Counterfeits of renowned or branded products probably started 300 years ago in a simple way when American goods, such as famous Railroad watches aka fob watches, were duplicated by, of all the countries in the world, Switzerland. The most frequently duplicated pieces were the saucer-sized pocket watches carried by old-timey train conductors. Rather than copy the pieces wholesale, the Swiss depended on marketing sleight of hand to sell their wares: They changed popular brand names slightly to avoid detection and simply sold them alongside the superior American pieces. Illinois-made Elgin became the Swiss-made Elfin. Marion Watch Company became Marvin (which, in turn, investors revived as a luxury brand in the 21st century), and AWW Co became BWW Co.

These fakes, far from being the worst of the lot, were designed to copy the superior American wares in every way. The reverse is true today in the 20th and 21st century, when renowned Swiss products, from watches to medicines, garments, shoes and ladies bags, and other speciality products are being duplicated in South East Asia (China, Hong Kong, the Philippines) and flooding the Indian, European and American markets. The amount of total counterfeiting globally has now reached 1.2 trillion US dollars, probably close to 5-6 per cent of global trade in genuine goods imported and exported across several borders of several countries in the world as economic liberalisation and WTO norms make trading easier.

Global trade

A Global Brand Counterfeiting Report (GBCR) 2018 estimates that losses due to counterfeiting of clothing, textile, footwear, cosmetics, handbags, and watches amounted to 98 billion US dollars, including counterfeiting from offline as well as online mediums. Business organisations spend a lot of money, time and resources on protecting their brand and trademarks. But even after all the measures, the counterfeit market is booming rapidly, says the report.

The GBCR 2018 says the globalisation of trade and communication has offered unparalleled opportunities for organised crimes to engage in illicit trade and counterfeiting so as to increase their economic influence. The report has focused on those economies where the consumers have the highest buying power namely, France, Germany, Hong Kong, China, Italy, Japan, Singapore, UAE, the UK, and the US. Add India to the list with the proliferation of e-commerce due to renowned websites making inroads to most homes across the country ~ Amazon, Flipkart, Snapdeal, Shopclues, Myntra and Jabong.

Law enforcement agencies face big challenges from illicit trade and violation of intellectual property crimes because the super fakes are now being branded as exact replicas by the OEMs (Original Equipment Manufacturer). Counterfeiting is eating into trade and economics and also causing environmental harm. “The illicit value chains and free trade zones make it easier for the counterfeiters to trade in fake goods without any fear of being caught,” the report points out.

Governments and corporates are seriously concerned because counterfeiting is old, growing. It poses threats to consumers welfare harming the reputation of the businesses, causing huge losses for owners of renowned and luxury brands. The report offers various legal and technological recommendations to curb illicit trafficking of fakes of luxury brands across porous borders globally.

Counterfeiting has taken a new dimension with the advent of the Fourth Industrial Revolution, where globalisation has acted as “a double-edged sword” and problems created by manufacturing outsourcing ~ a blessing in disguise for counterfeiters. Luxury brands and celebrity endorsement, Internet with its tags, hashtags and search engines, fast-changing fashions and trends are creating aspiration among the young demographic dividend, with social media creating its own problems, and e-commerce has become the new platform for counterfeiters, not only to unwitting buyers but also the platforms themselves, who don’t buy or sell the product, but act as a medium to connect the buyer with the seller. The seller himself is not aware of what is genuine or a counterfeit and the buyer is taken for a ride or goes for a toss completely.

Though there are several international agreements ~ TRIPS of WTO, bilateral agreements between countries ~ to tackle counterfeited goods with customs authorities on the vigil 24×7, where are the counterfeit goods made, what are their routes, and who are the pigeons who carry them or how are they exported wholesale is a matter under serious scrutiny by various investigating agencies in Europe, the US and even in India, but they have managed to escape all the time.

Big names

Counterfeiting and trademark infringement has taken place in the 20th and 21st century in the biggest markets such as China, France, Germany, Hong Kong, Italy, Japan, Singapore, United Arab Emirates (Dubai, Abu Dhabi), the UK and the US. Globally, counterfeiters have targeted the portals of renowned brands besides global e-commerce platforms such as the Chinese owned Alibaba, Aliexpress, Amazon (US), Blackberry (BBM), Blockchain Tech Ltd, Burberry (London), Bvlgari, Cartier International Ag, Chanel, Christian Louboutin, Dior, eBay, Facebook, FedEx (all US), Ferragamo, Givenchy, Gucci (France and Italy), Google (US), Igneia technology, Instagram (US), Kik, LV, Mars, Michael Kors, Nike, Prada, Ray-ban, Rolex, Samsung, Swarovski, Tiffany, Valentino, Versace and WhatsApp.

In India portals such as Amazon, Flipkart, Snapdeal, Shopclues, Jabong and Myntra are under attack by counterfeiters ~ name the brand , Gucci, Givenchy, Calvin Klein, Rolex, Omega, Hublot, Philippe Patet, Longines, Reebok, Adidas or Tag Hauer, all are peddled along with the originals. The look and feel of the product is so good and real, only the manufacturer can make out the difference between the original and the fake.

A few years ago they were being referred to as “Obvious fakes”, but today they are so well-made by skilled artisans, even 3D Hologram printing on products such as Rolex and steel engravings look like the original. It’s only when a customer goes for a resale of the

A few years ago they were being referred to as “Obvious fakes”, but today they are so well-made by skilled artisans, even 3D Hologram printing on products such as Rolex and steel engravings look like the original. It’s only when a customer goes for a resale of the product or servicing, one realises one has been duped.

Take this classic example of a young watch collector (they are millions in this world, including this writer) Andrew Dakin. Seven years ago, he bought a Movado watch on eBay for 500 dollars. He was happy to get a deal on a unique and valuable timepiece. “At that point, I was probably like 30 watches in so I thought I knew what I was doing,” recollected id Dakin of his early collecting experiences. The watch arrived in the mail, looked legitimate; he wore it with pride for a while and then took it to a jeweller for an appraisal on how he could resell if it was cleaned up. The jeweller took the watch to the back of the shop and came back upset. It was a very good fake. EBay and other online markets have always unwittingly allowed themselves to be trafficked in fakes. Starting from fake memory cards to watches and shoes, it’s hard for the average online consumer to tell if they are buying real products, but often they don’t care really.

But in the case of watches like Movado, Omega and Rolex, it’s getting harder to tell the real from the replica and the stakes are surprisingly high, say experienced horologists (watchmakers) with years and years of experience. “Once you see a good fake it’s actually scary to think about how many people are walking around with a fake watch that they think is real and they will sell or pass down to someone thinking it’s real,” Daikin said.

World of fakes

Manufacturers prefer to call these super fakes “Exact Replicas”. Welcome to this strange world of a new breed of fake watches that, thanks to advances in manufacturing and 3D printing, are often indistinguishable from the real thing. Fakers make them for pennies selling them for thousands, often duping first-time collectors and experienced resellers with their high-quality creations, say horologists and watch dealers.

The fakes industry ~ created as a reaction to the changes in engineering techniques in the 18th and 19th centuries ~ resurfaced in the 20th century, when watchmakers began selling luxury watches made of steel and brands like Rolex gained prominence. Because it was far easier to fake a watch in plain metal than in gold, Canal Street in New York became a veritable wholesale market for fake Presidents and Daytona’s. Many of these reproductions were laughably bad with poorly placed logos, fake chronograph pushers, and even quartz movements in watches that were supposed to be completely mechanical and “hand made”. But that didn’t stop buyers from snapping up these “fauxlexes” as status symbols.

These obvious fakes have now yielded to super fakes that are so uniquely well-made that they are almost indistinguishable from the real thing. A Rolex watch comes in five categories ~ Day and Date, Daytona’s, Submariners, Oyster perpetual and Explorer ~ ranging anything between 5,000 US dollars and 40,000 US dollars (about Rs 3.5-28 lakh) ~ simply unaffordable by any middle-class aspirant youth or status seeker. Enter the super faker, who makes exact replicas and advertises on portals as “SALE, MIDNIGHT SALE” (Indian portals are famous for it), Price Drop, Prices slashed to 80 per cent. A Rolex or Omega is advertised for sale at Rs 20,000 and after discount sold for as little as Rs 3,000- 4,000 or for higher brands of Rolex or Omega for Rs 13,000-20,000. People grab them as they want to been seen wearing these status symbols thinking they have struck a hard bargain. Duped totally.

The economics

The Federation of the Swiss Watch industry says Switzerland produces 30 million watches a year. They estimate that fakers build 1.6 million a year, ensuring that your chances of finding a fake in the wild are fairly high. The new manufacturing technologies that make it easier for Chanel to make ceramic cases make it easy for fakers to produce something similar, if not identical, to the real thing. It is trivial to get these fakes from the factory to the street, leading to a flood of fake watches that are almost indistinguishable from real watches to the average consumer, reports in the international media say.

“E-commerce has been a blessing and a curse.” The blessing? The world is at your fingertips, and we can now find and receive goods faster than ever before. With that, there are legitimate resale platforms out there, making it easy to find and access a wide selection of luxury timepieces. These sites have built their business on authentication and quality. However, there is a market of people who are selling fake goods passed off as real. “Technology advancements and access are the culprits. To start, access to high-tech machinery is more prevalent than ever,” says Hamilton Powell, a leading authority on watches who has flourishing trade in the resale of original brands.

Fakes come in all shapes and sizes. Rolex is the most faked with copies of Submariner, Daytona and Datejust appearing regularly. Breitling and Omega are next with Super Avenger, and the Sea master fakes hitting the market daily. Interestingly, fakers have copied almost every Panerai model thanks to the simplicity of the watch. In fact, fakers have copied many of the specific Panerai hallmarks, including specially designed internal parts designed to prevent faking.

“Panerai Super Fakes are some of the best out there, given the minimalism on the dials,” said Powell. These watch brands are entry-level in the strange and pricey pantheon of luxury watches. Expensive makers like Chopard, Piaget and Hublot are seeing fakes hit the market.

Emma Monks, head of social media risk at Crisp, a brand-safety adviser, says fakes worth “nearly half a trillion dollars” hit the market yearly. “It’s not just an issue of hitting the luxury brand’s bottom line, though. The reputational damage and loss of consumer trust are massive problems,” she said. “Counterfeits are often of inferior quality, leading to, at best, an influx of customer complaints and, at worst, injury from dangerous fakes. If the buyer believed the product they bought to be genuine, even after they approach the brand and discover it’s a fake, the lingering bad taste from the experience can sour their trust and appreciation of the original brand.”

The supper fakers today make thousands of dollars on a good replica, investing more money than before, avoiding the obvious fake. In fact, there is an entire world of “replica watches” that sell many exact copies of popular watches. This strange underworld is similar to the replica car market, where fans buy supercars for 20,000 dollars because they are “reskinned” Toyota Camrys and Corollas, say investigating agencies and customs authorities.

A dying art?

 Watchmaking is a rapidly diminishing art and watchmakers are slowly leaving the field, disheartened by consumers, who are happy to tote around a 300 dollar fake Rolex over a real piece with history and quality. How do counterfeiters affect bilateral and international trade globally? A slightly out-dated report of the United Nations Office on Drug and Crimes (UNODC) says counterfeit goods made up about 2 per cent of world trade, worth about 250 billion dollars a year on transnational crime in Asia. Some 67 per cent of those counterfeit products were manufactured in China, according to data on goods seized worldwide between 2008 and 2010, which China has vehemently denied, saying western powers were defaming them

Global counterfeit trade, considered a “soft crime” by the UNODC, is made up of seemingly innocuous items like knock-off designer handbags and watches, but also includes more dangerous goods like fake medicine or toxic toys. Since its emergence as the world’s factory, China has developed a reputation for exporting fake, dangerous goods, from pesticides, to fatal diet pills, cold medicine and Heparin, a blood thinner that killed 81 in the US in 2008. US custom regulators charged some Chinese toy makers of selling toys with dangerous levels of lead, says the UN report.

China on its part has cracked down on counterfeit manufacturing. In 2011, authorities arrested over 3,000 people and shut down almost 13,000 factories involved in the industry. As global trade in counterfeit goods crossed the 1.2 trillion dollar mark against expectations of 1.7 trillion dollars, Malaysia, Thailand, Indonesia, Japan, the Philippines, South Korea, Singapore and Vietnam have all come under the scanner for becoming major exporters of counterfeit goods.

Counterfeit luxury goods are big business in China. Together, China and Hong Kong are estimated to be the source of 86 per cent of the world’s counterfeit goods ~ an amount that the US Chamber of Commerce estimates, is worth about 397 billion dollars. Fake merchandise accounted for 12.5 per cent of China’s exports in 2016, according to the same report. China also has a huge domestic market for fake goods as consumers buy counterfeits deliberately, paying a lower price for expensive goods.

Cracking on counterfeits is difficult on luxury brands. Large counterfeit manufacturers and distributors keep a low profile. Chinese law enforcement is not strict as vendors caught are not punished. Manufacturers such as Rolex and Omega, who invest huge investments in endorsements by celebrities, take a big hit, trust of the genuine customers; it’s no longer a rare commodity.

Rolex started with Sean Connery and went on to mountain climbers, rewarding them with their best watches. Omega went a step ahead, hiring all the James Bond heroes, from Roger Moore to Pierce Brosnan and Daniel Craig for their popular brands. Leonardo DiCaprio has invested more than a million US dollars in popular brands of Omega. George Clooney wore a very expensive Omega to the Royal wedding of Prince Harry and Meghan Marple in London. Marlon Brando, Robert Deniro, Roger Federer, Tiger Woods, Leonardo Capiro and Orlando Bloom are among celebs to have endorsed luxury watches. No wonder the watch collector does not worry about buying an exact replica.

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