Fake Luxury Watches: Consequences & Global Target Market
Fake luxury watches are believed as a tribute to the rare timepieces and inaccessible models by counterfeit watch sellers. China is the largest producer of manufacturing and distributing counterfeit watches worldwide. Fake popularity is such that it is displayed and sold openly in Beijing’s Silk Street and Pearl Market, the heart of the capital.
Although, these fake watches might be a source of income for the local manufacturers as demanded by unscrupulous retailers perching in the global markets of developed countries. In hindsight, selling counterfeit watches is nothing more than duping customers into paying a hefty amount for a timepiece that will probably stop working in a year. Moreover, an enormous consequence of inadvertent purchases is deteriorating the sales of reputational brands and destroying their market value.
What have been the consequences of Fake Luxury Watches so far?
Today, the problem of counterfeiting Swiss watches is not alone limited to infringing the trademarks but even manufacturing. The counterfeiters are spread across Asian countries like China (holding 53.4% of “Swiss” counterfeit watches), Hong Kong (containing 24% of “Swiss” fake watches), followed by Singapore(5.1%) and Turkey(5%). They have the skillset, ability, human resources, and industrial resources followed by a confiscating network of transit points to manufacture and distribute fake watches worldwide. According to the Federation of Swiss Watch Industry (FH), counterfeiters use specific and strategic storage and transit hubs, for example, in the United Arab Emirates, to ship the watches to end customers.
In addition to that, according to a report by OECD, it is found that the increasing market of counterfeit watches has led to infringing the Swiss watch manufacturers’ IP rights, amounting to CHF 7 billion until 2018. This number is equivalent to the 2.3% of genuine Swiss exports recorded compared to the report generated in 2016 that amounted to CHF 5.3 billion of losses to the real Swiss Watch Industry.
The counterfeit market of fake watches doesn’t give up there. Another report procreated by OECD for the year 2017–2019 claims that around 55% share of the secondary markets is Swiss Watches and Jewellery.
A surplus addition is a report on “The economic cost of IPR infringement in the jewellery and watches sector” by the European Observatory on Infringements of Intellectual Property Rights which found that:
- The legitimate watchmaking and jewellery industry loses around 1.9 billion euros in annual revenue due to counterfeit watches and jewellery on the EU market, corresponding to 13.5% of sales in the sector. (Total sales are estimated at 14.6 billion euros.)
- Counterfeiting in this sector causes a loss of sales worth around 3.5 billion euros to the EU economy, leading to the loss of 28,500 jobs and 600 million euros in government revenues.
What are the targeted Global Markets for fake watches, and Why?
Counterfeit watches, explicitly belonging to the fake category, are the best reproductions produced for target markets like developed countries. These fakes are sold in European and American markets by claiming them as authentic timepieces only to dupe customers into buying highly sophisticated, indistinguishable fakes to earn hefty profits.
These intricately manufactured fakes not only dupe customers but cause direct harm to brands by losing them direct sales and reputational value in consumable hindsight.
“The person who makes the most profit on a single transaction is the one who buys an 800-dollar fake watch in China and sells it for 18,000 dollars in Europe,” stresses Thierry Dubois.
“I have already dealt with the case of an owner of a fake watch who had paid that kind of price. The high value placed on some models on the secondary market, as well as their rarity, encourages counterfeiters to tackle these types of very well reproduced models” he adds.
The figures indicated by the expert are an apparent reason why counterfeiters and counterfeit representatives are likely to sell their cheaply produced models in these rich countries. Furthermore, the profits generated by even one sale can benefit them to strengthen their anti-counterfeit mitigation mechanisms, thereby setting up new pathways and methods to distribute fakes worldwide.
In addition, the money generated by these counterfeit items is invested in other underlying criminal activities such as human trafficking, slavery, and poor-wage employment.
Thus, counterfeiters see these developed countries as gold mines that hold the potential to bring affluence at the expense of duping customers and destroying luxury watch brands.
Concluding Word
The market of fake watches especially claimed as Swiss is massive and will continue to grow if there is a lack of immediate action.
Therefore, Swiss brands collectively introduced a consortium a few years ago, known as the Fondation de la Haute Horlogerie (FHH), to raise publicity for a campaign named “Fake Watches Are For Fake People.”
The true message behind the campaign was to make people think before they advertently or inadvertently purchase a fake Swiss watch. Moreover, the motive was to drive people in the right direction by identifying and verifying any Swiss watch before purchasing.
Despite the campaign, it is hard for people to verify high-grade fakes or replicas and, therefore, a more viable solution to stop the spread and sales of fake watches will be to block their way before they reach customers.
It can be done with the collective participation of brands with logistics firms. They can exchange information to identify the large quantities of suspicious small parcels with the help of innovative technology, such as Countercheck, that will help identify counterfeit packages on the supply chains backed by image recognition and machine learning algorithms.
You might want to connect with us to know more about how Countercheck and Pietro Gagliano can help you detect counterfeit parcels and stop the counterfeits reach customers.
