the best routes to
smuggle the clubs into the country.

While Herrington is loath to reveal specifics of the
conversation, he and Wan discussed the fact that many golf club
counterfeiters fly their shipments to Vancouver or Toronto, then
truck them into the U.S. Another method, according to U.S.
Customs officials, is transshipping: sending the merchandise
first to a country not associated with counterfeit golf
clubs--say, the Netherlands--thus avoiding the red flag that cargo
from Taiwan or China might raise. Counterfeiters also smuggle
club components in containers filled with legal goods, such as
ceramics or auto parts. Or they simply list their cargo as
something else on the shipping bill, playing the odds that it
will get through amid the mass of foreign goods flooding U.S.
docks. Six thousand containers a day are shipped to the U.S. from
Hong Kong, according to U.S. Customs, and only 2% are physically
inspected.

After an hour or so of such banter, Herrington and Wood
identified themselves to Wan. "She insisted she'd done nothing
wrong," Herrington recalls. "When we asked her where the clubs
were made, she claimed she didn't know. She said some Chinese man
named Joe had come up to her with the stuff on the streets of
Hong Kong." Herrington confiscated the samples, and Wood
delivered a stern lecture to the distraught Wan on the penalties
she could face. In the end, though, he let her go, and she
bolted. Although trafficking in counterfeit goods is a felony,
"it's difficult if not impossible now to prosecute," says Wood,
because so much attention is focused on combating terrorism. Two
years ago Wan might have been put behind bars. Today, Wood notes,
"U.S. law enforcement has bigger fish to fry." Still, from
Herrington's point of view the sting was a success. "We really
scared her," he says. "She's never coming back here."

Others are, though. "Now that so much legitimate business has
moved to China, the counterfeit market can't be stopped," says
Ken Gaul, the U.S. Customs agent who spearheaded Project Teed
Off, which resulted in 14 indictments and the seizure of $6
million worth of counterfeit golf merchandise in 1999. "At this
year's show in Orlando, I saw an Asian man taking pictures of a
golf club from several angles. Everyone knew what he was doing."

Those photographs, industry experts say, could have been
digitally transmitted to a tooling factory in China, converted
into three-dimensional form by means of a computer program and
used to create a copper master of a head that could be ready for
mass production in two weeks. "It takes us over a year to design
a new club, using sophisticated computer programs that require
the expertise of very experienced engineers," says Barney Adams,
founder and chairman of Adams Golf. "If the club's a success,
copies are on the market in 60 days. It's reprehensible. To get
into the copying business, all you need is to take a couple of
drivers and irons you like, fly to Hong Kong, and voila, you
could be in the knockoff business tomorrow."

How much all this costs the golf industry is difficult to gauge.
According to the National Golf Foundation, U.S. consumers spent
$2.8 billion last year on golf clubs, some 70% of which came from
China. If only 10% of those sales involved illegal knockoffs and
counterfeits--some experts believe that figure might be
higher--that would amount to $196 million.

Jethro Liou is an expert in the knockoff business. A boyish
25-year-old Californian, he has been selling golf clubs since he
was 15. After school he would make cold calls for his father,
Ren-Jei (R.J.) Liou, asking pro shops and discount stores if they
wanted to order from his line of clubs. R.J. owned Kent Graphtec,
an importer of club components from Taiwan and, later, China.
He'd have the components assembled at his warehouse outside of
Los Angeles and would distribute them to retailers all over the
U.S. "The golf business was so good between 1991 and '97, you
could sell anything," Jethro says. "We were one of the first
companies to import from China."

Kent Graphtec dealt primarily in knockoff clubs, products with
names such as King Snake and Big Bursar--simulations of the
popular clubs King Cobra and Big Bertha. "The customs people
thought my father was [the primary distributor of] King Snake,
which in its heyday had something like 10 percent of the market,"
Jethro says, "but a lot of people were importing that product."

A lot of people eventually got in trouble for it too. "There are
different levels of counterfeiting," says Debra Peterson, a U.S.
Customs official who was involved in Project Teed Off. There is
the direct counterfeit, which is a dead-on copy that carries the
legitimate product's trademark, and that's illegal. Also illegal
is a club that is very close to a direct copy and is termed
either "confusingly similar" (if it infringes on company
trademarks) or "substantially similar" (if it infringes on design
patents). What is legal is the generic look-alike that does not
infringe on a company's trademarks or patents. Some features of a
driver--its head size, for instance--cannot be protected, while
others can. But with confusingly or substantially similar
knockoffs, the line between legality and patent or trademark
infringement is often fuzzy and is subject to legal challenge and
interpretation. A counterfeiter tries to alter a company's
protected features just enough to avoid prosecution. Whether the
result is illegal can be established only in court, on a
case-by-case basis; in other words, the aggrieved company has to
sue.

Callaway threatened to sue Kent Graphtec over its Big Bursar
driver, alleging patent, trademark and trade dress (trademark
design) infringement. In 1997 R.J. Liou reached a settlement with
Callaway. Four years later, in March 2001, the U.S. District
Court in Los Angeles ruled that R.J. Liou, Kent Graphtec and
Trophy Sports--a separate company started by Jethro and his
mother, Yeh-Chyn, in late 2000--had breached the settlement by
continuing to sell Big Bursars. The court ordered the defendants
to pay $20,000 in damages to Callaway and to turn over their
inventory of more than 11,500 infringing components for Callaway
to destroy. According to Jethro, the family's legal fees for the
discovery phase alone came to more than $1 million.

By then, Jethro's parents had divorced, and Jethro had fallen out
with his father. Kent Graphtec officially went out of business,
though R.J. is now back in business on his own, according to
Jethro.

The market for knockoff clubs, meanwhile, remains huge and
lucrative, and Trophy Sports is a major player in it. Trophy's
Integra line offers look-alikes of several major clubs. In
February, TaylorMade sent Trophy a cease-and-desist letter
alleging design patent infringement, and Trophy agreed to stop
importing and selling the Integra Bomber 880 driver, a knockoff
of TaylorMade's Burner 420. Jethro Liou says he spends $10,000 a
month on lawyers' fees. Lawsuits are just part of the cost of
doing business.

Liou also represents a dozen clubmakers, importing for a long
list of Internet dealers and discount retailers, including Kmart.
All told, Liou says, he sells a million golf clubs a year--roughly
equivalent to TaylorMade, which sold 89,282 clubs in March. And
recently Liou bought a Mexican foundry, Cast Alloys, which he is
disassembling and relocating to China.

A graduate of Cal-Berkeley, Liou is fluent in Mandarin--one of the
two major dialects in southern China--and Taiwanese. A recent
three-day swing with him through the Pearl River Delta provided a
rare look inside China's burgeoning golf industry.

Liou flew into Hong Kong on Feb. 6, during the Chinese New Year
celebrations, and from the airport he took a bus to Dongguan, an
hour and a half to the north. Dongguan is one of China's
industrial meccas, a city of 1.4 million people where private
enterprise flourishes. Workers flock there from poor farms in
central China, providing cheap labor for manufacturers that have
relocated to Dongguan from Hong Kong, Taiwan, Japan and the U.S.
The bus passed miles and miles of factories, many operating 24
hours a day to satisfy the appetites of Western consumers.

One of the factories was the Unimold Manufacturing Co., Ltd.,
which sent a car to meet Liou's bus. Unimold is a tooling
factory, the first stop in golf club construction after the club
is designed. According to Rob Duncanson, an attorney for several
brands, including Titleist, Cobra and TaylorMade, the tooling
factory is also where the manufacture of counterfeits begins.
"The R&D department of a company in California comes up with a
new design for a club and must transfer that proprietary
information to the vendor," Duncanson says. "The company doesn't
own the vendor. It has a contractual relationship with him. The
company says it will pay X dollars to turn this design into a
master, from which a tool will be made. The tool is used to
mass-produce the clubhead. The problem is, there's no control
over the proprietary design when it gets to China. There's a six-
to eight-week period during which they develop the master and
send samples back and forth for approval, and things can happen."

Unimold, which has been in Dongguan for five years, employs 60
workers. They work 12-hour days, seven days a week, and are paid
about $100 a month, plus room and board, according to the
manager, Hu Gui Dong. During Liou's 45-minute visit, Unimold's
workers were hand-tooling masters for a set of Tommy Armour irons
and a Mizuno driver. On an open shelf on the wall were copper
molds for some of Unimold's other customers, including Dunlop,
Spalding, TaylorMade and Adams. Unimold charges $1,200 for a
copper master of a driver. This is the intellectual property of
the company that designed the club, but in this tooling factory
there are no security guards, no surveillance cameras and no
metal detectors to prevent a worker from lifting a copper master.
On the street, Liou estimates, a finished copper master of a
brand-name club might fetch $10,000--more money than any of these
workers could expect to see in a lifetime.

That afternoon Liou made a call on one of his biggest vendors,
Unitech Golf Co., Ltd., a casting company on the outskirts of
Dongguan. It's a medium-sized operation by China's standards,
employing 200 people and cranking out 100,000 to 130,000
clubheads a month for 10 to 20 little-known companies, such as
Akia, Echelon, Pax and Velocity. This may be Knockoff Central,
but the care that goes into the construction of each clubhead is
mind-boggling. There are 200 steps involved between the tooling
and the shipping of a head. The wax has to be mixed, injected,
cooled and trimmed; the casts have to be scraped, welded and
polished; the heads have to be taped, painted, stacked and
inspected. Fifty to 60 workers touch every clubhead as it is
made--a clubhead that at the end of the day might be sold to Liou
for $4 or $5. There are no paid vacations or sick days, no
worker's compensation or maternity leave. And if orders fall off,
the owner can let a worker go with one day's notice. Modern
Communist China, it turns out, is a 19th-century industrial
capitalist's dream.

Five years ago, said Jimy Wang, the owner of Unitech, the land
around his factory was farmland. This area is called Tangxia, and
it is home to 20 factories that make both legitimate and illegal
clubs. Since February 2002 the population of Tangxia has doubled,
to 400,000. Security measures are much more elaborate at Unitech
than they are at the Unimold tooling factory. The front gate is
locked and manned by armed guards. There are five security
officers among the company's 200 employees, not to mention
surveillance cameras overlooking the factory floor. Still, Wang
admitted, no security system is foolproof. Wax molds have a way
of vanishing out the backdoor. "Every factory experiences theft,"
he said.

Wang, dressed stylishly in a black designer T-shirt, black pants
and a belt with a gold buckle, is relatively new to the golf
business. His capital came from his other line of work: a karaoke
bar that he owns in Dongguan. Karaoke bars in China, as in the
States, have microphones and music, but many of them also provide
customers with prostitutes. (Wang insists that his bar does not.)

Another line of capital for some illegal club manufacturers may
come from Chinese triads, or crime syndicates, which have long
been suspected of using some foundries to launder money from
prostitution, drugs and gambling operations. "They are involved,
guaranteed," says Fernyhough, the private investigator who spent
14 years working for the Hong Kong police pursuing the Chinese
mafia. "Golf clubs are a high-markup item, and anything that has
a high margin in it, they will be into."

Xiamen, a city of 655,000 people on the South China Sea, is across
the Formosa Strait from Taiwan. Its port is the 10th largest in
the world in terms of volume of goods shipped to the U.S., and
many Taiwanese businesses have moved there since mainland China
opened itself to foreign investment. Many of those businesses are
golf-related. "Ten years ago 70 to 80 percent of the counterfeits
and illegal knockoffs were made in Taiwan, and only 20 to 25
percent in China," says Callaway's Herrington. "But since 1992 or
'93, when the Taiwanese government began to enforce intellectual
property laws, and Taiwanese labor costs rose in relation to
China's, those percentages have flip-flopped. Now 70 to 80
percent of the counterfeits come from China, financed by
Taiwanese investors."

Theft of intellectual property is illegal in China, but its
prosecution is selective. A counterfeiter might be arrested after
failing to pay off a government official or after a U.S. company
protests so vehemently that an example must be made. And if
convicted, the worst punishment a counterfeiter suffers is a
modest fine.

Yarn-Way Enterprise Co. is one of the companies that relocated to
Xiamen from Taiwan. Yarn-Way makes graphite shafts, producing
some 450,000 a month, and Liou is one of its most valued
customers. Liou flew to Xiamen on his second morning in China,
and Yarn-Way sent a car to meet him at the airport. He gave Andy
Zhu, the sales representative who handles his account, a long
triangular cardboard box he had carried all the way from the
States. Inside was a TaylorMade wedge. Within minutes a graphics
designer at Yarn-Way had downloaded the logo from the TaylorMade
shaft onto a computer screen and was making minor design and
color alterations to it. He incorporated the word Integra into
the logo and then submitted it to Liou for approval. The altered
logo would be applied to the graphite shafts Yarn-Way was making
for Liou's Integra line. "All you have to do is make a few
changes to keep anyone from suing you," Zhu said of equipment
that walks the fine line between what's legal and what's not.

In the afternoon Liou visited another of his vendors, the
Aetenshun Casting house, where Ram, Tommy Armour, Hippo, Dunlop,
Maxfli and Integra clubheads are made. The factory is far out in
farm country, where bicyclists laden with boxes of vegetables
pedal incongruously past Aetenshun's guarded iron gate. Along one
wall of the factory's formal conference room was a display case
of the dozens of clubheads made by Aetenshun. As Liou surveyed
them, he picked out two TaylorMade driver heads, casually
identifying them as counterfeits. The manager of the factory
feigned disbelief until Liou pointed out an imperfection in the
lettering and noted the hollow sound emitted from the head when
he pinged it. The manager, recovering, said that now he
remembered. Those two TaylorMade heads had been a gift. He
couldn't remember who'd brought them.

"The company that really should have its antennae up now is
Nike," Liou said later. "It's a hot brand with an expensive
product, and it's new to the business."

Mike Kelly, the business director for Nike Golf, says one of the
steps the company has taken to discourage counterfeiters is to
put ultraviolet markings on its shafts, so U.S. customs
inspectors can identify them as legitimate with the wave of a
black-light wand. Serial numbers are engraved on the hosels too,
and according to Kelly, Nike plans to put a serial-number
checking system on its website.

Such a system would certainly have helped Scott Fong, a computer
engineer in Rocklin, Calif., who logged onto eBay last summer and
purchased what was described as a set of new Callaway X-14 irons.
His winning bid? A hefty $725, for clubs that would have cost
$1,040 at retail. When the irons arrived, they were in their
original packaging, individually wrapped. But Fong, a 16
handicapper, noticed some slight imperfections in the callaway
lettering. Worried, he took the irons to the practice range and
discovered that he had more trouble than usual hitting them
straight. When he compared them with Callaway demos at the
clubhouse, he found that his clubheads were slightly larger than
the demos'. He contacted Callaway, which put Stu Herrington on
the case.

Fong sent Herrington the clubs he'd bought, and Herrington
confirmed that they were counterfeits. The seller, who was from
Toronto, was eventually raided by Canadian police, and his eBay
auction was shut down. But how many other buyers had he
hoodwinked? And what about the dozens of other eBay sellers who
peddle illegal knockoffs? "We took down 618 Internet auctions in
2002 and 60 in the first six weeks of 2003," says Ken Parker,
corporate counsel for Callaway. "Not a day goes by that we don't
deal with it."

All of which has raised the cost of legal clubs. Who's the victim
of counterfeiting? The legitimate manufacturer and, of course,
the consumer. "Our product development group spends one third of
its time studying other patents and establishing and enforcing
our own patents worldwide," Nike's Kelly says. "Plus, we
constantly monitor the Internet. Then there's the cost of adding
the serial numbers and ultraviolet codes and of establishing a
serial-number checking system. All that gets passed on to the
consumer."

Why, then, do all those U.S. clubmakers continue to use Chinese
foundries, whose track record in protecting intellectual property
rights is so horrendous? "If we didn't, your $400 driver would
cost $1,000," says Barney Adams. "Making a golf club is still
very labor intensive. We understand the risks of doing business
over there. We do the best we can to minimize them, and we move
on."

One of the most significant breakthroughs in golf club production
in recent years has been the use of titanium, notably in drivers.
Titanium is stronger and lighter than steel, enabling
manufacturers to make ever larger clubheads with ever bigger
sweet spots that propel the ball ever farther. Most of the
titanium in golf clubs comes from Russia or northern China, and
most of the foundries that work with it are in or near Guangzhou.

Only a two-hour drive or 90-minute ferry ride from Hong Kong,
Guangzhou is a city of 3.8 million people and about 100 golf
manufacturers, if you count the makers of accessories such as
bags and shoes. But only seven foundries in the city work with
titanium, which requires a significant investment in specialized
equipment.

One of these foundries is Maxwin Golf. Its owner, David Chiang,
is Taiwanese. He moved to Guangzhou in 1989, becoming the second
golf manufacturer in the city. Between 1991 and 1997, he made
good money. Since then, business has been spotty. Many
deep-pocketed, publicly traded companies from Taiwan have moved
to this part of China, and competition has been fierce.
Fortunately, Chiang said, he started a karaoke club on the side,
where, with 60 girls, profits are more reliable.

Chiang, wearing a counterfeit Versace jacket with Adidas buttons,
conducted a tour of his factory for Liou but said the third floor
of his plant was, unfortunately, off-limits. Something that no
one was allowed to see was going on there. Outside, firecrackers
were popping, salutations to the Year of the Ram. Inside, all
that could be heard was the rhythmic booming of a machine that
stamped sheets of titanium into silvery cutouts that would be
used for the faces of drivers.

"Any company that makes things in China will experience theft,"
Chiang said. "Employees make so little money, they're always
going to steal and sell molds on the open market. In Guangzhou
alone there are three factories that do nothing but make
counterfeits and copies. We have our employees line up after
work, and we search them. We have metal detectors at both of our
entrances and security cameras at all the work stations. If
they're caught stealing, they're fired, and I'll call the police.
But it won't ever stop. The copy and counterfeit market is too
large."

Callaway was so concerned about security at the Fu Sheng company,
its main manufacturer in China, that it sent Herrington there
three times in 2002. He offered a bonus equivalent to a year's
salary to anyone who turned in a coworker for theft. He also made
sure that Callaway clubs were manufactured in their own building,
separate from the building that made Nike's clubs. Despite these
and other safeguards, wax molds of the newest, hottest clubs
still disappear. "We cannot guarantee 100 percent against theft,"
said Fu Sheng's president, P.Z. Lin.

"That's a joke," says Midi Liu, laughing at the notion of any
guarantee. Liu, a Taiwanese, was one of those arrested in Project
Teed Off in 1999. After spending four months incarcerated in the
U.S., he was deported and now lives in Taipei. Liu still exports
Chinese-built clubs and components, but to South Korea.
"Sometimes a security guard cooperates [with thieves]," Liu says.
"I could get 300 Nike heads this week. I could get Titleist. The
Chinese government has said it's cracking down on counterfeiters
because of pressure from the U.S. government. But they look with
one eye. China just wants to make money."

When Callaway learned that a foundry in Guangzhou, Shunde Jackson
Precision Industries Corp., was wrongly representing itself to
customers as an authorized Callaway manufacturer, Herrington
began an investigation. It's a frustrating endeavor. "We're
running a big investigation there, and it's pretty unsatisfying,"
Herrington says. "I can spend $100,000, invest three to six
months hiring investigators in China to follow trucks and gather
evidence of wrongdoing. We file an affidavit with the Chinese
anticounterfeiting authorities and stage a raid. But the
counterfeiters are back in business within a week. The fines and
forfeitures are minimal. They're happy to pay the fines as a cost
of doing business."

So, for the first time in a decade, there are rumors that some
U.S. companies are rethinking their involvement in China.
Callaway is believed by some of its competitors to be considering
a move back to Mexico, a rumor that Callaway's senior vice
president of global press and public relations, Larry Dorman,
doesn't dismiss out of hand. "We continue to explore
relationships with other vendors, but that decision will be made
on the basis of quality and price, not security," he says.
"Wherever your vendors are located, there are issues with
intellectual-property theft. Proximity does not mean better
security."

Others have simply thrown up their hands. "When it finally dawned
on me what the culture was over there," says Barney Adams, whose
company will continue to make its clubs in China, "I realized we
were never going to win this war. Most golf companies are losing
their asses right now. One of the fallacies about golf is that
we're an industry. We're so busy trying to cut one another's
throats, we don't cooperate. Callaway wouldn't dream of working
with TaylorMade. If we pooled our knowledge and resources, we'd
have a lot better chance of fighting [counterfeiters]."

The final stop on Jethro Liou's three-day tour of his vendors'
facilities was Deson Golf Sport Co. Ltd. in Shunde, a suburb of
Guangzhou. This factory, too, works with titanium. It had 13
tons of it stacked in a locked storage room. One hundred sixty
people work at the plant, which is clean, modern and well-lit,
churning out 40,000 heads a month for Pinseeker, Knight, Ram,
Dunlop, Pro Select and other companies. About 500 models of
clubheads are on display, there for a client's inspection.

Liou stopped during the factory tour and lingered over one
clubhead. It was the mold for something called a Power 420. The
model that Liou sells to Kmart is called the Super 420, which is
also made at the Deson factory. The lettering, size and scoring
on both club faces were identical. Liou called over the president
of Deson, a man named Su Hiao, and in a moment rich with irony,
complained that the Power 420 appeared to be a direct knockoff
of, and confusingly similar to, the Super 420 (which is a
knockoff of TaylorMade's 300 Series drivers). Liou had planned to
order as many as 30,000 Super 420s every two months to keep Kmart
supplied. Why would Hiao risk losing that?

Smoothly, with elan, Hiao dismissed the Power 420 as a
one-of-a-kind sample. He couldn't remember why it had been made
or what it was doing there. He'd be sure to find out, after he
finished with the tour.

Asked if he thought the golf industry in China would ever
consolidate, Hiao smiled and shook his head. "If one factory is
taken over, another one will be born," he said. "Everyone in
China wants to work for himself, to be an entrepreneur. Workers
save their money, pool their resources, buy a polishing machine,
and all of a sudden you have a new factory." In the past four
years two of Hiao's managers had left to start finishing
factories.

Could his factory, he was asked, put a logo--any logo--on a golf
club? Say, a Sports Illustrated logo? "Absolutely," he replied.
"We can do almost anything here."

COLOR PHOTO ILLUSTRATION: PHOTO ILLUSTRATION BY MATT MAHURIN COLOR MAP: MAP BY JEFF FERZOCO BILK ROAD From factories in China (inset), knockoffs are smuggled to the U.S. through Hong Kong, Europe and Canada. TWO COLOR PHOTOS: DAVID N. BERKWITZ THE REAL THING LOOK HARD The names and logos of these clubs aren't identical, but they might be close enough to confuse buyers. TWO COLOR PHOTOS: DAVID N. BERKWITZ THE KNOCKOFF [See caption above] COLOR PHOTO: E.M. SWIFT DANGER ZONE This Unimold factory produces clubhead masters, which, if stolen, could be used to make clones. TWO COLOR PHOTOS: DAVID N. BERKWITZ COLOR PHOTO: E.M. SWIFT HOT COMMODITY Wax clubhead molds such as these at a Guangzhou factory are all counterfeiters need to start their work.

CAN YOU TELL THE DIFFERENCE?

The Callaway Steelhead X-14 irons were among the best-selling--and
most often counterfeited--clubs ever. The five-iron on the right
is the genuine article. The one on the left is a counterfeit
purchased on eBay. Some of the differences cannot be seen (the
counterfeit, for example, is 11 grams heavier), but someone with
a sharp eye can spot these giveaway characteristics.

TOO BIG
The clubhead on this fake is about a quarter inch taller than the
real thing.

BAD GRAPHICS
The words on the medallion are in the wrong font, and the outline
of the medallion is too small.

TOO LONG
The hosel of the fake is about a quarter inch longer than the one
on the real X-14.

"It takes us over a year to design a new club," says Barney
Adams. "Copies are on the market in 60 days. IT'S REPREHENSIBLE."

Whether a knockoff is illegal can be established only in court,
on a case-by-case basis; in other words, the aggrieved company
HAS TO SUE.

Why do U.S. clubmakers still use Chinese foundries? "If we
didn't," says Adams, "YOUR $400 DRIVER WOULD COST $1,000."

HOLE YARDS PAR R1 R2 R3 R4
OUT
HOLE YARDS PAR R1 R2 R3 R4
IN
Eagle (-2)
Birdie (-1)
Bogey (+1)
Double Bogey (+2)