Fake branded items: Does it matter?

Grace Emelia, Contributor, Jakarta

Giorgio Armani would probably laugh again were he to visit Jakarta and be given fake Armani jeans or T-shirts, the way he did when he visited Moscow.

In his recent visit to the Russian capital, where cheap clothing bearing famous brand names can easily be found, he was given a pair of fake Armani jeans and sunglasses by a local television reporter.

Armani was not angry. Instead, he said he was glad people could buy Armani products, even if they were fake because this indicated that he was popular around the world.

Undeniably, Armani is popular in Indonesia. In Jakarta, it is easy to find various fake Armani products, particularly jeans and T-Shirts in Kelapa Gading or Blok M.

Traders usually sell fake branded clothes at big discounts. "Fake Armani jeans are, for example, offered at Rp 300,000 (US$32) each, but the discount can be as large as 60 percent," says Yohanes, a trader.

According to Yohanes, authentic Armani jeans sell for between Rp 1.1 million and Rp 1.9 million and can only be found in Emporio Armani's only store, located in Plaza Indonesia Jakarta.

United Colors of Benetton (UCB), which just reentered Indonesia in April 2002 is also experiencing a similar problem. Many fake Benetton T-shirts are easily found in Jakarta and Surabaya. The quality of the material and design of these fake T- shirts is much poorer than an original.

Customers of real UCB clothing are soon able to notice the difference. "This is a real problem for us who are not just selling prestige and brand-name items but also high quality products," says Anne Wiradinata, merchandising manager of UCB, which sells men's clothing at an average price of Rp 400,000 per item.

She says that at present UCB only has two stand-alone outlets in Jakarta (at Taman Anggrek Mall and Plaza Indonesia) and another one in Tunjungan Plaza IV, Surabaya.

According to her, there are many stores carrying the company's name and selling fake products.

"These kind of stores often use outdated UCB banners and interior design style, so new or ignorant customers will think they are the real UCB stores," says Wiradinata, adding that these stores usually offer big discounts to customers.

In Italy itself, home of many fashion brands, counterfeiting has become a national industry. The London-based International Chamber of Commerce (ICC) reports that in 2000, the turnover in illegal sales of leather goods alone amounted to US$1.5 billion a year.

According to a survey by the Milan Chamber of Commerce, three out of four producers of designer wear and leather accessories have become the victims of counterfeiting. Worse still, 80 percent of customers say they buy fake clothes willingly.

Fashion items such as sunglasses and leather handbags are copied illegally, either in Italy or abroad, and fakes are sold in the street or through established stores. A report by the Global Anti-Counterfeiting Group (GACG) estimated that in Europe as a whole, 11 percent of the clothes and footwear in circulation are not genuine. Other counterfeited goods are produced by craftsmen who work for the designer companies themselves, producing an extra few to sell on through the black market.

The GACG survey revealed that counterfeiting is costing European business in general around 50 billion euros ($47.5 billion) a year. Clothing and footwear companies are losing 7500 million euros annually - more than any other industrial sector.

However, it is not easy to combat these counterfeited goods both in Indonesia and elsewhere.

"If a company has to invest in expensive research, investigators and lawyers to protect its brand, it is harder to be competitive and create new products." says Peter Lowe, Assistant Director of ICC's Counterfeiting Intelligence Bureau (CIB).

Lowe added that political and judicial authorities are often reluctant to act because they see counterfeiting as trade-related and therefore a minor criminal offense compared with more urgent problems such as violent crime. Also legal action against counterfeiters can take so long that companies usually make a compromise with the counterfeiters rather than wait for official rulings.

In Indonesia, brand or store managers usually face similar problems. "The lack of law enforcement is one reason. We have asked the people who sell our fake items not to do it again, but they just return a few days later. At least we have our own customers who know whether an item is a counterfeit or not," says Betari Karlinda, public relations manager of GUESS Indonesia.

Those buying fake Armani products are not our consumers. We have our own captive market. Before the crisis, 75 percent of them were Indonesians. Presently the number is as much as 90 percent because much fewer foreigners are staying in the country.

"Though our sales have not yet reached pre-crisis levels, average sales have been increasing by about 15 percent compared to 1998," says Yohanes, conveying that men's suits, sold between Rp 15 million and Rp 16 million, are currently the hottest selling item in his Giorgio Armani boutique store in Plaza Senayan Jakarta.