The spread of counterfeiting

Knock-offs catch on

Fake goods are proliferating, to the dismay of companies and governments

See article

Readers' comments



I'll throw my 2 cents in: I collect watches and take groups of collectors to many countries where they manufacture them, including China. We all know about the $50.00 fake Rolex. But you should know you can buy a gold reproduction high grade watch with a tourbillon for $1K and even Swiss specialists can't tell the difference unless they take it apart (not only open the back). And, at legitimate Chinese watch manufacturies, a certain department makes spare parts for Swiss brands (names undisclosed but the parts betray tens or even hundreds of dollar watches). They end up in genuine Swiss watches as the Swiss law allows using "Swiss made" label on watches with minimum 50% Swiss parts in it. Now, who is faking whom?


Regretfully, the article puts counterfeiting on a level with copyright violations. These are two very different beasts.

Consumers often buy counterfeit products unwittingly, i.e., they pay close to the price of the original but get much lower quality. This harms the function of brands as a consumer guide.

With copyright violations, on the other hand, the consumer mostly is the perpetrator. The product is an exact copy of the original with more or less the same quality.

I am yet to see any convincing argument why counterfeiting should go unpunished as it harms not only original producers but also consumers. Copyright and patent laws, in contrast, have been extended to an excessive level in recent decades, securing unjustifiable profits for the producers at the expense of the consumer and harming innovation.


It is worth remembering that the USA violated the IP of Europe and Japan in the 1800's in its drive to develop. Europe in turn 'stole' ideas from other, usually Asian countries. Now the wheel has turned...

AB ve

Well well, once again The Economist fails to mention a couple of things. That is the reason why accusation are flying here

One is the use of technology.
People who wish to buy a LV/Gucci can order it online, or the stores can take the order and let the goods be shipped from the company to the consumer.

Other like ACTA secrecy. too much IP protection has been explained in another post.


Ironically, few people know that certain countries have quite a few paid commentators and propagandists. Those paid commentators love to post accusations of "propaganda" against global media outlets, protecting their employers and hence doing their job. If I were boss of a country with billions of people, I too would employ a legion of people to post (and vote for) comments against any article that seems to attack my country's delicate and non-elected government. It's so... rational. And predictable.


This article is rather biased ! Do you have any evidence to prove that Chinese officiaals are not taking measures to protect the consumers' rights and against counterfeiting ? Now China is becoming
an significantly important country that lead the road out of the downturn and boot the economy of world ！


Counterfeiting is wrong. Period. I don't see a way to justify this.

For those who think companies rip off people with exorbitant prices, there is something called brand trust. There are certain things that need to retain their value and not be made from the cheapest available avenue with no regard to quality.

There are still people in this world who value quality in goods and not go hunting for the cheapest goods. Brands sell value. Counterfeiting destroys this value, which is why it is wrong.


HAHA. The protectionists and monopolists are foaming at the mouth. We must stop the EVIL counterfeiters!!


Counterfeiting goes beyond imitation, and it is no flattery, apart from being a crime driven by insatiable greed for gains.

Such malpractice has been rampant and infectious in many countries, and the emerging economies are no exceptions.

Can the widespread epidemic be cured?


While I like the idea of RFID technology to protect trademarks, I just wonder how long it will take to find counterfeited RFID chips?


China is not the only source of counterfeit goods but it is the largest source. If China/Chinese are not willing to cooperate on protections of intellectual property then they should be excluded from the WTO. If the Chinese are willing to abide by the rules we should welcome the Chinese with open arms. Now, what are the facts?


Of course if by branding commodities corporations sell at many times the cost of production' others will knock it off.


Fake car parts...are good! Car companies should make genuine parts for a good price, like they do with Tyres, Batteries, etc.


The ultimate culprit is the consumer and no one else.

If consumers are ethical, they will simply shun knock-offs. If they are not ethical or hypocritical, they will whine about knock-offs and when they finish whining, they go out and buy more fakes. Ultimately in a capitalist society, value for money is what matters. It's not how much people pay, but how much people get by paying what they paid. It's value, not price that counts. If knock-offs are only cheap but offer no real functional, esthetic, or even psychological values, no one will buy them. The reason that so many people want to buy these goods because they offer real value for money. It's just as simple as that.


IP protections assisted the development of major industries in the West. Westerners made the rules and regulations that protect their big investments in brand or innovation. One day soon (too soon for some) China will want to protect investments in brand and innovation, too.

But today westerners want cheap knock-offs from the East AND to sell easterners products at high margin (cake and eat it, too).

When in Rome... When in China... Stop the whining. Welcome to the new world order.

Innovate something that is hard to copy - fusion, space travel, space manufacturing, surgery... not hand bags, soda pop, or small cars.

The alternative is to try and convince consumers to pay outrageously more for "brands" made locally (using tariffs). Good luck.

From the inside

@RedHab: Sir, you really have no clue what you're talking about! Sure, a brand [a trademark] is not like a patent or copyright where standing alone, those have value. However, a trademark allows consumers to know the source of the goods that they buy. If those trademarks are copied, then there is no way for a consumer to know what they are purchasing. Trademarks serve a very important role in our economy.

If any of the readers have ever drank a Coca Cola, how do they know that the beverage came from the global conglomerate based in Atlanta known as Coca Cola? ---the trademark. The shape of the bottle, the red label, the script writing, those are all trademarks. The trademarks tell consumers the source of the product. When you buy a beverage with those trademarks, you can be confident that they came from a legitimate source, and you will not hesitate to spend your $1.50. If those trademarks did not exist, or if they were inherently unreliable (because they are copied) you had no consumer confidence, then you would be less likely to spend that money. Every purchase you make would be like trying it for the first time, because you would have no clue if the product came from the same source as the last time you tried it. Now extend that situation to the thousands upon thousands of products and dollars that you will consume in your lifetime. If you were not confident about what youre buying, then you wont spend, and then we would all have the worst recession in history.

Do companies receive a benefit for creating a brand? Of course they do. These companies invest time and money in R&D and make improvements in their products. Trademarks and other intellectual property is the legal way these companies can secure a return on their investment. Why would any company invest in their products if those advances would simply be stolen and sold at a cheaper price?

RedHab, you ignore the fact that legitimate companies have overhead, they pay taxes, they contribute to society. These factors raise their cost basis and directly impact the price to consumers. Counterfeiters do not have the same overhead, they dont pay taxes, and they can undercut legitimate brand very easily.

You think LV's profit margins are high? How much do you think those fake LV's cost to make? It has been proven that counterfeiting is one of the most profittable crimes of the world.

I hope you do your shopping on eBay. I hope those counterfeiters take your money and send you a fraudulent product. With your attitude, you will eventually get deceived. Then you might abandon your conspiracy theories and realize that there is a legitimate and well-intentioned purpose behind brand protection efforts.


Assuming that China keeps developing as it does, it will one day be faced by rip-offs of its own products. I expect China's reaction to be a lot more aggressive than that of the Western countries Chinese manufacturers are currently stealing IP from.


I think that one of the major problems with this subject matter is that many brand owners do disenfranchise large amounts of the public through unfair pricing strategies, and assume that they are the only victims or their poorly thought out strategies. However, we must bear in mind that these same companies do not report the ACTUAL amounts that they loose to counterfeit and piracy to their stockholders within their own report and accounts. Many have poorly staffed and funded anti fraud departments or an over abundance of expensive lawyers. Many further do not actually realise that Counterfeit is their competitor, where the full value is being paid by the genuine end user. Piracy is often purchased at a fraction of the value by those who never intended to purchase the genuine article. My point here is that Governments should chase for lost tax revenue relative to the amounts lost to the state, but Brand owners should be mandated to demonstrate spend in direct proportion to what they say they are losing. This will keep the lobbyists in step with the loss, and ensure well funded anti fraud initiatives. It should be known that these CASH losses are getting into the hands of organised crime and terrorism. Many of these criminal and terrorist organisations keep the money within the countries in which they sell the counterfeit products. This avoids money laundering detection. And we wonder how sleeping terrorist Cells manage to fund themselves. The outrage apart from over priced goods, is the development of products by brand owners that can be so easily copied and where the brand owner is not mandated to protect or police them in a truly measured and meaningful way. When these guys say that they are loosing billions, they are not really losing it on their own, because WE ARE in higher taxes, fewer jobs and much more organised crime and terrorism. Brand Owners must be told, so if you are really losing this much, then either withdraw the product or expect to be made totally liable for the costs to society as a consequence of your poorly protected and policed products. An easy way is to tax brand owners for counterfeit losses, and grant them refunds in relation to anti fraud spend. Might be tough on them, but hey its tough out there.

Ciaran O'Riordan

Of course China won't sign. ACTA is a massive encroachment on a country's sovereignty, as the March 1st leak shows:

Countries will have to require Internet service providers (such as ISPs but also social networking sites) to provide identifying information about users accused of infringing not just copyright but also patents and trademarks.

Countries will be required to enforce bans on circumventing "protection mechanisms" - so if I want to copy a CD or a game to back it up, that act will be illegal if the CD maker took any efforts to block copying, even if I have the legal right to make said backup!

The list goes on. In the linked document, the left-hand column is the current discussion text. Our governments' negociators clearly feel under no pressure from the current campaigns to maintain people's fair use rights, privacy rights, or the public interest.

Tough measures can be justified in case of public healthy and safety risks due to counterfeiting, but the measures in ACTA are not what's called for.



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