In Western Society if a consumer purchases a product he suspects is counterfeit his only resource is to contact the manufacturer for verification. The situation is different in China which has appraisal centers for verification.
The China Electronic Commerce Association established an official luxury brand appraisal center in March, 2017 to assist shoppers who can submit a product they suspect is fake for an appraisal. This is the only state-owned service of its kind in China, however, there are many other appraisal centers, including independent appraisal centers, in-house appraisal centers and artificial intelligence appraisals.
Product counterfeiting in China is an immense problem due to the size of the population and because China is the world’s second largest luxury market behind the U.S., with luxury goods sales reaching $78 billion or 21% of the world market, and with many purchases done online on sites like Alibaba’s Taoboa and Tmall. The counterfeit products are a problem not only for the consumer but also for the brand owner.
Meeting the growing demand for skilled appraisers is a problem. It takes 4 to 5 years to become a skilled independent appraiser because of the training and skill in product and trademark recognition, as well as in the use of sophisticated technology and also hands-on experience. Unfortunately, many training courses are not professionally run and provide little qualifications for trainees besides theoretical knowledge.
Many of the fakes are available on the Internet. In July 2017, The U.S. Toy Industry Association sent a letter to the Senate Finance Committee in response to a Committee Hearing in March related to protecting e-commerce consumers from fake toys. The industry group’s IP Protection Committee works closely with U.S. Customs and Border Protection (CBP), the Consumer Product Safety Commission (CPSC)—as well as representatives from Alibaba and Amazon to explore solutions to the problem.
ToyFair 2018 held in England showed a decrease in toy sales of nearly 3% for 2017caused in large part by counterfeits. According the British Toy and Hobby Association (BTHA), the counterfeit toys came primarily from China and the volume was so great that Trading Standards seized tens of thousands of toys every month.
3.5 million fake toys were seized by EU Customs officials in 2017. The retail value amounted to over 21 million euros. Toys represented 11% of counterfeit goods detained at EU borders in 2017.
2017 Notorious Markets List 1.11.18
The Office of the United States Trade Representative (USTR) published the 2017 List of Notorious Markets. This was the first review under the Trump Administration. The List identifies physical and online marketplaces believed to facilitate the sale of pirated goods.
Two of the most interesting selections were the PirateBay and Alibaba’s Taobao.
Pirate Bay is of symbolic importance as one of the longest-running and most vocal torrent sites of illegal downloads of movies, television, music, and other copyrighted content.
Alibaba blamed politics for Taobao’s listing and cited its impressive anti-counterfeiting record, which was cited in the USTR’s report. The USTR acknowledged that Alibaba has taken steps to improve the situation, but it noted that “important unresolved concerns remained.” Taobao was reinstated on the list under the Obaba administration a year ago.