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COUNTERFEITS/
FASHION GOODS
source: www.eubusiness.com/topics/Trade/
piracy.2005-02-09
www.gacg.org/pdf/rapport_uk.pdf
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Clothes, watches, jewellery, and sportswear have proved a favourite target for counterfeiters all across the world. But not just top luxury brands: today traffickers increasingly turn their attention to mass-produced items… - according to the World Customs Organization, fashion & sportswear industries are losing an important share of their global market as a consequence of counterfeiting and piracy: clothing and footwear (11%), perfume (10%), clock and watch (5%);
- counterfeiting and piracy are a threat to innovation and creativity. They have damaging economic consequences, but - particularly in this sector - they have also strong social and environmental implications. Moreover, fake substandard goods may endanger the health and safety of consumers;
- in Europe, between 2000 and 2002, fraud doubled in the clothing sector. However, according to statistics published on February 2005 by the European Commission, in 2003 the counterfeit of luxury products traded within the continent continued the recent trend of becoming more marginal, as traffickers increasingly turn their attention to mass-produced items. Clothing, for example, represented only 4% of goods seized - a drop of 58% on 2002 - and watches and jewellery constituted less than 1%;
- 50% of counterfeit clothes sold in the EU in 2000 were manufactured in Member States. Italy and Britain, especially Leicester, have been identified as major producers of counterfeit clothing. (Leicester is labelled "the clothing counterfeiting capital of Europe" after a succession of investigations revealed a huge local capacity to make fake designer clothes.)
- In 2002, 59% of clothes and accessories seized at the EU’s borders came from Thailand; in 2003, 70% of the amount of (all) counterfeit and pirated goods seized by customs authorities originated in Asia;
- according to the World Customs Organization, across Europe, it’s estimated that about 20% of sales of clothing are counterfeit. European clothing and footwear companies lose €7.5 billion per year to counterfeiting; (1)
- in France and Sweden, counterfeit sales of clothing and shoes are estimated to comprise about 25% of the total market, while, in Italy, they are believed to account for as much as 12% of sales (20%, according to a report issued by the Italian consumers association Intesa dei Consumatori in April 2004);
- in France, one out of every 5 firms with 50 or more employees admits to having been the victim of counterfeiting and piracy;
- in Italy, fake shoes and clothes reached €3.13 billion (US$3.705 billion) in terms of value in 2002, and accounted for nearly 21% of all counterfeits produced and marketed in the country in the same period. In May 2004 only, the Italian customs police found 9,000 counterfeited Nike shoes - €800,000 worth - shipped in a container coming from China;
- 40/60,000 pairs of counterfeit shoes are sold each year in the United Kingdom. Of these, about 30,000 are imported (mainly from Asia) and 10,000 are manufactured in Italy for the British market;
- In Mexico, 58% of all clothing and 66% of sports shoes sold is contraband or pirated. According to the National Chamber of the Apparel Industry, in 2004 the garment industry lost some US$10 billion to competition from illegal products as well as theft of merchandise. And Roberto Castañeda, the head of the Alliance Against Piracy, a non-governmental organisation, says that 2 out of 3 pairs of sports shoes sold in Mexico are fake brand-name products or came into the country as contraband. (2)
- in Brazil, according to a survey published in July 2003 by the European Commission, the legitimate clothing industry loses €1.5 million per year due to counterfeiting; (3)
- trans-shipment is used to conceal the origin of the product by carrying it through several territories before sending it to its final destination. On July 2002, for instance, a consignment of 2.6 tonnes of counterfeit watches originating from Hong Kong and bound for Spain was seized at Roissy, France. Three days later, the same customs officials seized a batch of 1.1 tonnes of counterfeit sports clothes originating from Vietnam and bound for the Czech Republic;
- in Europe, statistics show that after the Christian Dior era, there was a major onslaught of pirated clothing. Adidas, Nike, Reebok, and others had ‘cousins’ like Adibas, Red Book, etc., which were produced in Polish and Lithuanian semi-underground workshops. The distributors of counterfeit merchandise often justify themselves with these distorted brand names, although the law regards even the use of similar sounding trademarks as piracy; (4)
- a common technique involves a subcontractor producing more goods than those ordered by the trade mark proprietor and for which the subcontractor is licensed. This has increased the difficulty of combating this illicit trade;
- counterfeit branded goods are sold in street markets and in dual-inventory retailers, especially those who also carry grey market products. There are many instances of counterfeit branded goods being mixed in with grey market shipments.
Big fashion houses worry about the 'pollution' of their brand… so, how do they counteract? - according to an article published by The Observer in July 2004, Cartier is currently involved in 2,500 legal proceedings and devotes $3.8m annually to its crusade; Louis Vuitton has more than 1,000 active cases each year. Burberry, too, is highly aggressive in its efforts to protect the exclusivity of its brand. Statistics suggest that only 3% of the traffic in counterfeit goods is seized by customs. So, - the article states - for most luxury-goods companies, vigilance has necessarily become a way of life; (5)
- but however much indignant noise the luxury-goods companies make about the counterfeiters (and putting aside the links with organised crime for a moment), do fakes really affect their sales? In the fashion world, opinion is divided. In truly hip circles, logos are only worn in an 'ironic' way, so a fake really is as good as the real thing. Unsurprisingly, at an organisation like the Anti-Counterfeiting Group, such blase attitudes fall on deaf ears. In fact, its members would like to see the law changed so that it becomes an offence to be caught buying or in possession of counterfeit goods. (5)
(1) World Customs Organization, Intellectual Property Rights Strategic Group, 2001.
(2) www.harolddoan.com/modules.php?name=News&file=article&sid=67
(3) www.delchn.cec.eu.int/en/whatsnew/memo151104.htm
(4) www.cipr.org/activities/conferences/riga_07_2001/All_Riga_clips_rtf.rtf.
(5) Syma Tariq (market interviews), “Fake”, The Observer, July 18, 2004 [ observer.guardian.co.uk/magazine/story/0,11913,1262063,00.html]
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