Overview Sales of fake luxury products may more than double to Rs.5,600crore by 2015, according to a report released by lobby group Associated Chambers of Commerce and Industry of India (Assocham) .The local market for fake luxury labels, including handbags, watches, sunglasses and perfumes, is growing at twice the growth rate of genuine luxury products. Globally the fake luxury products market accounts for 7% of the overall luxury market with an estimated value of over $22 billion of the global luxury industry worth about $320 billion. In India, fake luxury goods account for about 5% of the overall luxury market, Goods made in China, which is the source of a bulk of the copies of coveted labels, are largely fuelling the demand for fake luxury goods in India, over 80 percent of the imitation luxury products being sold in India come from China. It further highlights that a major contributor to this growth is online e-commerce websites that now account for over 25 per cent of all fake luxury goods sold. The online luxury market worth Rs.17,000crore is growing at over 20 per cent. Countless websites have flooded the online retail space and this is an unmonitored platform with simplified channels for counterfeiters to promote and sell fake products to India. This at a time when online retail reaches a new high of 85 per cent. Consumers across income classes in India do not discriminate against buying fake products,
Transcript
Overview
Sales of fake luxury products may more than double to Rs.5,600crore by 2015, according to a report released by lobby group Associated Chambers of Commerce and Industry of India (Assocham) .The local market for fake luxury labels, including handbags, watches, sunglasses and perfumes, is growing at twice the growth rate of genuine luxury products. Globally the fake luxury products market accounts for 7% of the overall luxury market with an estimated value of over $22 billion of the global luxury industry worth about $320 billion. In India, fake luxury goods account for about 5% of the overall luxury market, Goods made in China, which is the source of a bulk of the copies of coveted labels, are largely fuelling the demand for fake luxury goods in India, over 80 percent of the imitation luxury products being sold in India come from China.
It further highlights that a major contributor to this growth is online e-commerce websites that now account for over 25 per cent of all fake luxury goods sold. The online luxury market worth Rs.17,000crore is growing at over 20 per cent. Countless websites have flooded the online retail space and this is an unmonitored platform with simplified channels for
counterfeiters to promote and sell fake products to India. This at a time when online retail reaches a new high of 85 per cent.
Consumers across income classes in India do not discriminate against buying fake products,Interestingly, people who buy fakes of luxury brands are not always logo-loving middle classes, even the affluent class make trips to shops selling duplicates. Whether it’s the M-block market in Delhi's Greater Kailash or Linking Road in Mumbai, they have all the high-end labels such as Chanel, Michael Kors, Fendi, and Gucci to replicas of Louis Vuitton. And they are such
true copies of the original that it’s hard to find the difference between a fake Rs 3,500 Lady Dior bag and the real one costing anywhere between Rs 1 lakh to Rs 5 lakh.
Another reason why the fakes luxury market is growing at such a fast pace is the advent of e-commerce platforms selling them at lucrative prices. According to the reports, web portals selling fakes account for over 25 per cent of the fake goods market in India. For instance, first copies of these premium brands are easily available on c2coffer.com, an online portal, within a week of official launch of the original collection. There are other websites also such as Quikr or OLX who offer replicas of high-end brands such as Hermes TAG Heuer, Omega, Rado, PatekPhillipe, Chopard and Bvlgari. (1)
Market places selling fakesWhen it comes to India or in fact Delhi there are innumerous numbers of market places, which indulge into the unethical practice of selling counterfeits or replicas of high-end luxury brands. For instance-
The M-block market in Delhi's Greater Kailash is well known for its exclusive and latest collection of fake luxury bags and belts. There collection is highly updated. Here you can find row upon row of-Chanel, Michael Kors, Fendi, and Gucci. There are replicas of Louis Vuitton monogrammed stoles, a few good but mostly horrible copies of YSL clutches, and some Chanel scarves so convincingly elegant that one has to be a connoisseur to spot a flaw. These shopkeepers are making profits above the margin due to increasing demand of replicas among all the age groups, irrespective of their income levels as these products are highly cheap and affordable.
Whether it's Delhi's GK or Mumbai's Linking Road, the thirst for fakes is growing. An Assocham-Yes Bank report released last month noted that the market for counterfeit luxury goods in India is now growing at twice the rate of genuine products and was poised to double in size by next year. The issue,
which rises here, is whether this is a good or a bad news! (2)
Case studies
Fake Louis Vuitton at a five star hotel
Owner of a high-end store in five-star in Mumbai arrested for making fake LVs in the stores loft.
Shoppers who have been vainly flaunting their Louis Vuitton indulgences bought from a high-end store, i.e. The Leela, Sahara, Mumbai are surely shamefaced for fashion illiteracy. The police along with the Enforcers of Intellectual Property Rights (EIPR), an anti-counterfeit investigating agency, conducted a raid and seized a haul of fake accessories that could have been sold illegally at an unearthly 2.2 crore.
The shop was also stripped of monogrammed raw material, used by it to put together these phony products bags, clutch, belts and wallets. These wares
were
manufactured, rather remarkably, in the loft of the store. Rolls of fake Louis Vuitton raw, material and lining material were also found surprisingly.
Sahar Police have arrested NaseerNiyaz, 37,the owner of the counterfeit shop under sections 51 and 63 of India Copyright Act. Which is a non-bail able offence.
Counterfeit of Gucci products sold online
A well to-do flagship store of fashion e-commerce companyXiu on Tmall’s online platform was shut down after reports of the sale of counterfeit Gucci products.
The scandal also delivers a blow to consumer trust both on and off the web, as counterfeits spread into all corners of the economy. And hence many online customers believe that online luxury goods are fake.
Online shopping for luxury goods is an inevitable trend but the market will undergo a shakeout, which will wipe out many customers.
Fakes sold in shopping malls in Mumbai
The Worli police raided three high-profile stores at a plush mall in central
Mumbai and seized duplicate bags and accessories worth more than Rs70
lakh bearing the tag of Louis Vuitton.
Investigators said that these products were then sold as original to the
customers. Three people have been arrested in the case so far. On
inspection, investigators found duplicate handbags, trolley bags, luggage
bags, wallets, cufflinks, belts, key chains, card holders, and sunglasses
bearing Louis Vuitton’s tag.
The fake are so craftily made that it is difficult to distinguish them from the
original. Only an experienced eye could have identified the difference. (3)
Differentiate between real and fake
While purchasing a luxury item the most considerable fact is that whether the product is original or an imitation. Imagine paying as per the original value and purchasing a fake worth not even half of the price of the original product. Due to many fraud cases lining up these days one must be conscious and alert while shopping for a luxury item. While purchasing a luxury item one must consider the following – zipper, buckle, leather, logo, stitching, etc (4)
BUTTONS LOGO
Authentic Fake Authentic Fake
Logos should be perfect- anything slightly ajar should be reported right away.
Make sure the buttons are securely attaches and have the designer logo if appropriate.
ZIPPER
Zip should move smoothly and the hardware attached should be of the same color.
TAG
Stitched on tags should have the same number of stitches on both sides.
Legal issues related to selling fake luxury products
Is it Illegal to Buy Counterfeit Goods?It is difficult to hold a person liable for buying counterfeit goods, especially if they purchased the item or personal use without knowing that it was an imitation. State policies may vary regarding the purchase of counterfeit goods. However, the people who buy fake luxury goods cannot be held responsible and cannot be blamed for it under certain cases.
Is it Illegal to Sell Counterfeit Goods?On the other hand, it is illegal to manufacture and distribute counterfeit goods. There are several federal and state laws that make it illegal to engage in the practice of selling counterfeit goods.
Examples of some laws that prohibit the sale of counterfeit goods include:
1. Stop Counterfeiting in Manufactured Goods Act: Specifically prohibits the practice of attaching brand-name labels onto generic items or presenting low-quality items as brand name products. 2.Trademark Counterfeiting Act of 1984: Makes it illegal to sell items, which use another company’s trademark without their permission.3.Anti counterfeiting Consumer Protection Act (ACPA): Imposes criminal liability for the trafficking of counterfeit goods or services. Specifically targets the counterfeiting of copyrighted merchandise including motion pictures and computer programs.
The counterfeiting industry is a complex and highly organized effort. It often involves the transport of illegal goods across state and international borders. Thus, people who are arrested for selling counterfeit goods are often charged with several different crimes.What Are the Legal Consequences of Selling Counterfeit Goods?
A person who is caught distributing or manufacturing counterfeit goods could face severe legal penalties under such statutes. The penalties for violating anti-counterfeiting laws can include:
▪ 5-10 years in prison.▪ Fines of up to $500,000 (possibly more depending on the case)In addition, anti-counterfeiting laws allow authorities to seize counterfeit goods, money from the sales, as well as any property that was used in connection with the distribution. This means that authorities may seize vehicles used to transport the items, or the machinery used will be taken away. Under these acts unless a court finds some mitigating circumstances the victim will have to bear triple the profit earned by him during the sale and a
reasonable attorney fee award will be awarded if the counterfeiter knew that the good sold by him was a copy and was not an ethical practice.
If you get a Cease and Desist Letter ?The following scenarios are possible after receiving a cease and desist letter:
You keep selling the lawyer files a lawsuit, get a default judgment and enforce it against you personally (assuming you're not an LLC or incorporated) or against your business.
You stop selling the lawyer drops the whole thing. You stop selling, the lawyer sends a second letter, gets no response
and files a lawsuit and gets a default judgment. (5)
Sources of fake luxury productsAccording from the new report from the Associated Chambers of Commerce and Industry of India makes some other questionable claims. It identifies three big sources of counterfeit goods Firstly, more than a quarter of fake goods sold in India are sold online. Secondly, 80 percent of the produce is coming from China. Thirdly, 20 percent of the produce is coming from Hong Kong.
On the first point, ecommerce still makes up only 1 per cent of retail sales in India (which were worth a total of $528bn in 2012, according to Ernst and Young). That isn’t nearly enough to pose a big threat. Besides, large websites such as Flip cart and E-bay
dominate the online business and they have stringent rules on authenticity. Many of the counterfeit websites sell the products for a price that can hardly be called cheap and the websites look convincing.
Hong Kong's market might be rammed full of sham merchandise, but it is more common for China to be the manufacturer rather than the consumer of copies. China is
$528bn in 2012, according to Ernst and Young). That isn’t nearly enough to pose a big threat. Besides, large websites such as Flip cart and E-bay dominate the online business and they have stringent rules on authenticity. Many of the counterfeit websites sell the products for a price that can hardly be called cheap and the websites look convincing.
Hong Kong's market might be rammed full of sham merchandise, but it is more common for China to be the manufacturer rather than the consumer of copies. China is the heart of the problems of people who can’t buy original luxury products.
There is a variety of range selling bags of different brands like Louis Vuitton, marc by marc Jacobs and many more at Stanley markets on Hong Kong Island, where the glittering designer belts and boots are easily spotted between plastic children's toys and calligraphy sets.
From markets stalls to global networks, they distribute goods that can even end up in legitimate distribution channels through deception. (6)
Consumer Psychology
India being a show off society needs a great understanding of consumer psychology. From Primary research, we have come to the conclusion that people belonging to higher income groups, are seen to be more interested. and infatuated in purchasing fake luxury products such as Burberry, Louis Vuitton, Chanel, Prada, Gucci, etc.
Indian consumers are highly brand conscious and want to maintain a high status while spending less amount . For them carrying a counterfeit is not such a big deal, what matters to them is carrying a branded item irrespective of its price. In short we can conclude that India has enough contribution to the show business.
To study the demand for fake luxury products among the youth of India.Sub objective: To study Overview Market places Case studies Legal issues Sources Diff. btw real and fake
RESEARCH DESIGN
Literature review was conducted on Fake luxury products through secondary sources of data collection i.e. internet followed by primary research through questionnaire on target market.
DATA COLLECTION METHODS
The secondary sources of data were collected from the internet and newspaper articles. And the primary data was collected by surveys.
