Business Articles

Industry Watch - A Danger to the Hobby

The radio-control industry stands at a crossroads as cheap seconds, knockoff brands and counterfeit products make their way onto store shelves.

By Tim Kidwell
Published: September 14, 2010
A thriving gray market has emerged in the radio-control hobby industry. Its engine is the thirst for quick money. It's aided by slow patent approval and weak -- often blatantly ignored -- intellectual property laws. It's fueled by the consumer's near-Pavlovian response to low prices.

The rate of technological innovations in R/C is white hot, and as companies continue to push the boundaries of what's possible in electronics, batteries and motors, the new markets they create are tempting targets for foreign companies, especially those in China.

According to industry insiders, it's a simple thing for a manufacturer there to overrun parts or to send factory seconds or castoffs out the back door. They go to companies who distribute them into the U.S. for a fraction of the cost.

Those familiar with the situation report many of these offshore entities circumvent customs and import taxes, mainly by mislabelling shipments into the U.S.

Doing so is illegal, says Therese Randazzo, director of intellectual property rights and policy programs with U.S. Customs and Border Protection. "Depending on the facts of a particular case, the goods may be subject to seizure and/or the importer may be subject to penalties or criminal investigation," she said.

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