The plastic casing if probably from a commodity supplier, who doesn't know or care what the buyer uses it for. The labels and manuel, likewise. The engineer, manufacturer, and distributer could be one hacker, a few mates flashing the drives, and a couple of drivers.
As for the retailers, building managers, and government, it's likely that you bought it in a tourist shopping area, probably near a long-distance railway station or a tourist attraction. Tourists (generally Chinese tourists from other cities) who shop in those places get ripped off, and nobody notices, because they never complain. They just fly home, and curse themselves for shopping in a tourist trap.
In China, you never shop in tourist traps. You don't eat anything unless its in a side street, where the locals (who prey on the tourists) eat. You don't even get a taxi parked in front of a 5 star hotel, or bus depot. Get a bus, walk out of the tourist zone, or flag a taxi that just happens to be passing by. (Note, the buses can be dangerous if they aren't local buses. Some special tourist buses disgorge the passengers into a small village, where taxi drivers insist on exorbitant fees to take you back to civilization).
Pretty much nothing but locals. If you wanted to buy a PC, they'd sit you down on a little stool and offer you a drink, then fill out a form with you in Chinese. (Surprisingly, it turned out the prices were within 10% of the cheapest Australian importers [MSY/CPL] for many things - even as I was walking away they couldn't go lower!)
I did buy it from a smaller stall similar to photo #6. But it was still quite surprising to find it was dodgy - the mall didn't even sell pirated software! Perhaps if they can tell you're not local they pull out the knockoffs. Good point about the lean manufacturing - although the number of people who've encountered this online is what implied to me that it's a reasonably large operation. Hard to say, really.
I guess you were just unlucky with the scam then.
Still, it's worth keeping in mind, "you don't get what you don't pay for". If the price is under 1/4 that of a reputable brand, there's likely to be some kind of problem.
As somebody who has taken a variety of buses in China, I have to question this. Do you have a source?
Sure sometimes it can get a little extreme (I'm looking at you McDonald's coffee) but in a lot of cases it's an efficient system that frees up your attention and focus on more important things then checking whether your milk contains poison.
Personally, I think this over protectiveness is actually a sign of an advanced economy taking specialization to it's logical extent. Not having it is an economic cost in the long term.
/rollseyes
So yes, obviously, heroin is a good example of places where we have decided that the free market is a bit too free. This is another example of a place where the free market might be a bit too free. Is there anything wrong with that?
Recreational drugs are a place where I'd say attempts at regulation have extremely counter-productive. IE, look at the massive drug war in Mexico.
That could you buy tobacco/heroin/alcohol if you wanted it is the worst argument against a pure libertarian society.
The better argument against a pure libertarian society is that you might find heroin in your soup and your cough medicine even if you didn't want it.
What I claim is that making arguments about free market capitalism in light of behaviour around selling bogus USB drives is reasonable enough that it contributes positively to HN, and that while you or anyone else might disagree, such an argument does not deserve scorn.
Copyright and patents are intended to benefit the public by incentivizing creators to make more stuff. Whether that works is debatable.
But trademark is intended (or at least has the effect) of helping consumers identify a product's maker. If I buy an Acme Rocket Sled, it's because I've heard that Acme makes good ones. It sucks for me if I can never tell a real Acme from a fake one; I can't purchase with any confidence. And while maybe the blogosphere could help me find out where to get real Acmes, it really seems more efficient if we just outlaw making knockoffs and penalize those who do. If it's not Acme, I want it to have a different label.
For the price of the drive I thought it was a good business lesson. It implies the existence of an entire supply chain - crooked engineers/programmers, distributers, retailers, and maybe even government, manufacturers, building managers, etc. All to satisfy the market's "need" for the product to appear to work for longer than someone's visit lasts. An interesting/scary demonstration of total free-market capitalism.