Counterfeiting is a Costly Form of Flattery
Brands have always had to fight counterfeiting. Think about Cartier ordering a steamroller to crush thousands of cheap replicas of its branded objects in Los Angeles in 1981.
In mature markets like the EU or US, counterfeit goods can be considered proxies of market success for certain items at a given historical moment. But the making and selling of fake branded goods has reached worrisome proportions, especially now that sales are falling due to the global recession. According to customs data, piracy and counterfeiting account for between $200 and $360 billion of sales, corresponding to 5-7% of global trade.
The Swiss Watchmakers Federation (Fédération de l'industrie horlogère suisse) calculates that over 40 million fake Swiss watches are sold each year, netting a profit of around $1 billion. That staggering amount is 50% more than actual Swiss exports of the real thing, equal to 26 million watches sold abroad in 2007!
In counterfeiting, there is a distinction between cheap replicas and fraudulent imitations. Replicas are usually easily distinguishable from the original. Low pricing also sends a clear signal that the product in question is a mockery of the real thing. But fraudulent copying is definitely more dangerous and is taking hold in many industries. In this case not only the aesthetics, but also the technology is imitated. In the case of luxury watches, counterfeit watches are often a combination of original and non-original components, which can be hard to distinguish even to expert eyes.
Such products are often sold in legitimate channels at rather high prices. Customers are lured by the promise of a hefty discount, unaware of the fact they're buying a copy. This is the reason consumers from emerging economies prefer to buy at licensed shops and official dealers, which provide guarantees on the authenticity of the good purchased.
Counterfeiting is endangering the sales, reputation and innovation of famous brands, which are now forced to spend significant sums to protect their intellectual property. As piracy grows, the generalized loss of trust negatively affects high-value-added, labor-intensive luxury companies. Conversely, behind counterfeiting there are ruthless firms, employing informal and child labor. Whoever buys a fake is subsidizing the shady actors of this grey economy.
National legislation and international regulations have proved themselves unable to quell counterfeiting. But hitting supply is only part of the answer. Demand must also be brought into play, since it's consumer purchases that are feeding this vicious circle. It is thus imperative to persuade consumers that such buys are laden with negative consequences. That's why the Fondation de la haute horlogerie has sided with Swiss watchmakers by launching an international media campaign carrying a simple and effective message: "Fake watches are for fake people".