Counterfeit Production
By: Danya Almoghrabi
The production of counterfeit fashion is a negative externality towards the economy. Counterfeit fashion is the production of fake brand names such as Nike,Louis Vuitton, Michael Kors, and many other brands. Consumers of these counterfeit products need to become more aware of how terrible this is to the economy.
Fake v. Real Celine bag
According to the “World Trademark Review”, the counterfeit market earns a revenue of more than $600 billion each year. That number means a lot of things towards, not just the economy, but also towards other people. These fake goods affect the real brand name companies whose total demand lessens because of how many people buy the cheap, fake products. For example, Louis Vuitton, one of the most counterfeited brands in the fashion industry, could be making billions of more total revenue if there wasn’t so much counterfeits being sold. These products are sold illegally on the streets, online, or in stores.
The impact that counterfeit products have on the economy is huge. The sales of real products reduce because people would rather buy cheaper items that looks similar to the real thing. This causes fewer output which leads to a decline in production. Additionally, it increases unemployment because if less products are being produced, less workers are needed. Also, concerning the global industry, it decreases trade because the products are not needed as much. Each country’s economy is affected because of counterfeit products. In the U.S. alone, we approximately $200 billion is lost annually because of counterfeits. 
Counterfeit Bags Being Sold
Production of counterfeits don’t affect just the economy, but living dangers as well. For example, when a counterfeit is sold, the person selling the item usually sells it at a higher price than it is to make it so, they make a profit. With that money, they can do anything they want with it, like purchasing other illegal products. Although this is not always the case, counterfeit products create a domino effect that impact others as well as the economy. There are many other dangers that counterfeit products create, but, as described in the video below, there are also ways to stop them from happening.
In conclusion, people should be more informed on the dangers of counterfeit products towards the economy. Consumers may think that they are saving money buying fake products, but the opportunity costs are too high for this to continue. If you ever think of buying fake products, stop and think of how many other things you are affecting because of that small purchase.
Sources:
Flows, Capital. "As Louis Vuitton Knows All Too Well, Counterfeiting Is A Costly Bargain." Forbes. Forbes Magazine, 25 June 2015. Web. 05 Feb. 2017.
"The Harmful Effects of Counterfeit Goods." Athens State University. N.p., n.d. Web. 05 Feb. 2017.
Lieber, Chavie. "Why the $600 Billion Counterfeit Industry Is Still Horrible for Fashion." Racked. N.p., 01 Dec. 2014. Web. 05 Feb. 2017.
I completely agree that this is an issue. Fashion is a 2.1 trillion dollar business overall and for other vendors to be coming in and creating counterfeit products really upsets the balance that these high end companies have created. While there are many reasons for them to have these options, many vendors believe that they are doing this for the greater good of the people who cannot afford a $300 Michael Kors purse. However, if this continues, fashion will become a more lower end business since the high end companies will not be able to keep their prices high and demand will decrease significantly.
ReplyDeleteIt is crazy to think that counterfeit/ fake products make up $600 billion a year. I feel like anyone who has shopped for expensive clothes, shoes, or anything like that they have encountered fake products. They may not have bought it but the websites are good at making it look real and valid for people who quickly find what they want and make an impulse purchase. To add to that, I feel like people often care less about the quality of the product and instead care more about the looks of the product leading them to purchase the cheaper, fake product.
ReplyDeleteCounter fit production is illegal as well as unfair to those who produce the products in poor conditions. However, just like the drug industry and black market, counter fit items will continue to be in the market until the population determines they will not buy their products any longer as the products are illegal already for violating trademarks. If we want to stop these, we can either devalue the name brand itself by shopping generic, or simply not buy counter fit products.
ReplyDeleteI feel that counterfeit products are horrible for our economy and negatively affect producers of commonly counterfeited products. I think that it is crazy how these products can create nearly 600 billion dollars of revenue a year, which is a huge sum of money that is taken from those who genuinely produced these products. A company commonly counterfeited for example would be Louis Vuitton, which charges thousands of dollars for iconic purses and accessories. Many are angered with these unreachable prices and will turn to fakes, but in fact the counterfeit products are an offensive remark to the company and those who actually purchased the real product. My mother owns a few purses from this company, and she is constantly asked if hers is fake or not (by relatives and friends), which just shows the impact that counterfeits have on the market for this company. These companies take pride in the products they produce, which are then easily copied using cheaper materials and lower quality structure. If you own a fake, your funding an illegal black market.
ReplyDeleteI never realized that counterfeit products were such a big industry. I knew that they existed, but I didn't know they were sold in stores. It makes me wonder how many people have bought a counterfeit bag without even knowing it. Although it hurts the designer bag industry to produce and buy these counterfeit items, it is up to the consumer whether or not that is a risk they want to take in purchasing a counterfeit product.
ReplyDeleteFor me personally, this was an interesting read because I am one of those people who buys the off-brand look-alike of a popular, expensive brand, just because I want the style of the product but the savings of buying a shoe for $10 compared to $70. I didn't realize until reading your blog of how much counterfeited goods effect the economy. The loss of production and money that is caused by the production and distribution of counterfeited products is greater than most people think it is, especially when all the consumer thinks about is saving money on an off-brand item. They don't stop to think about the toll that their purchase will make on the economy, and that's why I agree with you about that fact that the reason this problem is becoming so great is simply because people don't understand the negative externality that counterfeited products have on the economy.
ReplyDeleteI agree that counterfeit items need to stop being created and sold, especially because of its negative effects. Another thing that these products negatively effect is the nation’s GDP. This is because the products are often sold outside of the normal market, therefore they are not counted towards GDP. This causes the GDP to be less accurate than if people were to spend more money on the real items. It surprises me that so many people choose to buy the fake products over the real ones as the quality of the fake ones are often much worse than that of the real products. Therefore the people may be saving money on the initial purchase, but in the long run they are going to end up spending more as the product needs to be replaced much more often.
ReplyDeleteAlthough I don't buy too many expensive products, I think they are priced accordingly to the value of the brand and the materials used in creating said product. Brands such as Michael Kors or Louis Vuitton may be overpriced in the eyes of some people, but the market for these companies is still wildly apparent. Although counterfeit products aren't seen too often in the United States, I have seen multiple people selling them on the streets in Italy and France, and some people actually buy these products. As you said, this is illegal in these countries, so by purchasing counterfeit bags and such, consumers are supporting this industry and the sellers, harming the actual firms. I think it's important that people understand these harmful effects, even if it's "just a bag". One transaction will lead to another, so these counterfeit products really do have a major effect on the fashion industry.
ReplyDeleteWhen clothing lines were designed and produced months in advance, counterfeit and copycat products were less of an issue because they would no longer be in style by the time that they were available in the market. Due to the increased designing and manufacturing speed of clothing, a new type of trend market called "fast fashion" has emerged. Some companies, such as Zara, have been able to excel thanks to this opportunity, while monolith fashion houses, such as Louis Vuitton, find their entire business model undermined. Maybe these companies could try to move their seasonal trends faster in an effort to lower demand for past season knockoffs and drive up demand for their own products.
ReplyDeleteThis blog post was very ironic to me because I am one of those people that would rather buy an off-brand for $10 dollars then spend $100 on a pair of shoes or a piece of clothing. Yet, I never realized the true effects of these copycat products on the economy. After reading this, I agree completely that they need to stop the production of counterfeit items and off-brands to help our economy but the problem is that people do not understand this. Many would rather buy an off-brand and save their own money then worry about the bigger picture.
ReplyDeleteIt was fascinating on how counterfeits were a big negative externality, I always thought counterfeit production as a"black market" but through your blog, it made me realize that counterfeits are also part of the product market. I feel like it is not a serious issue in the United States and I never heard of a branded company getting significantly affected through counterfeits. But sure enough, it is a big problem in India because there are rows and rows of shops that sell various fake brands. I have been to those stores a couple of times, the best part was the products were cheap but not in good quality. The counterfeits in India are growing rapidly because there is a high demand for these kind of products. As you said, workers will be laid off from the branded companies which unwilling makes the workers work in the counterfeit brands. This might change the country's GDP, due to the workers' low living standards. So therefore, consumers should make a choice in buying efficient goods which helps their own countries to be productive.
ReplyDeleteAt one point or another, I'm sure everyone has bought an off-brand product and didn't realize the impact that their purchase could have on the economy. The only true benefit that comes from these off brand purchases is money saving for the consumer. It is in the consumer's self interest to buy the lowest priced item with the end goal of saving money to use in the future. Where some competition among companies can be good and can keep our economy going, this competition among name-brand companies and counterfeits is doing more harm than good. It is taking business from the name-brands and causing a decline in production and selling which could directly lead to a decrease in jobs which has always been a major concern in the US's economy
ReplyDeleteCounterfeit production is not something we really think about, and I agree that it will have a negative effect on name-brand companies but decreasing their demand. However, these companies often have a consistent consumer base that would rather invest in a name-brand than save money. This idea of increased quality for an increased price allows these companies to keep their prices high. It is very interesting to see where people draw the line though. . .how much can companies charge for these products before demand significantly decreases?
ReplyDeleteI agree that it's an issue, but I feel like it applies to a lot of industries and is hard to combat directly. A large span of products have cheaper alternatives, legal or not, and whether the consumer is aware of it or not. Its hard to regulate things like this in a free market since companies have so much freedom in what they make, so they can make products very similar to their competitors.
ReplyDeleteThe only thing that bothers me in this article is to later suggested that counterfeit products are sold for far more, while before you described them as cheaper alternatives. I understand if you meant they CAN be sold for more, but I didn't see that distinction.
Simon
DeleteI meant that the counterfeit products were cheaper than the real brand name products, but they are being sold more than their actual worth.
This is really interesting, I always knew that harm came to the company with counterfift items, not that it could affect a lot of the economy like this. I agree with you on this topic due to the nature of this. Also the conterfit items could be made with toxic fumes
ReplyDeleteWhile it may be true that counterfeit production of shoes or handbags do lose money for the fashion industry, it's also true that it makes fashion more accessible to more people. Not everyone has the money to buy products from "Nike,Louis Vuitton, Michael Kors". But some people are judged based on whether or not they have these things. So off-brand fashion is there to fill in the gaps for those that want higher fashion products but don't have the financial opportunities that people who are anti off-brand do.
ReplyDeleteThis is an interesting topic that until now didn't seem that degrading to the economy of our country. I agree with the statement that counterfeit is poor for the actual businesses and can be a negative impact on employment if less products are being produced, but I feel like that is only a possibility. A high class company sells to certain people who want high quality products, they won't want to buy cheaper items. There will be others who pay for the counterfeit items, but it's most likely they wouldn't buy the expensive version anyways. And, although they purchased an off-brand product, it is still promoting the name.
ReplyDeleteCounterfeit isn't typically what people think of when purchasing something that looks nice or that looks expensive. I'm sure people have bought a counterfeit item at least once, but not many people will find out it that it was counterfeit. People mostly think of when it looks nice is the price of the item and if it has a lower price than what the item actually is or the price of other similar items, people will buy these counterfeit items whether they know if it's counterfeit or not. However these counterfeit items such as: shoes, handbags, and clothes, have allowed people to have easier access to nicer things or what looks nicer. Really the people it's affecting are the stores that sell these items because they are losing money with the counterfeit items. It is also taking away consumers and other potential business away from these popular brands, which will decline the use of production and employment which will impact our country's economy.
ReplyDeleteThis is an interesting way of looking at counterfeit. I have never though that people don't know they are buying a counterfeit item, but now i can understand that people might not realize that item is fake. I also like how you thought about the stores losing money. They are the ones selling that item, and if they were to sell a real item they would get more money for it than just selling the counterfeit item. But if a store can get more purchases on a fake item than less on a real item, they might end up gaining more money.
DeleteThis issue is a very common thing in the shoe industry. Shoes nowadays have increased in price and fakes have become so “good”. A shoe that it retailed for $200 can hit a resale value of upwards of $1000 and if the fakes have become so similar it is hard (over the internet) to tell what shoe is real and what is not. However the difference in the shoe community is that most people do not want fakes. So a person could pay $1000 for a shoe they presume to real when in reality it is fake and the person who bought it paid $50 for it. People who fake brands should be fined because technically they are stealing someone else's idea.
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ReplyDeleteThis is a very interesting topic. I agree but I did not know that counterfeit products have such an big impact on our economy. Designer items are often very expensive so people would rather buy a cheap copy. I would rather have a good quality product instead of a bad quality copy of something, but there are people who can not afford the expensive items. Counterfeit products impact the brands and economies negatively. $600 billion dollars a year for copied items is a big amount of money and I think the people copying it should sued for copying someone else designs.
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