Fight Against Counterfeits

            Counterfeits account for anywhere from $300 billion to $600 billion in sales globally, with the majority of them being manufactured in China. In fact, about 88% of counterfeits seized originate from either Hong Kong or China. This presents a massive problem for thousands of companies, as they try to establish their brand identities across the world. One particular Italian company, Gucci, has decided to pursue legal action after learning that there were more than 2,000 counterfeit Gucci eyeglasses found in the factory of a Chinese company. Earlier this year, Gucci filed a lawsuit against this company, arguing that they are producing counterfeit products under the company name. Gucci is just one example of many companies how rely on these raids and seizures to ground the industry of counterfeiting, but and their reliance and trust may be misplaced. Numerous intellectual-property experts with over 10,000 different raid and seizure experiences theorize that a significant amount of these raids are compromised. Documents and numbers can be faked and many times investigators can be bought off. Brands such as Columbia Sportswear, have decided to pursue legal action in lieu of ineffective raids and seizures. Hiring third parties to raid counterfeit companies doesn't come cheap, and with the integrity of the raids being compromised, the money might be better spent elsewhere.

            Of course, this affects marketing a product from the company's perspective, particularly those in the business of watches, jewelry, apparel, etc. Consumers have to have the security of knowing they are buying from you when they see the company name pressed on a product. Once counterfeits begin to become a problem in any region of the world, customers will be more cautious buying that brand due to the possibility that it is not the prestigious product that the logo implies. This happens particularly often for companies with a prestige pricing strategy. Because much of their price comes from the brand name, the production costs aren't as high as one would think and could easily be mimicked by fraudulent companies for cheaper production costs, and for the customer, cheaper prices. This is one problem that companies with low prices don't typically encounter. If the production costs of a product are low, there wouldn't be much money in mimicking it. Of course, people have become more privy to watches and jewelry on the streets of metropolitan areas, recognizing them as fakes more often than not. It is more likely that someone fall for apparel, shoes, consumer electronics, and pharmaceuticals. If companies are to solve this problem, they will have to find a more effective way than either seizures or legal action, as both are expensive and often become dead ends.

http://www.wsj.com/articles/in-the-fight-against-counterfeits-even-the-raids-can-be-fake-1449171005