Friday Rant: Luxury Goods vs. Really Good Bargain Fakes – Who Gives A Darn?

I will never understand why anyone would pay thousands of dollars for a handbag, scarf, pair of shoes, or even a watch for that matter. But that's me, a somewhat curmudgeonly cheapskate who would prefer to spend $3K on a good used car that cost 90 grand new. Vive la difference, with a twist. Yesterday's WSJ Personal Journal covers "The Fine Art of Faking It" and how it's becoming increasingly difficult to know that the bag one buys for $300 -- when the real thing costs more than 5x that amount -- is a fake.

Who's kidding whom? If a price is too good to be true, it is. I've purchased "designer" knock-off hand bags from street vendors in NYC as gifts because they were cheap, colorful and it was fun to see the initial perplexed look on the faces of those to whom I gave them because they knew I'd never spend what the bag appeared to have cost. Never-the-less, according to the Journal, "Counterfeits are better crafted [than ever], duping even sophisticated shoppers ... [and] The International Chamber of Commerce estimates that the value of counterfeit and pirated products worldwide is about $600 billion, and projects that figure to double by 2015."

What I find more interesting is that "Last year, U.S. agents conducted nearly 20,000 seizures of goods that infringed on intellectual property rights, an increase of 34% from 2010, according to a report from U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement. In 2001, there were about 3,600 seizures. Footwear was the top commodity seized, the government agencies said. Clothes and handbags ranked third and fourth, respectively." I related this story at a social gathering last evening and was a bit surprised at the general response of "so what". "So what?", I said, there are bandit's out there stealing corporate brands and they deserve to be prosecuted. To which my friends replied -- in step with government frugality -- "and who's paying for it?"

I didn't acquiesce, but my friends may have a point. Legitimate litigation against patent infringement and intellectual property rights typically involve rebranded stealing of other's property that is duly registered and licensed. Knock-off fashions are, in fact, counterfeit. Illegal yes, but so transparently so that it would seem that the onus and cost of investigation and prosecution should be borne by the corporate entities that are violated, similar to the manner in which patent infringements are litigated.

Not surprisingly, according to the Journal, "More than 60% of counterfeit goods seized by U.S. agents last year came from China, which has a sizeable pool of highly skilled labor and is increasingly the source of legitimate luxury goods manufacturing. Seizures from China rose 18%, in part the result of higher mail activity." And while we all get what we pay for -- or not -- it would seem that those who buy knock-offs are basically far more savvy shoppers, even if they are duping themselves.

- William Busch

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