While counterfeit products have been a long-enduring problem globally, a weak economy further fans the flame of the fake brand market. It is generally acknowledged that Asia—and China in particular—is the center of the brand counterfeiting black market. In August 2007, The Japan Times reported that over 330,000 items were seized in Japan during the first half of 2007. This was a record number of fake brand name goods—more than in the entire previous year. Nearly 46 percent of those fake goods came from China.
China’s counterfeit goods industry is so pervasive that the Silk Street Market in Beijing, notorious for offering phony brand name fashion and other goods for over twenty years, recently launched its own brand called SILKSTREET. In an ironic move that mocks the international brands it copies, the market’s management said “anyone who tries to counterfeit [SILKSTREET] will be held liable,” according to CHINA Daily.
More troubling than the number of brand fakes flooding the world, however, is consumers’ attitudes towards buying them. A 2006 telephone survey of 1,600 consumers was conducted by Synovate and TeleNations Global in the United States, Hong Kong, China, the United Arab Emirates (UAE), and Serbia, according to Euromonitor. Hong Kong, China, and the UAE were included because they are major areas for counterfeit buying and selling.
When the question “Is there anything wrong in buying counterfeits?” was asked, 69 percent of respondents from the United States answered No. In the UAE, 53 percent said No. In Serbia, it was 41 percent, and in Hong Kong/China, 25 percent. When asked if they had actually purchased counterfeit brands, 57 percent of respondents from the United States said "Yes."
Another 2006 study, conducted by Ledbury Research and Davenport Lyons in the UK, found that consumers who purchased brand fakes or look-alikes were similar in demographics to average UK consumers. In other words, the buyer of fakes is pretty much your average consumer, not someone who is economically disadvantaged or a criminal.
These surveys' data are not particularly encouraging for international high-end brands in a down economy. Match the availability of brand fakes with the fact that many consumers think there’s nothing wrong with purchasing them and you have a recipe for brand disintegration.
Now consider the results of the new 2008 Customer Loyalty Engagement Index (CLEI), recently released by consultant Brand Keys. CLEI has measured consumer brand relationships in the US since 1997. Two brands tied for first place in seventeen categories, and there were fifty-two other ties. Robert Passikoff, creator of CLEI, says in Marketing Daily: “Many brands are now just placeholders. … People know the brand names, but they don’t know what the brands stand for.” This is yet another warning shot fired across the bow of brands that do not distinguish themselves from competitors.
The bottom line for a brand facing a recession is that its owner must aggressively and tirelessly build a compelling case for the brand’s singularity. The brand must be perceived as truly special, with attributes unique enough to create a strong and lasting value proposition. Otherwise, when money is tight, consumers will make a necessary if unpleasant choice: They simply won’t buy it.