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eCommerce: The problem of counterfeit goods

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A few weeks ago statistics were released by Xinhau, a state-run Chinese news agency, showing that 40% of goods sold online in China last year were either counterfeit or of poor quality. According to the UN, from 2008 to 2010 almost 70% of all counterfeit goods seized worldwide were from China.

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A fast-growing market

The figures will be unsurprising to many, as the country has built something of a reputation for exporting cheaply made goods, however when you consider how rapidly eCommerceis growing in China (online sales grew 40 percent last year alone, to 2.8 trillion yuan or $441.84 billion) the sheer scale of the problem becomes apparent.

The likes of Gucci and Yves Saint Laurent have already launched lawsuits against eCommerce platform Alibaba for allegedly breaching trademark laws for failing to police the sale of fakes. Of course, fakes exist in all corners of global eCommerce, but with low cost labour and materials Chinese factories are producing them at an alarming rate.

The main targets when it comes to counterfeiting are major brands like Apple and Louis Vitton. Budget fashion, for example, is extremely popular amongst the young in China, so fake handbags and other ‘designer’ items are prevalent, even on the high streets. These items are often discounted by as much as 50%, prompting consumers who think they’ve found a bargain to hit ‘add to basket’.

A particular danger is that of fake cosmetics, such as lipstick and perfumes, with some having been found to contain lead, arsenic, cyanide, rat droppings and even human urine. The prevalence of these look-alike products has become such a hazard that the City of London Police and the FBI have issued alerts to the public urging them to purchase only from official stockists. The possible side-effects of using the poisonous products range from severe skin rashes to infertility, and even cancer.

Is it the real deal?

So how do you recognise that something is fake? One of the first giveaways should be the general look and feel of an item. On close inspection the material may feel cheap, the colours may be slightly off or the finish bad. If the product features a logo or trademark stamp this may be badly printed or not quite the same as the real one.

If you’ve purchased cosmetics or jewellery you think might be fake you could even take them into the store and ask the sales team, who will know the product’s signature colour or scent and can also compare the packaging for you. That said, with the counterfeit business so prevalent many fake goods are of a deceptively high standard, so are not always this easy to spot.

Changing China’s eCommerce landscape

So how do you solve a problem that runs so deep within the consumer web? While promoting awareness of the dangers (and legal implications) of counterfeit goods might deter some here in the UK from buying them, often from marketplaces like eBay, many locals in China also knowingly purchase fakes on a regular basis because of much lower prices.

It’s thought that despite efforts to control counterfeit sales through sites like Alibaba, dealers are turning to mobile chat platforms to bypass the rules and make transactions under the radar. Not going through legitimate sales channels makes it much harder for the consumer to get their money back, and for the law to be enforced. Criminal punishment for the sale of fake goods in China are also not particularly robust, with most convictions just leading to fines. Alibaba says it has made leaps and bounds in tackling intellectual property complaints, and is also helping local brands get their genuine goods onto the online marketplace.

It seems that while China has a long way to go in its battle against counterfeiting, a change in attitudes is certainly in motion.

December 17th, 2015 by Jonnie Davis

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