Fighting Fakes: Two-Part Special
The global spread of counterfeit watches is an issue that plagues watchmakers, retailers, enthusiasts and everyday consumers alike. Given the sheer magnitude of fakes flooding the markets the best defence available to protect yourself is knowledge. In this two-part special I will explore in detail what constitutes a counterfeit, how its effecting the industry and what’s been done about it. In part two I will provide some valuable hints and tips on how to steer clear of imitators.
What Are They?
Per Wikipedia, a counterfeit watch is an illegal copy of an authentic watch bearing the name of its brand and according to estimates by the Swiss Customs Service, there are some 30 to 40 million counterfeit watches put into circulation each year. The profitability of this black market industry is huge and seemingly endless, with one estimate putting the profit margin at $10 per dollar invested, about equal to profits of the illicit drug trade (and well below the profits of legitimate watch makers). This is truly a global business with numerous links to organised crime and a distribution network to die for!
Where Do They Come From?
So who’s making all these fakes? Swiss Customs estimates that 40% of counterfeit watches come from China, but counterfeits are produced elsewhere, even in the USA. You may remember the story from a few years ago now of authorities arresting a Florida woman for operating a counterfeit watch business. Her rented storage unit held almost 2,000 brand-name fake watches, with a total estimated retail value of $8.5 million. This is one of literally thousands of stories just like it and only serves to illustrate how wide-spread this issue has become.
The scary thing though is that in many countries possessing such a watch is not illegal. Even in Switzerland, where somewhat surprisingly, private persons are allowed to keep one counterfeit watch per person at the most, provided they import it personally into Switzerland. The maker and sellers of the replicas are usually in violation of the legal copyrights on the original manufacturer’s copyrights and trademarks, however, this rarely gives the latter much comfort.
What’s Been Done About It?
Why don’t the big brands do something about it I hear you ask? Well the fact is they do, however, with limited to no success. As with any facet of organised crime, tracing the problem back to the source is incredibly difficult, nigh impossible! Further to this, distribution of counterfeit watches is so widely spread now that it is simply pointless trying to address it without international co-operation between the appropriate authorities. This aspect is improving, however, it is a long way of being at the level required.
Another argument often put forth is that anyone who wants a $1,000 to $20,000+ watch and will settle for a $100 fake of it was not a serious buyer. They either would never have bought the real thing, or will toy with the fake and eventually return to their original desire and buy a real one after the brand-name image makes them feel good, but the fake itself disappoints. So while these products do infringe on the name brands, they don’t really hurt sales, therefore manufacturers do not have a financial incentive to aggressively pursue them. They tend to do enough that they can prove in any court cases that do arise that they have enforced their trademarks. But more than that is profitless to them.
There is some merit to this argument, however, consider this: globally, counterfeit watches are estimated to cost the Swiss watch industry more than $600 million per year. The claim that there is no harm done to sales is simply not true, as we all have seen or heard of countless examples where people will settle for a fake for any number of reasons, lack of education, taste, etc.
The Final Word
In my opinion, the big brands need to do more. No so much in pursuing the purveyors of these cheap imitations, but in educating and reminding consumers why they choose (have chosen) to buy a luxury watch in the first place. I’m fairly certain that no one here has bought a luxury watch solely because of the brand name or the way it looked. Consumers demand quality and they need to know they are going to get it. Watchmakers and retailers alike should be aware of this and act accordingly. Too often the significance of this is overlooked and can seriously impede the whole buying experience.
Make sure you tune in tomorrow for Part.2 on avoiding purchasing a fake watch.
Category: Special Features
What I find interesting about the fake watches debate is how similar it is to the illegal music downloads industry. The people who do it say it is because 90% of the population is completely priced out of the market – it is a natural balancing act.
Sad though, I’m sure it causes problems for innovation.