LI guitar string maker decries China counterfeiting

Lots of Long Island companies do business in China, and lots of Island business people say they find the experience challenging because of cultural differences and exchange rates.

The latest to voice an opinion is Jim D'Addario, chief executive of Farmingdale-based D'Addario & Co., a manufacturer of guitar strings. D'Addario is to testify in Washington, D.C., Wednesday before the U.S. International Trade Commission, saying that counterfeiting of his company's strings in China is "rampant."

The ITC has begun investigations into the effect on the U.S. economy and U.S. jobs of intellectual property rights infringement in China. The investigations were requested by the Senate Finance Committee, which said in its requesting letter that, "Despite widespread evidence of the harm to U.S. industries, authors, and artists resulting from [intellectual property rights] infringement in China, the U.S. government has not conducted a comprehensive economic analysis of China's ineffective IPR protection."

D'Addario, who traces the roots of his company back to the late 17th century in Salle, Italy, will tell the commission a long tale of woe, including how a Korean competitor illegally used D'Addario's name and trademark to sell D'Addario strings in China.

"According to our research, seven out of 10 sets of strings present within Chinese music stores that are labeled/advertised as D'Addario strings are fakes," D'Addario will tell the ITC. "The quality of the counterfeit strings is horrendous, ruins our brand equity and prevents us from not only obtaining our fare share of the Chinese domestic market but also from increasing our market share in other foreign countries."

D'Addario is a large family-owned company, with about $120 million in sales annually and about 1,000 U.S. employees, including 800 on Long Island. It has a 110,000-square-foot facility in Farmingdale. About 90 percent of D'Addario's manufacturing is in the United States; about 10 percent is in China.

D'Addario will tell the ITC that China tacitly accepts "predatory behavior" by counterfeiters, adding that only 58 criminal matters were begun from 18,793 anti-counterfeiting cases initiated in 2007.

Aside from counterfeiting, D'Addario said his company has suffered under a 17.5 percent tariff imposed on its products exported there.

D'Addario says he is "optimistic" that his testimony will be used "to level the playing field for American companies" in China.

In an interview, he said that despite the difficulties, doing business in China is worth the effort. "There's 1.3 billion people there," D'Addario said. "At some point in time, it's going to be a viable market."

ITC spokeswoman Peg O'Laughlin said two reports will be delivered to the Senate, the first due in November.