Almost like the real thing

24 November 2008 at 12:11 pm Leave a comment

by Giles Powdrill

Counterfeiting has, in all likelihood, been around for as long as currency itself but as the exchange of goods and services has become more complex, so has the trade in fakes. The forger’s business goes well beyond banknotes, art and documents these days. Everything from aircraft parts and microchips to pharmaceuticals and even baby milk powder can be, and is, reproduced for an illicit profit.

Globalisation and the internet means that our exposure to the phony has increased dramatically in recent times (the catchily-named International Anti-counterfeiting Coalition says the problem has grown 100-fold in the past two decades). The Counterfeiting Intelligence Bureau, run by the International Chamber of Commerce, estimates that the fakes business accounts for between 5 – 7% of total world trade, worth around $600 billion a year. And while it’s generally in the interests of such organisations to talk up the threat from fakes, by way of comparison, global advertising revenue runs at around $70 billion a year.

Asia is undoubtedly one of the principal sources of the world’s fake brands, while China is the largest contributor. Counterfeit products could account for a sixth or more of all products made in China, representing 8% of China’s US$2.6 trillion GDP. For the largest global brands it’s a large and growing concern. It’s also quite a tough business problem, since they typically hope to expand in markets which apparently originate much of the imitation merchandise.

And much of the anecdotal evidence suggests that in a post-modern world consumers are getting more tolerant about fakes. A survey last year by a British law firm deduced that one in eight Britons had bought a fake handbag or watch over the previous twelve months. The three most-purchased fake products purchased were Louis Vuitton, Gucci, and Burberry.

These cultural attitudes are likely to be reinforced as economies stall. Louis Vuitton, according to the 2008 brandz study by our sister WPP company Millward Brown, has a brand value of $25.7bn. This is a substantial figure, and only a small dent in this from the sales of fakes is a significant problem. It seems more likely that they’ll have to learn to live with it, as Microsoft did when it tolerated copies of Windows circulating in China because it realised it might build a long-term market for the company’s software. There is some good news on the consumer side: the survey mentioned earlier found that almost a third of the buyers of fakes said that the experience made them more likely to buy the real thing.

Perhaps the lesson to be learned is from judo rather than boxing; to find ways to work with the grain of the counterfeit business, rather than trying to confront it.

The image at the top of the page is from the Chinese site, which has a whole gallery of pictures of fake products.

Entry filed under: brands, consumers. Tags: .

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The Futures Company was created through the merger of Henley Centre HeadlightVision and Yankelovich in 2008. This is the blog of the new company - but the former posts from the former Henley Centre Headlightvision blog still can be found here.

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