The term “genuine replica,” a favored parlance of counterfeit luxury watchmakers and their advertisers, seems oxymoronic, if not cynical, at first. After all, touting your watch as a “genuine fake” is akin to bragging about a high ‘F’ on an exam — congratulations, you still failed. But it does highlight a disturbing new trend in the counterfeit watch industry: the appearance of a ‘second-tier’ of better crafted, better mechanized replicas that sometimes fool even the experts themselves.
Good times for bad business
While luxury watch makers wilted beneath the heat of the global financial crisis, enduring their worst period since Japanese quartz watches flooded the market in the 1970s, business for their cut-price counterparts boomed.
A 2009 report by the group Business Action to Stop Counterfeiting and Piracy (BASCAP), in conjunction with the International Chamber of Commerce (ICC), estimated that the global market for all counterfeit goods was worth upwards of $200 billion, with some sources putting the figure even higher.
Countries in the Middle East are no exception, with annual counterfeit trade (all goods) in the region reaching $24.8 billion according to Havocwatch, a non-profit watchdog group that monitors counterfeiting. Profit for illicit markets comes not only at the expense of other legitimate watchmakers, but also impinges on society as a whole through the loss of tax revenues and the cost of counter-piracy policing efforts.
Counterfeit luxury watches are about as old as watch making itself, harking back to a time when counterfeiters would inscribe the names of well-known craftsmen on hand-made pocket watches. The problem has grown exponentially in the past several decades due to, among other factors, the easy availability of reliable movements — the internal mechanism of a watch.
Though a strong alliance of corporations and transnational monitors — including the World Trade Organization (WTO), the World Intellectual Property Organization (WIPO), the International Chamber of Commerce, Interpol and local governments — stepped up their campaigns against illicit goods in recent years, counterfeiters seem to be staying ahead of the game.
“I regret to say that the commerce of counterfeit watches has taken on a new dimension,” says Marc Frisanco, deputy director of intellectual property for the Richemont Group, one of the world’s biggest luxury goods groups. “It’s become more global, more active and its intermediaries have grown more powerful. And this applies to all levels — whether in production, marketing or distribution.”
This makes bustling commercial hubs like Dubai or Abu Dhabi, with simplified customs procedures and huge quantities of imports, particularly susceptible to counterfeit goods. The Fondation de la Haute Horlogerie (FHH) lists the United Arab Emirates, along with the Benelux countries, Singapore and Panama, among the favorite destinations for counterfeiting rings, due more to ease of transit than to regional demand.
Another complicating factor in the fight against counterfeits is the ease with which they proliferate on the Internet, says Frisanco. One site calling itself Hot-Replica.com — a comprehensive, professional-looking webpage — promises free shipping, postal insurance and even secure payment through Paypal, the global Internet payment module. All it takes is $49.99 charged to a credit card and the new fake will appear in a week’s time on your doorstep — with its enclosed warranty.
Profit for illicit markets comes not only at the expense of other legitimate watchmakers, but also impinges on society as a whole
Real fakes
As the counterfeit watch industry increases its global reach, it grows ever more sophisticated. Last year, the FHH launched a comprehensive study of the industry in order to educate the public and crack down on piracy.
The study’s findings describe how new high-end replicas come into being: “Counterfeiters work within well-established networks,” the report reads. “They order the various components that will make up the counterfeit watches (movement, case, strap, dial) from specialist suppliers who use modern, high-tech machines.”
“As soon as the parts are delivered, the counterfeiters add inscriptions, either in their own workshops or through an unscrupulous third party,” it continues.
The use of reliable movements — some replica dealers even claim to employ the same movement systems as the luxury dealers themselves — is an unsettling trend, as are the many stories of high-quality counterfeits passing unnoticed under the eyes of experts.
Yet there are certain qualities that cannot be replicated. No counterfeit, even at the higher end of the price spectrum, can afford the material costs of a genuine luxury watch. Instead, they rely on substitution — stainless steel for silver, synthetic gems for real jewels, and mineral glass for sapphire.
Killing time?
Data compiled in the UAE gives a telling example of the damage counterfeiting can cause to local economies, regional watchmakers and retailers alike. According to an impact study by the Brand Owner’s Protection Group, a group of global brand owners and legal consultants, effective action against counterfeiting would increase non-oil based production in the UAE by 5.95 percent, tax revenues by 3.78 percent and employment levels by 1.85 percent.
Yet the extent of the damage is still debated, even among watchmakers themselves. “While we’re absolutely behind the effort to combat counterfeiting, we don’t consider it a competitive market,” says Jacob Hrayki, regional manager of Dior. “A customer who purchases a counterfeit is not the same customer who purchases a genuine Dior watch. It’s a completely different demographic.”
But by being complacent about protecting their “true brand experience,” luxury watch makers run the risk of their top lines falling victim to what counterfeiters capitalize on stealing — the brand’s association with a particular lifestyle.
“It is an established fact that counterfeiting can turn customers away from the original product,” said the FHH report. “A brand earns its reputation through continued efforts in production and good relations between the manufacturer and its customers…. When a poor quality imitation appears on the market, customers inevitably lose faith in the original and its brand.”
If apprehended and charged in Lebanon, counterfeiters face fines between $3,000 and $33,000 and up to 36 months in prison
The good, the bad and the professionals
Lebanon is party to international laws and conventions, including the Paris and Berne Conventions, which set out the parameters of counterfeiting. If apprehended and charged in Lebanon, counterfeiters face fines between $3,000 and $33,000 and up to 36 months in prison, according to data provided by Saba&Company, a Middle Eastern intellectual property law firm.
Within the government, an Information Technology and Intellectual Property Rights Law Enforcement Office was established in 2006 as a new section under the jurisdiction of the Internal Security Forces, supervised by the General Prosecutors office. In coordination with customs authorities, this branch is responsible for intercepting counterfeit products within Lebanon and at the border, in addition to prosecuting smugglers.
Yet part of the difficulty authorities and industries face in cracking down on counterfeiters stems from a lack of coherent policy or enforcement at a transnational level. Though Interpol, the WTO, the ICC and countless business alliances have developed a sophisticated system of information sharing, national efforts are generally restricted to their own localities.
Wolf Meier-Ewert, legal affairs officer at the WTO, elaborates: “There is a consensus among developed countries as to what necessary measures to take,” he said, “but other countries — generally, those in which counterfeiting industries have a significant presence — have blocked the measures. They argue that international legislation could target them should their own local enforcement fail to meet its standards.”
Thus cracking down on the copycats remains confined to the purview of state law enforcement agencies; as Richemont’s Frisanco puts it: “Repression is local but counterfeiting is global.”
With as strong a nation as China producing over 60 percent of the world’s counterfeit goods, according to the FHH, international efforts have little chance of making headway if individual states decide not to cooperate.
The public is its own best defense
That puts the ball squarely in the court of the consumer. “The best way for a customer to ensure that the watch they purchase is genuine is to buy it on-site from a certified retailer,” says Dior’s Hryaki. “Purchasing off the Internet is risky and we discourage our customers from it, but as long as you’re purchasing directly from a high-end shop, there shouldn’t be much to worry about.”
Even so, it never hurts to be vigilant. Here are a few tips to spotting a fake, according to criteria laid out by the Federation of Swiss Watchmakers. High-end replicas generally exhibit a slight looseness of parts, and their casings, made of glass instead of crystal, can be easily scratched.
Though heavier than low-end fakes, these models will still be more light-weight than a genuine luxury watch. And, while they may employ reliable parts, they do not function at anything close to the mechanical precision of a genuine luxury watch.
Is imitation the sincerest form of flattery? Perhaps, but it’s a hard sell to make in terms of the counterfeit watch industry, where the desired end is not appreciation but profit.
