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The Ripple Effect of Buying Fake Goods

Mon, Apr. 23, 2018
Many people tend to think of buying knockoff designer goods as something normal and acceptable since the original is often perceived as overpriced. A common belief is that the difference in quality is not worth the heftier price tag.

But those consumers disregard the bigger picture—not only in terms of how much effort, skills, talents, research and time are behind this pricey original piece, but also in terms of what the counterfeit market means on the macro level.

The masterpieces audiences love were once just a sketch on a piece of paper; take for example the journey of creating the Chanel 2.55 and Christian Louboutin iconic red-soled shoes; a long process and financial investment takes place until the products reach store shelves. For the designers, it is increasingly frustrating when a few minutes after each design is launched, a remote workshop somewhere, or a big factory, steal the designs they have been developing for months, and then sell replicas at a fraction of the original price.

Nike tops the list of the most counterfeited brands, with RayBan glasses, Rolex watches and Louis Vuitton bags following. Egypt’s economic situation has made affording luxury brands far less possible, with the cost of one item often amounting to the price of one’s rent. In a way, this has been positive for local brands and designers, as more consumers prefer buying Egyptian over imported. But in another, it left many consumers finding counterfeited products all the more desirable in an effort to reflect a financial status they aspire for but can’t afford.

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According to the Organisation for Economic Co-operation and Development (OECD), imported fake goods are estimated to be valued at around $0.5 trillion a year. This constitutes around 2.5% of global imports, with profits often going into the pockets of organized criminal organizations.

In 2013, OECD and the EU’s Intellectual Property Office placed the value of imported fake goods worldwide at $461 billion, compared to a total imports in world trade of $17.9 trillion. Up to 5% of goods imported into the European Union are counterfeit, most of which are produced in the likes of China and Bangladesh. The report analyzes nearly half a million customs seizures around the world between 2011 and 2013 to produce the most accurate estimate to date of the counterfeit trade’s sale.

No longer a distant phenomenon in a Far-Eastern country

According to the report by the OECD and the EU’s Intellectual Property Office, US, Italian and French brands are the main targets. But any brands with international recognition, however, are usually those that most easily fall victim to counterfeiting; and that has recently started to include Egyptian designers as well.

Designer duo Okhtein have been on the rise since 2013, but it was last year that they started gaining the international following as A-listers like Gigi Hadid, Beyoncé and Solange were spotted carrying their bags. Due to this international spotlight, they are now becoming victims of the Chinese counterfeit world. “As designers, our bags are considered our invention and it’s outrageous that someone can just put this notion aside and support piracy…buying the fake items hurts the local economy,” Mounaz Abdel Raouf, one of the Okhtein sisters, says. “Our bags are manufactured in Egypt from A to Z. Instead of supporting the local economy by encouraging the export of these local goods, people who buy the fake bags are actually hurting [the economy] by importing the fake bags from China.”

The most vital legal action brands must be taking even before they launch is to register their trademarks worldwide so they have the right to take legal action when piracy happens. But still, that doesn’t mean that designers can go around chasing after each and every counterfeited piece.

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Iconic Egyptian jewelry designer Azza Fahmy has also been a victim of counterfeiting, especially among local producers and upcoming designers who mix between being inspired by her design and outright copy-paste them. This shows that Egypt is not only a customer of counterfeited products, but also a producer. In her 50 years on the market, Fahmy says she has faced this issue endless times and always patents her designs. She had filed legal cases until “one day I realized that people copy my work due to how successful it is. So at the end of the day, I remind myself that being copied is a sign of my success rather than a threat,” she recounts.

Another form of counterfeiting that is largely popular and mainly affects the home interiors industry in Egypt is consumers visiting showrooms and exhibitions to get a look at the newest trends and products and, rather than purchasing these items, they get a carpenter to recreate the product for them at a fraction of the cost. This form of counterfeiting is very hard to prevent.

As alarming as this is, interior design creators tend to be assured that fakes will never measure up to their originals.

Mohamed Fares, a partner at Alchemy Design Studio, affirms, “Good design remains good design and has quantifiable benefits. Copies generally do not have that…There is no doubt that an artist’s intellectual property must be legally protected in the form of copyright laws. These laws should be clearly defined and prosecutable, and must be taken seriously.” While he is aware that Alchemy’s own products may have been copied, he notes, “We do not get discouraged by that as we are well aware that this exists across all design fields be it industrial, fashion or product design.”

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Similarly, Eklego’s head designer and founding partner Dina El Khachab tells Business Today Egypt that “Eklego’s retail philosophy is really about the whole picture, about the whole feeling and the home.” Addressing those who commission counterfeit products, she explains, “If you go to a carpenter and copy a coffee table or copy any product, you’re not going to get the home that we can make you…they’re not coming to Eklego, they don’t want an Eklego product. They want a coffee table.” Eklego has seen many other companies imitating their products, but El Khachab says it’s not done on a professional level, only a consumer one, so she is more tolerant with this line of consumer-driven counterfeiting.

Chairman and CEO of Amr Helmy Design Amr Helmy believes that “most designs can only be recreated by the original producer. Egyptian workmanship has trade secrets that are unique to each production entity.”

After the fake Gucci

People may think that the only side effect of their bargain purchase is taking away a small profit lining the pockets of billion-dollar organizations, or that perhaps they’re protesting their use of child labor production factories. But taking an in-depth look at what happens after purchasing counterfeit goods, be it in fashion, electronics, medicine or food, it becomes clear that the ripple effect of what happens next is quite frightening.

The ripple effect resulting in the reoccurrence of counterfeit incidents may involve a decrease in production and risk the jobs of competent, specialized workers, especially when emerging talents like Okhtein’s are hit by the knockoff markets. Some experts may argue, however, that consumers who purchase counterfeited products are not the target market of luxury brands. But that still leaves a large grey area for products that are neither luxury brands, nor as cheap as knockoffs.

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Poor-quality fabrics, plastic sunglasses and imitation makeup place one’s health, eyesight and skin respectively at dire risks. If we take a look at any nearby kiosk, we’d find cheaper, less attractively packed and poorly produced versions of favored confectionery foods. Asides from the chemicals and unknown ingredients, many of these products have also been found to fund terrorist organizations.

Alastair Gray, a counterfeit investigator, shed light on the inner workings of criminal organizations that produce the imitation bargain products flooding markets and pavements globally in a recent TED talk. He explained how counterfeit networks span over three countries where the seller is just the equivalent of a street-corner drug dealer. Gray unveils how fake luxury handbags are often made by children who are likely the victims of human trafficking. As for the cheap brake pads that the local mechanic tries to sell, they are probably lining the pockets of an organized crime gang that is embroiled in the drug trade. The worst realization for Gray was of counterfeiting as a form of funding that terrorist organizations often opt for. Meanwhile, selling fake goods online leads to sky-high profits with little risk or penalties in the process.

Diane von Furstenberg, the world-renowned fashion designer and president of the Council of Fashion Designers of America (CFDA), penned a piece to the LA Times titled “Fashion Deserves Copyright Protection,” where she expresses her aspiration for the US government to protect the creative work of fashion designers by implementing the Design Piracy Prohibition Act. “The Design Piracy Prohibition Act pending before Congress would provide a minimal three years of design protection,” the article reads. “Once enacted, this law would protect only unique and original designs, leaving absolutely everything already designed in the public domain and available to copy. This short-term protection offers support to creative designers while preserving the flow of trends and styles at the heart of fashion design.”

French designer Christian Louboutin has been also been combating counterfeiters with the “Stopfake” call to action on his website, which states, “We have adopted a ‘zero-tolerance’ policy and have put in place a comprehensive program to deal not only with websites offering fake Christian Louboutin products, but the sources, the distribution systems, the auction sites and other avenues of trade in the fake products.” The website also asks shoppers to always “Keep in mind that when something looks too good to be true, that’s usually what it is worth.” It also points out keywords like “Cheap Louboutin”, “Christian Louboutin Sales” or “Louboutin Outlet” that should raise a red flag when it comes to finding alarmingly cheap Louboutin products.
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