For All The Complaining About Chinese Counterfeits... China Is A Massive Growth Market For Luxury Goods
from the aspirational dept
A few years ago, we noted a study that suggested "counterfeit" goods weren't nearly as big a "problem" as many made it out to be. That's because in a very large percentage of cases, the buyers knew they were buying a counterfeit and did so on purpose because they knew they couldn't afford the real thing. In other words, in those cases, there was no "loss" per se, because the buyer couldn't buy the original at that time. But the really interesting part of the study was the finding that a very large percentage of people who buy counterfeit goods end up buying the real product later. In other words, the counterfeit is a form of marketing.It appears that may be happening on a large scale in Asia (and China in particular). Despite all the claims that China and other Asian companies are homes to mass counterfeiting, apparently various luxury goods brands are seeing massive uptake and demand in China and across wider Asia. Various luxury goods companies like Prada are announcing record revenue thanks to these countries that are often supposed to be pits of counterfeiting. Perhaps that original study got it right, and lots of folks who used to buy counterfeits are now itching for the real thing.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: china, luxury goods, trademark
Reader Comments
Subscribe: RSS
View by: Time | Thread
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
... No customers are fooled by thinking a Prudo bag is $10 on a street corner before their payday.
It's not a fraudulent transaction. It's one that allows for a larger number of people to trade up on a good.
[ link to this | view in chronology ]
Re: Re:
Any data, or just one of your usual blind assumptions?
"Don't make your money off of someone else's reputation."
You realise big corporations do this as well, right?
If something's to be outlawed, it has to be due to actual harm done, not because it feels "wrong" or someone didn't built the wheel from scratch. If nobody's fooled and the originals aren't losing sales, there's no harm. As ever, you need to start from the facts - do you have data that shows actual harm done? If so, sue. If not, well..
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
The sales of luxury goods in China is about the snob factor, just the same as it is in the US (or elsewhere). The difference is in China, people who can't afford the real thing have no problem consuming the knock offs, and it is accepted, tolerated, and even approved of socially. This is very different from the US, where someone caught with "fake" stuff would risk social issues. In China, it's considered normal.
Also, "massive growth" isn't hard to achieve when you have (a) a country of over a billion people, (b) a people with expanding incomes and desires, and (c) a people who have not had these options ever before.
So sorry Mike, the "success" doesn't somehow wash away the huge market in knock off goods. Nice try, but once again you fail.
[ link to this | view in chronology ]
Re:
Note also that many bootlegged luxury goods are better in quality than the original today.
[ link to this | view in chronology ]
Re:
The problem with the brand holders (as well as the MAFIAA and their ilk) is that they're not understanding the wider impact of having their product be ubiquitous.
If it's considered normal for everyone to have a Prada bag, whether or not it's a knockoff, then NOT having one is actually harmful. Then it becomes a matter of wether or not you can afford a real one or have to settle for a "fake". Being able to get a genuine article improves your social status.
The flip side of aggressive enforcement is that only people that can have a genuine item have them. Unfortunately, that's a much smaller subset of the population which ends up giving the owners more of an negative elitist reputation than a positive role model one.
Consider cell phones. Today, a significant portion of the US population carry one. A large number of them allow people to check email, update social media status, etc, and are considered "average". But think back a few years before the iPhone and Android phones to when just BlackBerry was the choice. People with BlackBerry's were often looked down upon as someone who needed to "get a life" and "you don't need to be THAT connected". Now that the devices are everywhere, the pressure to upgrade on people that DON'T have smart phones is immense. Even the cell providers are making it difficult to stay data free. The last time I checked AT&T for new cell phones, every last one available for their monthly plans required a data connection.
So go ahead, push enforcement but be ready to fade into obscurity when you do.
[ link to this | view in chronology ]
Mike writes "various luxury goods brands": link states ONE.
You inflate the claim of a piece which is at best only fluff filler for leisured parasites who interest in "fashion".
And while large for one company, it's small in absolute terms, and may not apply to the "industry":
"In hard cash numbers, that�s more than $244 million banked from the first half of this year versus $141 million from the first half of last year."
Listen, Mike. You make sniping not just easy and fun but almost necessary by exaggerating "one" into "various". That's flat out counterfeiting. But where do I go for the "real" truth?
[ link to this | view in chronology ]
Re: Mike writes "various luxury goods brands": link states ONE.
How about somewhere far away from here.
[ link to this | view in chronology ]
"But the really interesting part of the study was the finding that a very large percentage of people who buy counterfeit goods end up buying the real product later."
I just don't get it Mike! Most knockoff buyers cannot afford the real thing, and then they go ahead and buy the real thing? Just does not compute. Can someone translate, please?
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Translation
Meanwhile, the buyers have acquainted themselves with the price of the real thing. Then they save up, or their life circumstances change and they get wealthier. Then their counterfeit thing breaks, goes out of style, or gets shabby, whatever. Then our buyer decides to spend the money and buy the real thing. Shazam! The maker of the real thing has made a sale.
What has happened is that the counterfeit thing has acted as a free advertisement for the real thing. Had the counterfeit thing not existed, the buyer might have bought some substitute thing which was nothing like the real thing. If that happened, then there is no advertisement, hence the sale of the real thing becomes less likely.
The counterfeiters are actually doing the makers of real things a favor, by giving them free advertising.
[ link to this | view in chronology ]
Re:
It's quite simple. Note the word "later" in the second quoted sentence.
Most people start with lower incomes. They want the designer goods, but for whatever reason cannot get them. But, they still want the cache that comes with that brand rather than a lesser name or no-name item. So, they buy the knockoff.
Later on, they have more money and can afford the real thing. They still want the cache that comes with the brand, but now since they can afford the real thing they're not going to continue buying the knockoffs. So, they buy the real thing.
They could not have bought the real thing earlier even if the counterfeits weren't available. They're not going to lower themselves to the knockoffs when they can buy the real stuff. Hence, the counterfeits probably don't really impact sales, even if the counterfeit buyers are actually a larger group overall.
[ link to this | view in chronology ]
Re: Re:
Further, let's consider this: A woman needs a purse. She only has a certain amount of money to spend. She can (a) buy a regular purse all legal and nice, or (b) she can buy a knock off. While both of them "feed the market", the knock off money tends to stay outside of the tax regimes, it tends to become "black" money, moving quietly outside of the economy.
So even on an even dollar purchase, only one of the two is beneficial to society as a whole, and the other is a negative.
So why worry about "later", there is enough of an issue "now".
[ link to this | view in chronology ]
Re: Re: Re:
> regimes, it tends to become "black" money, moving quietly
> outside of the economy.
So you are saying that items that can't be "taxed" move out of the "economy"? I'd say "tax" is antithetical to "economy", and many involved in the underground economy (trades, used goods, etc.) would agree with me.
[ link to this | view in chronology ]
Re: Re: Re:
Black vs. "legitimate" economy and "benefit to society" are good points, but they have nothing to do with my post.
[ link to this | view in chronology ]
Re: Re: Re: Re:
If the knock offs are good enough (and many of them are made on the same production lines, or using the same materials and sources for things like logos), there is no reason to buy "the real thing" because nobody can tell.
I cannot see anywhere in any of these reports that suggests that people "bought knock offs, and then saved up for the good stuff", that seems to be a Techdirt myth (repeated often enough, people like you think it is true). What is more clear is that a sudden rush of wealth has allowed many Chinese people to indulge in "true" luxury goods. The connection of knock off goods as a stepping stone just doesn't seem to exist (except in Mike's head).
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
Bootlegs in that market act as place holders for the real things, they are the fuel that maintain and keeps the flame burning, and when suppressed some how leads to eventual decline in sales the reason being people can't show of something or claim status over something others don't know, specially if the bootlegs can be made better than the original.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
And apparently in the heads of the people conducting the various studies that have made this conclusion. I know you have a deep, driving need to criticise everything Mike says, but why don't you direct some of your imaginative thinking towards those people and their studies. Or is this really just a personal thing for you?
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
Aspirational connections between knock off goods and the real thing just doesn't appear to be that strong in China. The increase in sales is almost exclusively because of access to a newly opened, newly affluent marketplace, and not much more.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: Re:
These companies are going from "zero" to "something". Of course they are going to see phenomenal growth amounts, because they are growing a business from nothing.
None of the reports specifically about China is able to link the knock off sales to increase "real product" sales, because there isn't any that they can find.
What Mike (and others) are doing is the old game of creating a correlation that cannot be supported.
Example: Personal auto sales and ownership have also increased dramatically. It could be claimed that the sales of personal cars also spurs on the sales of other luxury goods.
Also, there has been a significant decrease in the number of cases of burd flu in the last few years. It could be claimed that people not worrying about getting sick are more likely to buy luxury goods.
See how it works? They are only expressing an opinion, nothing more, based on correlation of data that just doesn't have a proven, solid link.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: Re: Re:
Too clueless to work out the actual points being discussed? I have no idea what this has to do with the assertion that counterfeits don't impact the sales of originals, which was not even the point I was making if you bother reading my post.
"It could be claimed that the sales of personal cars also spurs on the sales of other luxury goods."
I have absolutely no idea what your point is here.
[ link to this | view in chronology ]
Re: Re: Re:
Eventually all money get taxed and retaxed and re-retaxed to say the least.
[ link to this | view in chronology ]
Also apparent:
Bears in wood defecating
[ link to this | view in chronology ]
What really irritates me...
It really is disgusting. If their product were a bit cheaper then more people would buy it... simple.
Why the hell should I pay �150 for a shirt because it has a small horse on it?
[ link to this | view in chronology ]
[ link to this | view in chronology ]
More than half the super rich women in the world come from China that may explain why luxury goods do so well there.
Apparently counterfeits, piracy and other stuff is only a problem in countries with contracting economies, others don't see it.
As a side note, the US used to claim a perfect system but the truth is that the US system is full of problems that were masked by its success, that ain't gona happen in the future apparently, those institutional problems will get more visible with each year for at least more 10 years, because western countries are on the downside of the growth slope at the moment.
[ link to this | view in chronology ]
Then you have: China based manufacturer of licensed NFL gear
My ever so alert wife found the company that makes the gear you pay way too much for in my opinion. The ball park, official web site and "the blessed" retail prices are so insanely high I wonder why folks pay for the shirts. Well, the company setup a site with discounted "Real" NFL shirts they make for "xyz" team.
{ horn SFx } Feds now display the "we shut down evil counterfeiters". I just love it when the feds protect me from saving money legally.
I still need to photograph display.
.
[ link to this | view in chronology ]