From Prada through Chanel to Gucci

The fight against the sale of counterfeit designer and other goods in China has so far not achieved visible results, except that this part of trade in larger cities has, under the pressure of criminal prosecution, moved deeper into the ‘illegal’ realm, so today instead of being sold in open markets, such goods are sold at secret locations accessed through word of mouth or by recommendation.

Sellers at the Beijing ‘Silk Market’, one of the most famous tourist attractions in the Chinese capital, today do not openly offer cheap counterfeit designer goods such as watches, clothing, or bags, but upon expressed interest, they show customers catalogs of designer products from Prada through Chanel to Gucci stored at other locations or pull goods from hidden bunkers. This is a result, among other things, not only of raids that Chinese authorities have recently undertaken in markets to prove that they take their obligation to protect intellectual property seriously, but also of lawsuits that representatives of luxury goods manufacturers have begun to file in China. Recently, the management of the ‘Silk Market’ and several tenants of sales spaces at that market found themselves in a Beijing court.

They were sued for intellectual property theft by five houses – Louis Vuitton, Burberry, Chanel, Gucci, and Prada. These companies are seeking about $300,000 in damages and, by a first-instance ruling, they obtained satisfaction, albeit for a much smaller monetary amount. The management was found responsible for ensuring compliance with the ban on the sale of designer copies. Their arguments that the market management, despite warnings and requests from the affected companies, did not take any effective steps to eradicate the sale of counterfeit goods and thereby encouraged the sale of fakes found fertile ground in court. The management was not helped by the fact that in the meantime, the market area was equipped with notices that the sale of counterfeit designer products was prohibited in that area.

In Beijing, as well as in other Asian cities, today the highest quality counterfeits are sold at secret locations that can only be accessed by recommendation, and such goods are significantly more expensive than poorer imitations sold in places frequented by tourists. Thus, the average price of a higher quality counterfeit women’s bag is around 700-800 kuna, while poorer copies can be obtained for three times less. In other Asian countries, traders of counterfeit goods show even more resourcefulness.

For example, in South Korea, which is known on the global illegal market as a producer of the highest quality copies, after a customer selects a designer copy, they remove the anonymous label on the spot and sew on an ‘original’ designer label. Experts estimate that the trade in counterfeit designer and other products in the world today is ‘worth’ about $500 billion annually, and it is believed to partially finance terrorism. According to police sources, the group responsible for the terrorist attack on a train in Madrid three years ago was partially financed by the sale of pirated CDs. According to manufacturers, the largest producers and markets of counterfeit goods are China, South Korea, Pakistan, and India. (H)