no justification. It is similar to pirating CDs, DVDs and Video Games and
also stealing intellectual property like Copyrighted materials.
Counterfeits have been a problem for the luxury and prestige industry for
centuries. In 2005, the international trade of counterfeit goods was estimated
to be worth €500 billion, which is a significant jump from its 1997 worth of
$90 billion. New York City alone accounted for $23 billion in sales of coun-
terfeit luxury goods in 2004, while Italy has an annual counterfeit goods trade
of approximately €3.1 billion. This rapid growth rate is also evident in several
Asian markets and shows no signs of abating. In Hong Kong, there is a high
demand for counterfeit luxury goods mainly from white-collar workers
between the ages of 25 and 34 and other age groups. In China, the case is
more serious and although statistical evidence remains inaccurate, it is
considered a major world centre for counterfeiting and the worst violator of
intellectual property rights. However, the Chinese government has recently
taken measures to contain the trade through introducing new laws and launch-
ing visible raids on factories. Other major producers of counterfeit luxury
goods are found in Turkey, Thailand, Morocco and South Korea.
The ongoing question of how to curtail counterfeiting in luxury fashion
seems to have received no clear answer. Several luxury brands believe that
this is a losing battle so instead of trying to win against the violators, they
have initiated different means of making the trade more expensive to operate.
Luxury brands such as Louis Vuitton and Burberry have proactively chan-
nelled substantial resources towards dealing with the supply aspect of fake
luxury products but have almost ignored the growing demand facet. These
brands work in collaboration with law enforcers such as the New York Police
Department’s Trademark Infringement Unit and the Chinese government
authorities. They often raid stores and factories; and arrest counterfeit goods
suppliers and distributors. An example is the recent closure of the Shanghai
Xiangyang Road Market, which is considered an abode for replicas of luxury
brands, by government authorities. Other brands such as Hèrmes have warn-
ing messages on their website informing consumers that products are sold
exclusively in Hèrmes Boutiques, approved retailers and on the official
Hèrmes website and therefore purchase of Hermès goods outside these three
channels would not guarantee that the products are genuine. The result of
these efforts is that the counterfeiting trade is now more expensive for the
suppliers but despite this, the demand continues to grow.
So how can the demand aspect be curtailed in addition to the supply of
fake luxury goods? An example of how this may possibly be done can be
taken from the French government, which is a notable pioneer of curbing the
demand for fake luxury goods. While several government authorities have
made the manufacture and sale of fake luxury goods illegal, the French
government has gone a step further. It has introduced legislation covered
under criminal and customs law which makes not only the manufacture and
distribution of fake luxury products a crime, but also their ownership and
chapter 5 173the art of creating and managing luxury fashion brands