The Wall Street Journal's "Numbers Guy" takes a look at the issue of counterfeiting of luxury goods, a major thorn in the side of such couturiers as Coach (NYSE: COH) and Gucci. According to The Numbers Guy, "Washington business groups such as the U.S. Chamber of Commerce and the International Anticounterfeiting Coalition calculate that global counterfeit sales equal $600 billion to $650 billion a year -- numbers parroted in news releases by companies claiming to fight piracy. They build on the often-cited claim that counterfeit goods represent 5% to 7% of all world trade."
The problems with this statistic are twofold: First, it's hard to get accurate data on the operations of organized crime. Secondly, even if we do know how many knock-offs are being sold, it's hard to say how much of that is actually detracting from the sales of the high-fashion labels: Is someone who buys a $10 pair of "Gucci" sunglasses from a street vendor really buying those instead of $300 Gucci sunglasses? Or is that sale instead coming at the expense of less expensive retailers like PacSun (NASDAQ: PSUN) or even Wal-Mart (NYSE: WMT)?
It's unclear how much illegal knock-offs are really hurting designers, but there's another issue that definitely is hurting them and, for now at least, it's legal: lower-budget knock-offs, perfectly legal because there's no logo, of runway couture, often before it even hits stores.
In September, I wrote that one of these knocker-offers saw herself as a champion of womens' rights -- "to look fabulous." But some of the fashion houses are lobbying Congress to pass bills granting greater copyright protection for designers.
Check out this excellent Los Angeles Times piece for the pros and cons of that.
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Reader Comments (Page 1 of 1)
10-21-2007 @ 7:33AM
Budd Margolis said...
Some luxury goods are made in China, assembled in for example Italy and legally labelled as made in Italy. China factories have been known to work extra shifts and manufacture additional goods sold or replicate to such high standards that one can not tell the difference between authentic and fake.
So, income is being lost by the major luxury brands.
And cheap fakes rarely hold up and degrade the reputation of the brand.
Organized crime and terorist organizations do not pay taxes nor do they abide by labour law and human rights. The money made in this fake industry does not help build schools or hospitals and supports slave labour and illegal immigration.
People should also be aware that faked medicines, airline and auto parts, baby food, medical equipment and alcohol KILLS people. The forgery of luxury goods is not a victimless crime, in fact children are often abused in the manufacturing process.
Therefore and without any hesitation I can affirm that any fake, copy or pirated good hurts our society and we should be fighting this crime as actively as if it was a threat to our national security which it is.
To buy a fake is to help organized crime and terror groups. Why would anyone think it is harmless just astounds me.
There is a problem with the law when look-a-like goods are permitted to remain on shelves. But this must be settled in the courts.