by Marc Schmitt
Have we created a monster?
One might think that given the advance of more and more high-tech counter-measures, the value of fake goods trade would have decreased in recent years. However, according to the Economist, a report published on April 18th by The Organisation for Economic Co-operation and Development (OECD) suggests that it’s quite the opposite. The last report from 2008 valued cross-border trade in fakes at $250 billion. The latest report estimates that by 2013 that had risen to $461 billion. A whopping 2.5% of the total for all goods.
But why? Well the rise of e-commerce has certainly made selling and transporting fakes much easier. In fact, it is reported that of all counterfeit good seizures these days, two thirds of them are postal shipments, mostly bought online.
The great haul of China
So who holds the not so prestigious title of biggest faker? Well according to the aforementioned OECD report, data from seizures of pirated or counterfeit goods suggest that China sits in pole position – being the origin for 84% of all cases. A separate report from the American customs bureau backed this up, saying it accounted for more than 50% of the $1.35 billion-worth of fake products the bureau seized in the last year.
China has been a member of the World Trade Organization for nearly 15 years now. Surely this would have been the impetus to clamp down on such infringements. Indeed, in that timeframe, China’s economy has gone from strength to strength which has seen the emergence of valuable Chinese trademarks and other intellectual property – surely they didn’t want to get a taste of their own medicine? As it stands, the seizure of such Chinese brand fakes still only accounts for a mere 1% of the global total. Hopes are high in China though – as enforcement becomes a prominent issue with deputy prime minister, Wang Yang recently saying that tackling piracy was essential if China is to become an innovation-driven economy.
More than just the price tag
But what solutions are out there? Firstly, it’s not just Louis Vuitton luggage that is being copied. The operation reaches far and wide, with counterfeit medicines, pesticides, vehicle parts, software, wines, clothing, electrical equipment, leather good and watches being captured in seizures - to name but a few. However, considering the number of customs seizures, it was the footwear industry that was most-affected from 2011 to 2013 according to the OECD report. And it is the footwear firm Ferragamo that has taken steps to combat this movement itself.
Price tags for designer footwear are one thing but Ferragamo have tagged their shoes in another way. Embedded in the left shoe’s sole of this fine footwear is a passive radio-frequency identification (RFID) tag. When scanned by a transmitter-receiver, only the real thing will send back the correct signal. So does it work? In a word, yes. Last year alone, the company was able to take down tens of thousands of ads for fake Ferragamo shoes from online auction sites. It also recovered or revoked 140 domain names and websites which infringed its copyright. And to whom did most of them belong? You guessed it: Chinese people or firms.