Global counterfeiting costs luxury brands billions of dollars

Counterfeiting is much more than the fake Louis Vuitton and Gucci bags we see on market corners during summer holidays.

The Global Brand Counterfeiting Report 2018 estimates that the losses suffered due to global online counterfeiting has amounted to 323 Billion USD in the year 2017, with luxury brands incurring a loss of 30.3 billion dollars through internet sales.

The report analyses the size, mode, trade routes and issues underlying counterfeiting of high end consumer goods, specifically clothing, textile, footwear, cosmetics, handbags, and watches. The estimated losses due to counterfeiting of high end consumer goods amounted to 98 Billion USD which includes counterfeiting from offline as well as online mediums.

The global counterfeit market is booming

The globalization of trade and communication has offered unparalleled opportunities for organized crimes to engage in illicit trade and counterfeiting so as to increase their economic influence. The report has focused on those economies where the consumers have the highest buying power namely, France, Germany, Hong Kong, China, Italy, Japan, Singapore, UAE, UK, and the USA.

Counterfeiting seems to be an untamable business with high profits, and a research paper published by Emerald Insight in Malaysia looks from the consumer perspective to explain consumer purchase intention towards counterfeit luxury goods.

Buyers of fake goods have a sense of denial

Buying a fake handbag requires some sort of denial of responsibility from the buyer, which is precisely what the report found. The results showed denial of copyright and social risk are significant predictors of consumers’ purchase intention towards counterfeit luxury goods. Interestingly, condemnation of the condemners, psychological and prosecution risks were found to have no significant relationships with purchase intention towards counterfeit luxury goods.

Is there any harm in buying a fake Chanel handbag or Louboutin shoes? David Wall, professor of criminology at Leeds University, asks the BBC. “Counterfeited goods provoke a lot of outrage, but what about?" Most people who buy a fake Rolex for 10 dollars know it is not a ‘real’ Rolex. There is also a skill required for the manufacturing of items to look like the original. Buyers of fake products don’t expect them to last in the same way they do when they invest in the original.

While luxury brands are a quick to say fake brands are denting their profits, how likely is it that somebody who buys a fake bag for 20 pounds would invest in the real Louis Vuitton that costs thousands of euros? The dilemma appears to be a moral one and one of copyright.

Some even argue that the fake market bolsters the genuine one as it raises brand awareness. And when it comes to ethics, how do we know for certain the garments we buy from H&M, Primark and other cheap fast fashion companies are ethically sourced? As David Wall states, “Fashion is a complex market and counterfeit fashion is just as complex,”

Photo credit: Counterfeit and real Louis Vuitton