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As factory production processes have improved (particularly in Asia) over the last couple of decades, so has the ability to efficiently produce imitation branded products. A knockoff Chanel or Louis Vuitton item could be so uncannily close to the real deal that only an authorized representative of the company can tell the difference.
While much of the public is aware of the fraudulent fashion items, few may know how pervasive counterfeit branded products are in their lives. Pirated items infiltrate industries including music and entertainment, electronics, household products, cigarettes and tobacco, food and liquor, (legal) drugs and medical supplies, and industrial goods.
According to Gieschen Consultancy, a Canada-based counterfeit-intelligence monitoring service and consultancy, more than 5,000 incidents of counterfeiting and piracy were documented from October 2004 through mid-January 2006, totaling more than 1.41 billion seized counterfeit items worth an estimated US$ 4.13 trillion.
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Brands Fight Back
In response to the global epidemic, the International Chamber of Commerce initiated the Business Action to Stop Counterfeiting and Piracy (BASCAP) to work with individual companies throughout the world in fighting counterfeiting and piracy and to encourage governments and governmental organizations to create and enforce tough anti-counterfeit legislation.
BASCAP currently operates a website offering assistance, information, and a database of reported cases and merchandise worth. How responsive the agency's initiative is beyond the website is difficult to determine; the agency did not respond to interview requests for this article.
Some brands battle piracy firsthand by employing authentication software, lobbying governments directly, and employing sales and distribution strategies to counter the counterfeiters.
The European Commission, the executive body of the European Union, reported an 800 percent increase in Chinese counterfeits during 2004. That same year, the Shanghai Commerce and Industry Branch banned the sale of counterfeited products at the request of ten European brands, including Montblanc and Prada. The authentic items are now sold exclusively in established shopping centers and retail stores.
As of October 2006, however, the European Union reports that China remains the top counterfeiting nation, and claims that the country's local authorities do little to reign in the practices.
The Union also identifies Russia, Ukraine, Chile, and Turkey as the top sources of counterfeiting (after China)—and wants to negotiate counterfeiting production and distribution issues with a number of countries including Thailand, Malaysia, Indonesia, the Philippines, Vietnam, South Korea, Brazil, Argentina, and Paraguay.
According to professional licenser David Milch of Perpetual Licensing, smaller, niche "it" brands sometimes opt to license their brand to areas they may not have chosen otherwise—such as bed linens branded by Vera Wang—to head off the counterfeiters before the fakes appear on the market.
With entertainment piracy at all-time highs—the Motion Picture Association of America (MPAA) estimates that more than 90 percent of the films sold on DVD in China are counterfeit—Warner Bros. currently employs some creative strategies to curb their own sales losses. The New York Times reported on September 29, 2006, that the company timed the DVD release of Superman Returns two months ahead of schedule and priced it as low as $1.77.
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Where There Are Sellers, There Are Buyers
While many consumers may not recognize a fake from an authentic product nor purchase a fake intentionally, there are many others worldwide who are far from innocent dupes. They knowingly—and in some cases, proudly—purchase counterfeits from online and on-street locations.
Consumers who feel that purchasing knockoffs is a victimless crime should consider that many in the anti-counterfeit industry believe the sales are often linked to organized crime—yet another revenue stream to fund drug cartels, terrorism, and even child labor. Furthermore, food, beverage, and particularly pharmaceutical fakes (via online pharmacies) can pose extreme health risks to a (sometimes) gullible public.
Aside from funding criminal activity and the original brand losing sales, piracy also results in municipalities losing tax revenue. According to the New York City Police Foundation, an estimated $1 billion in New York City alone is lost in tax revenue from counterfeit purchases—money that would otherwise benefit the city's community.
The Foundation has teamed up with Harper's Bazaar for glossy, color ads in the magazine to promote counterfeit awareness and encourage people to anonymously report sellers of counterfeit items.
The Police Foundation's website goes a few steps further in its message, placing the responsibility for fighting counterfeit sales directly in the hands of consumers. The site's headline perhaps sums up the counterfeit dilemma best: "When you buy fakes, we all pay." [16-Oct-2006]
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Alycia de Mesa is a brand identity consultant and writer with over 10 years experience from Fortune 100 to start-up companies. She is author of Before The Brand, the definitive brand identity handbook, published by McGraw-Hill (under the name Alycia Perry).
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Jul 31, 2006
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Building Appeal -- Randall Frost
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Part art, part science, the field of branding architecture has never been more relevant to firms around the world.
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Mar 13, 2006
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Standards: Who Needs Them? -- Edwin Colyer
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By setting standards, organizations like ISO, EFQM, and Eco-label create a mark of distinction for brands to promote. But rules differ greatly between the groups on who gets to use the mark and how.
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