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Wednesday, July 11, 2007

Brand Busters: Fake Designer Handbags, Clothing and Pirated Movies on DVD Proliferate in New York’s Chinatown

By Shakira M. Brown

On Friday, June 29, 2007, my assistant and I were headed to Little Italy for a nice lunch. We got off the subway at Canal Street which dropped us in the belly of Chinatown’s counterfeit row. As soon as we placed our comfortably-heeled feet on the sidewalk, the sound of fake designer merchandise being hocked surrounded us.

As Asian women shoved laminated photos of faux bags in front of me they asked, “Coach, Gucci?” “Prada, Chanel”. This was not a trip for that type of shopping, so we continued on our journey up Canal Street toward the sweet smell of Italian food. But at each new block there were more street peddlers and hustlers asking us if we wanted a DVD of “Live Free Die Hard” (just days after its release) faux Dolce & Gabbana sunglasses or a Rolex watch. If we fancied, we could have indulged in a nice knock-off Tiffany bracelet ( ), but we motored on.

As I was wading through the crowded street, I could not help but think about an article I read in the Wall Street Journal ( no more than two years ago about how designer companies were cracking down on counterfeit versions of their merchandise. They were even cracking down on the desperate housewives who were raking in side money by having “bag parties” in their homes selling knock-off wares rather than candles or jewelry. Was that just a publicity stunt to scare off the faux bag peddlers? I am not sure, but what I am sure about is that the counterfeit designer goods and pirated media business is alive and well in New York’s Chinatown.

Why is this bad?

The counterfeit industry is very bad for branding. The number one reason for this is that the counterfeit items are poorly made and lack subtle details which typically add caché to the real items. Often the integrity of the brand is lost mainly because of the lack of attention to detail.

With thousands of counterfeit items being sold daily in various markets, high-end designer duds are making their way into the hands of the average Jane or Joe. Why is that bad? One reason is that those designer items are no longer exclusive to the wealthy and famous set. If a middle-class person can purchase the latest Birkin bag in Chinatown as a counterfeit for $100 why would Jennifer Anniston or Jessica Alba want to carry a bag that is suddenly so attainable to common folk? Counterfeits ruin the mystique behind some of the most revered designer brands. When celebs stop showing up in your hottest designer items - the free publicity the brands were receiving go away with it.

The movie industry seems to be more proactive with regard to piracy. Over the last year, Regal Cinemas has tested devices that allow movie-goers to alert theater staff if they see a scoundrel recording the movie they are watching. This is called citizen action and is a great idea and a step in the right direction. But piracy has taken a toll on the movie industry, so much so that theaters are doing everything they can to get people lined up to pay $9.75 or more to see the latest releases. Reduced pricing during certain hours of the week are in full swing and movie clubs offering free popcorn or other discounts are being offered by large theater chains.

But what about the designer bag manufacturers? What are they doing to stop their brands from being hijacked and sold for far less then the retail cost? I know some designer brands have legal departments dedicated to cracking down on counterfeit goods, but is it more then they can handle? Perhaps some luxury good makers have decided that they have bigger fish to fry and are not proactively looking to stop the counterfeits. Maybe it is the unsavory PR they would receive if they suddenly disenfranchised thousands of immigrant peddlers, many who are Asian and African, by raiding the back rooms and alleys the faux merchandise is sold from. Photos of immigrants being escorted from the scene in handcuffs plastered on New York tabloid papers would not be very good for corporate cultural relations.

I will tell you one thing, the counterfeit sales force is very savvy. Very few of them have items on display on the street. Instead, they show you a picture of their fake merchandise rather than have it right there on the street. I guess they are doing all they can to protect their counterfeit brands.

I wonder exactly what luxury good makers are doing to protect their real brands?

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