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If you make a pair shoes that look like a classic Clarks model and sell them under the name "Clerks" then this is piracy and you are selling a pirated "knock-off". If you sell them under the name Clarks then it is a counterfeit. I use that example because I actually discovered a "Clerks" store in Chengdu about ten years ago.
The counterfeit business used to be all about over runs found on market stalls, as many leather industry executives will remember in Korea back in the eighties. The western brands were often very tight on margins and unforgiving with low quality items or inventory left-overs so some of the problems were self infected. But globalisation and the ease of selling via the Internet have changed all this. The counterfeit trade has become big business with big gangs involved. Roughly taking OECD figures at least 2% of world GDP, up to 9% of world merchandise trade, is accounted for by this crooked business and people have died from fake medicines and knock off spare parts for aeroplanes.
Since much of the manufacture from the west removed to China between 1990 and 2010 it is perhaps not surprising that about three quarters of the total come from China where some estimates say counterfeit products account for 8% of China's GDP.
I have supervised dissertations from clever Chinese students who argue that knock off hand bags or “tong kuan” are good entry level routes for poor students into the world of luxury goods and the brands should not worry. Equally I have travelled frequently to Hong Kong and China with parties full of executives and partners looking for the various markets to buy their cheap copies.
Both groups need to take note of what A.T. Kearney said a few years ago: “counterfeiting allows skipping the investment necessary to create, develop and market products and go directly to profits. No R&D headaches. No brand building. No advertising.” Great harm is done to companies if we as consumers are willing to ignore all the effort and cost they have put in to creating great products. Worse still we now know that much of the earnings from these counterfeit articles ends up funding terrorism.
Given what we have learned about lack of supply chain scrutiny by some brands and retailers then it comes back to us, as tanners, to ensure that we keep our leather out of these products. So as you sell your leather, not just in China but to other counterfeit hotspots like India, Thailand, Russia and Vietnam - although they can come from pretty much anywhere these days - you need to be totally sure how and where it will be used. Our customers need our help to defend their businesses and so does "Brand" leather on which we all depend.
Follow Mike Redwood on twitter: @michaelredwoodcomments powered by Disqus