Fake branded items: Does it matter?

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"These kind of stores often use outdated UCB banners and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.