Chinese hackers get the drop on fashion houses

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ROME -- Organized teams of Chinese hackers are breaking into the computers of Western companies to steal fashion ideas and counterfeit them before the genuine articles can hit the streets, Italy's domestic intelligence service reports.

"Platoons of seasoned, unscrupulous cyber pirates, crackers and hackers of every kind ... make up an exponentially growing and unstoppable army," says a report made public in Gnosis, a magazine published by Italy's SISDE counterintelligence agency.

As much as 20 percent of Internet viruses and "spam" messages that jam e-mails around the world originate in China, the article claims. It says Chinese mobsters profit most from pornography -- including sites that sell videos for pedophiles and traffic in date-rape drugs, heroin and counterfeit medicines.

A spokesman at the Chinese Embassy in Washington dismissed the "sensational" SISDE report as "irresponsible" and driven by "ulterior motives."

"The Chinese government expresses strong dissatisfaction and firm opposition to it," spokesman Chu Maoming said.

Paola Pisa, fashion reporter for the Rome daily Il Messaggero, said the report deserves close attention from top Italian fashion houses such as Fendi, Gucci and Prada, whose accessory designs frequently are copied illicitly.

"There already are many copies on the market all over the streets of Rome, and they often look very good," she said in an interview.

"Street sellers offer what seems like a Gucci purse for 5 euros [$7]. Counterfeiting already is an enormous problem, and if fashion houses' computers are now at risk, they must take countermeasures to protect themselves."

SISDE's alarm has been echoed by reports from the China desk of Italy's special anti-Mafia investigative directorate and professionals working in the office of the national anti-Mafia prosecutor, Judge Pietro Grasso, intelligence sources say.

The report in the current edition of Gnosis -- the first to be edited by SISDE's new director, Franco Gabrielli -- is the most detailed, describing a "Chinese boom" in Internet crime.

"Once upon a time, the Chinese came to the West to photograph the windows of shoe stores or fashion boutiques to copy the products. Today, instead, they steal projects directly from the servers of producing firms so that they can put counterfeit products on the market before they are distributed commercially," it says.

"On the Internet the Chinese sell everything, from human organs to poisonous medicines. They traffic in weapons, drugs, gambling and so on. ... Chinese cyberspace is fueling a massive amount of criminal business."

Miss Pisa, a veteran observer of the European fashion world, said she expects the Chinese hackers would target designers from other countries as well as Italy.

In her view, fashion houses have invited criminals' attention because of high prices for the real articles, placing them out of reach for ordinary consumers.

"[Louis] Vuitton is already the most copied house in the world," Miss Pisa said. "I would expect the French fashion houses in competition with our Italian companies likely will be targeted by the Chinese as well.

"Of course Italy needs to take steps to neutralize the hackers. But some of the companies have encouraged copying by charging as much 1,500 euros [$1,800] for a simple bag or a scarf. What is happening is not quite poetic justice but almost," she said.