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Devils wearing fake Prada undermine brand owners

The value of counterfeit goods could well be running at €1.6trn a year, or more, and it has spread beyond luxury items to goods like baby formula and car components 

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Anne Hathaway and Meryl Streep in the movie The Devil Wears Prada

Anne Hathaway and Meryl Streep in the movie The Devil Wears Prada

Anne Hathaway and Meryl Streep in the movie The Devil Wears Prada

Just in case you missed it, World Anti-Counterfeit Day was held three weeks ago on June 8. While you might think it’s a tad unusual for a crime to have its own annual day of recognition, such is the size of the problem that counterfeiting is a clear and present danger to hundreds of legitimate brands around the world. And it needs to be called out.

Precisely how big a problem is a different matter. A report published in 2019 by the Organisation for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO) estimated that it was costing the global economy a staggering €445bn, or approximately 2.2pc of global trade, in 2019. Of this amount EU accounted for around €119bn.

But these figures were based entirely on the value of seizures of counterfeit goods made by law enforcement agencies around the world and they didn’t include domestically produced and consumed counterfeit and pirated products.

Nor did they include pirated digital content like software, movies or illegal subscriptions to pay TV channels or streaming platforms.

In other words, these figures are just the tip of what is most certainly a very large iceberg which some analysts estimate to be worth more than €1.6trn every year.

Apart from the day-to-day competitive challenges brand owners face when it comes to trying to grow sales, the mere idea of somebody else stealing their trademarks, copyright and intellectual property and passing them off as their own is enough to induce apoplexy.

In many ways, counterfeiting is a testament to the power of good branding and marketing. But it also slowly erodes a brand’s equity and cachet, both of which often take many years to build up by way of investment into things like branding, design, advertising, strategy and research. 

When we think of counterfeit goods, however, we automatically think of luxury brands like Prada, Gucci, Louis Vuitton, Rolex but many mid-range brands too have also found themselves competing with their fake alternatives, often in a never-ending war. While it is true that branded consumer goods like clothes, shoes, electronics and jewellery have been manufactured by counterfeiters on an industrial scale for many years, the fakers have been spreading their wings into the fast moving consumer goods space too.

Now we have car components that fail and cause accidents, medicines that make people sick, toys that harm children, perfumes that cause rashes, baby formula with zero nutritional value and electronic goods that are fire-hazards.

In addition, food and drink products like wine, spirits, olive oil and balsamic vinegar, to name but a few, have also become high-margin targets for counterfeiters and the criminal enterprises that are generally not too far behind them.

Not surprisingly, counterfeiters are thriving in the digital world and there’s no shortage of online marketplaces, many of which are Chinese, that wittingly or unwittingly connect buyers with any number of manufacturers willing to supply them. In addition, social media platforms like Facebook, for example, have hundreds, if not thousands, of closed groups which allow members access to so-called hidden links which, in turn, allow them to buy counterfeit products on many of the bigger online marketplaces. Needless to say these marketplaces deny this is happening while the group members on Facebook are technically not doing anything wrong on the platform.

But for every seller, there will nearly always be a buyer and a recent survey of Irish youth between the ages of 15-24 showed that 43pc had bought counterfeit goods in the past year. The survey also found that 37pc had done so intentionally.

So, as consumers continue to seek out brands and ramp up their online spending and as long as counterfeiters stay two steps ahead of law enforcement agencies and brand owners, it is difficult to see how this never ending tide can be stemmed.  

That’s not good for brand owners, the global economy, consumers and, of course, the faceless victims of the counterfeiting industry who often are exploited, under-age and forced to work in appalling conditions. 

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