Sunday, June 11, 2017

Forging Ahead

Counterfeit designer goods are big business - and one that's still growing. But, as more designers start to address it on the catwalk as well as in the courtroom, will they have the last laugh? For the January issue of British Vogue, fashion features editor Ellie Pithers went behind the scenes of the fightback.

It’s a bright, fresh morning in Hounslow, but inside Courier Facilities Ltd the air is dank. Monolithic columns of air freight, stacked pallet upon pallet, fill the giant warehouse. Workers in steel-toe-capped boots and high-vis jackets stride up and down sparingly lit rows to the ceaseless background hum of Heathrow Airport. And up a flight of stairs, in a padlocked holding pen, Peter Herron is brandishing a Stanley knife.

“This box is being declared at less than £15. Contents: 50 Hugo Boss wallets,” Herron, Border Force senior officer in specialist operations, announces in his precise Geordie tones as he inspects the side of a cardboard box, 6ft square, full to bursting. “This has come from Mumbai – the release note is Air India – but there’s not a lot of information about where this box is going. Why would a company or individual in India be selling 50 Hugo Boss wallets in the UK?” He slices open the box, and fishes out a Hugo Boss branded container. Inside, a mini manual replete with spelling mistakes – “cotton canvas can been [sic] cleaned with the help of a brush” – is as amateur as the stitching on the wallet. The cloying stench of fake leather rises like heat. “They’re getting better and better at the packaging,” concedes Herron, “but I’d only have to glance at this box to know it’s counterfeit.”

In the course of the two months prior to my visit, Herron and his Border Force team at Heathrow made 163 counterfeit seizures, and the list of replicated brands they have confiscated reads like a map of Bond Street – Louis Vuitton, Ralph Lauren, Giorgio Armani, Gucci, Hermès, Versace, Bulgari, Chanel, Cartier, Prada, Burberry. In the past three days alone they’ve seized two tons of fake goods, three-quarters of which was counterfeit Björn Borg underwear, made in Turkey.

“The Turks are very good at making clothing,” says Herron (not unadmiringly), although the vast majority of counterfeit goods come from China. Tracing this supply chain is crucial when it comes to identifying fakes. “We speak to rights-holders and we know, for instance, that Gucci, Hermès and Chanel don’t share supply chains. So if we find products from more than one rights-holder in a box, it’s suspicious.” On other occasions it comes down to packaging. “GHD told us they never put the hair straighteners in the boxes when they move them around. So if we get a GHD box with GHDs inside, we know it’s counterfeit.”

Fakes have always been big business, not least because the spectrum of counterfeited and pirated goods (whereby trademarks and copyright, known as intellectual property, are infringed) is mammoth. From synthetic Viagra to fake brake-pads to rip-off Ray-Bans to infringed trademarks on strawberries (yes, really), faking it has long been lucrative. According to a report published by the Organisation for Economic Co-operation and Development in April 2016, however, the industry has exploded in recent years. In 2007, the value of cross-border trade in fakes was thought to be $250 billion, or 1.8 per cent of total global imports. The latest report estimates the figure was closer to $461 billion in 2013, and 2.5 per cent – the equivalent of the GDP of Austria. Piotr Stryszowski, an economist and co-author of the study, is at pains to point out that the later report made use of better data. But he insists the fake phenomenon is growing.

Which leaves us with a lot of fake bags. “And sunglasses,” says Herron, back at Customs House, a faded Eighties office complex just outside Heathrow, where he has assembled more loot. “Belts and sunglasses start coming in during the summer. Handbags are becoming more prevalent,” he rattles off. “Then there’s polo shirts, which are all year round. Nearer to Christmas, the market traders are bringing in whatever they can. But,” he pauses, “whatever is in fashion – whatever is in Vogue – will be counterfeited.”

In the eight years since Herron arrived at Heathrow, he estimates he has seized £150 million worth of counterfeit goods. This seems relatively low compared with that $461 billion – but, as Herron points out proudly, with dwindling resources, the amount of counterfeit product his team is finding is increasing. He shows me another recently seized box, aggressively wrapped in yellow tape in an attempt to combat its bulge, which reportedly contains “280 pieces: belts and glasses.” An address label reads “New Nroth Road [sic], London” – “Another warning sign,” says Herron, “along with the overstuffing and yellow tape, which suggests it’s Chinese.”Alexander Wang referenced counterfeits at his spring/summer 2017 show after-party, where 4x4s were spray-painted with “Stop leaking my shit”

Prising open the box, out spill 200 pairs of Prada sunglasses, wrapped in crackly Cellophane, secured with an elastic band. Beneath them: a pile of Michael Kors bracelet watches. I lift one out and the second hand flops uselessly. Likewise, the Prada sunglasses are misshapen – the quality is so bad, it’s entertaining. “That watch won’t last you five minutes. And even if it did, you wouldn’t be able to tell it from the watch,” Herron chuckles, before growing serious. “I understand why people go out and buy counterfeit goods. They can get things cheaper. But these goods are dangerous.” Cobalt-60, a radioactive isotope, is often found in metal straps. Chemicals used in the leather tanning process are not flushed out properly and can cause rashes and skin irritations. Sunglasses are without UV protection. As Herron pronounces gravely, “It’s just not worth it.”

E-commerce is partly to blame for the boom in sham products. Never before has the selling and distribution of fakes been as breezy. Sidney Toledano, president and chief executive of Dior, calls it “a new danger”. “Before, you had to go to a special market – somewhere in Tokyo, Paris, London, New York, before [counterfeit product] was in front of you,” he says. “Now, it’s on your screen. And sometimes… it’s mixed with real things.”


Pierre Denis, CEO of Jimmy Choo, agrees, citing “China and online sites” as the company’s biggest problems when it comes to tackling fakes. “Like with any luxury product, as soon as you feel the leather and look at the finishing details, the difference in quality and craftsmanship is blatant. Logos may be easy to mimic but stitching, welting and quality of materials are not,” he says. The caveat? They’re far easier to mimic on a computer screen.

But the brands aren’t giving up. An aggressive fightback has begun – most of which centres on anti-counterfeiting measures such as holograms, tags and packaging quirks. Salvatore Ferragamo inserts passive radio-frequency identifi­cation tags in the left sole of each pair of shoes it produces, as does Moncler in all of its products. Chanel places hologram stickers with unique serial numbers in the lining of its handbags. Other brands resort to more old-school methods: Hermès, for instance, uses mouliné linen thread coated in beeswax for all the stitching on its handbags, which has a noticeably different appearance to synthetic threads.

Some brands are getting litigious. In August, Alexander Wang successfully sued 45 defendants operating 459 websites selling fake Wang products (some as mind-numbingly obvious as Cheapalexanderwangbags.com) and was awarded $90 million by the courts (a victory he cheekily referenced at the after-party for his spring/summer 2017 show, where 4x4s decorating the venue were spray-painted with the words “Stop leaking my shit”).

In October 2014, Richemont, the conglomerate that owns Cartier and Montblanc, won a landmark case against five British internet service providers, including Sky and BT, requiring them to block access to websites selling counterfeits online. Meanwhile numerous fashion houses, including Louis Vuitton and the conglomerate Kering, have taken China’s biggest e-commerce group, Alibaba, to task for its role in the distribution of fake goods on its platforms. For while Jack Ma, Alibaba’s founder and executive chairman, has acknowledged that “counterfeit goods are absolutely unacceptable”; he also argued in a speech at Alibaba’s headquarters in Hangzhou in June that “the fake products today are of better quality and better price than the real names. They are exactly the [same] factories, exactly the same raw materials, but they do not use the same names.”

There’s the rub. Counterfeit quality is undoubtedly improving – not least because a number of fashion houses have moved their production to China, where they struggle to police their factories. “Sometimes the factory will produce 10,000 of a product and then make 2,000 on the run and sell them off cheaply. They’re not too bad in terms of quality, because they’re coming from exactly the same factory,” says Cassandra Hill, a lawyer at Mishcon de Reya specialising in intellectual-property litigation.

Sophie Hersan – a dab hand at spotting a fake, given that she runs the quality-control department at Vestiaire Collective, a website for the resale of designer goods – tells a story of being duped by a Cartier bracelet. “It looked exceptional, in white gold and diamonds. But our gemologist found that the setting and the diamonds didn’t really reach the quality of Cartier. So we got in touch with [the house] and found the serial number in their archive, but it didn’t match up. It was fake. We have to be really vigilant today as counterfeits are [becoming] more and more sophisticated.”Counterfeiting is so profitable that a lot of mafias actually move away from drugs to start doing it.

Sometimes, however, fakery is more crass. When I visit Belstaff’s London headquarters, the smell with which I am confronted when I walk into CEO Gavin Haig’s New Bond Street office can only be described as akin to wet dog. Haig, a slight man with rock-star stubble, who is wearing the leather jacket that presumably comes with the corner office, apologises and gestures to the four-pocket navy jacket hung up on a coat rack. “We thought you’d like to see this,” he says, laying the Roadmaster, a classic waxed-cotton jacket introduced in 1981, down on the conference table. Except that this isn’t a Roadmaster. The material has been patchily daubed with what looks like blue boot polish. The zips at the wrists are stiff and unyielding, and, I’m told, in totally the wrong place. The phoenix patch and Belstaff logo buttons are present and correct, but the fabric feels thin and has been glued, not stitched. At the back, part of the hem has come away: the defect that prompted a customer to come into the store to request a repair after buying it online. “We had to explain that unfortunately, it was counterfeit,” says Haig. They then confiscated the item.

In October 2015 Belstaff won $42 million in damages from 676 websites selling illegal counterfeit goods. Assisted by Mark Monitor, an American company specialising in brand-protection software, Belstaff identified 3,000 websites selling fakes, some 800 of which were managed by one individual in China. Jérôme Sicard, Mark Monitor regional manager for southern Europe, doesn’t sugar-coat the findings. “Counterfeiting is so profitable that a lot of mafias actually move away from drugs to start [doing it] because the risk is virtually zero, and the margins are incredible. Frankly, it’s so lucrative that even if your factory is seized you probably wouldn’t care,” he says. “It’s like Whac-a-Mole. Shut down one and they pop up again somewhere else.”

What can be done? For Haig, it’s about education. “We’re well on the way to winning the first battle, which is customers who are buying fakes without knowing they’re fake. We’ve got strategies in place to clear that up,” he says. “To the customers who are searching for a fake: do you want to buy from someone who is paid maybe a couple of cents for an hour’s work? Who works in awful conditions? Where that piece that you’re buying is full of chromium and polluting the environment? Getting a fake is almost as criminal as stealing.” Case closed.

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