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SIHH Anti-Counterfeiting Campaign: Desperate act by victim of success?  6 Comments

Published Tuesday, January 27, 2009 by Harry SK Tan |

 


SIHH 2009 saw the launch of the anti-counterfeiting campaign with the tag line - "FAKE WATCHES ARE FOR FAKE PEOPLE". Having seen limited success in legal prosecution, it seems that the brands are now looking to educate the buying public of the problems with buying counterfeit watches.
The watch industry is not alone being victims of the counterfeiting industry. They are indeed a scourge and continue to impact on the bottom line of businesses.
However, while I am supportive of the view that counterfeiting should be stopped and agree that there is some evidence to suggest that the fakes may indirectly be funding underworld organisations, I am not totally convinced that with their 'everyone suffers' claim.
The luxury goods industry - in recent history - enjoyed huge growth in revenue due to the past decade of growth and liquidity resulting in an ever growing demand for luxury goods (Richemont and LVMH has continued to post double digit growth every quarter until recently - due to the global financial crisis. For the uninitiated, SIHH is an event run by Richemont for their stable of watch brands).
It is this unrivaled success enjoyed by the luxury brands that drew the attention of counterfeiters, and as such have become - a victim of their own success. It seems that successful models of successful brands tend to become the focus of the buyers of counterfeits. Unpopular brands or models are ignored. Hence the attention of the counterfeiters are often targeted at the best sellers. I have yet to read about how any brand had made such heavy losses from counterfeiting activity to result in bankruptcy or business failure. Clearly, its the most successful brands who appear to be losing a portion of their expected revenue to counterfeiters.
There are probably two kinds of buyers of these counterfeit goods. Those who can afford the original and real models and the other that cannot. For the latter, these buyers are never the intended market. For the former, I have yet to meet a serious collector who would readily wear a fake when he has several rare top models in his collection.
Then there are those who can afford the expensive luxury originals but choose not to buy them - and instead prefers the fakes. This category of buyers are the real issue. Would they have bought the original if the fake did not exist? I have yet to see conclusive research on this question and am currently not convinced that such individuals would still buy an original Rolex Submariner if they could not buy a fake? Would public education succeed instead?
In my opinion, it will only work if the campaign treats the buying public as smart individual buyers who look at details. To be taken seriously, the campaign needs to report on real cases of how counterfeiting has negatively affected the industry and the report must be made by independent non-profit organisations and preferably audited as to accuracy. I believe that the buying public who can afford the real thing would need to be convinced that the campaign is not another marketing effort on the part of the brands to keep their profit margins high.
Then there is the other problem that luxury goods companies are facing - counterfeit quality continues to grow better each year and where 10 years ago one can spot a fake with a glance, the top quality fakes are now indistinguishable from the original unless they are inspected up close and with a loupe. The better they get the stronger the attraction for buyers.
How did the other industries deal with fakes and counterfeits? The software industry in the late eighties faced the same issues and had the same problem with piracy. The top software companies employed several anti-piracy measures including developing alliance organisations to enforce their IP rights. I believe the one true solution that worked there was to price their products at a point where buyers are able to feel that the purchase is justifiable.
-HT

 

 




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