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To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value than the real thing.‎Counterfeit consumer goods · ‎Counterfeit money · ‎Counterfeit Drugs.
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All non-deceptive counterfeit market shoppers share one attribute: they are willing to pay for visual attributes and functions , but not willing to shop the genuine products. Affected parties have previously complained that punishments for selling counterfeit goods in China are too light to deter offenders. In February Alibaba reported that of the 1, cases of suspected counterfeiting they passed on to authorities, only people were found guilty.

In August the State Administration for Market Regulation stepped-up efforts to crack-down on the illegal production and sale of counterfeit goods in China. The regulator announced strict punishments for online trading platforms that fail to protect the rights of consumers and trademark owners, or that do not actively cooperate with market regulatory authorities. They demanded that other regulators such as the Shanghai Administration for Industry and Commerce launch targeted investigations into sales of counterfeit goods in China, and specifically called out offending platforms such as Pinduoduo.

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The law also addressed false-advertising, consumer protection, data protection, and cybersecurity. The new law targets three groups: e-commerce platform operators like Taobao, merchants who sell goods on sites like Taobao, and vendors with their own websites or who sell on social media. Merchants who sell exclusively on social media platforms had been previously unregulated, but now these sellers will need to register their businesses and pay relevant taxes.

In an effort to spur major e-commerce platforms to crack down on counterfeits being sold on their sites, the law makes platform operators jointly liable with the merchants selling fake goods. Previously, only the individual merchants were liable. Platform operators can now be fined up to 2 million RMB USD , for the property infringement that comes with selling counterfeit goods in China.

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In a strongly worded white paper, state authorities criticized Taobao for lax internal controls, declaring that many of the products sold on the site were substandard, violated trademarks, or were just plain illegal. Chinese consumers agreed and called on the government to tighten supervision over Taobao. Alibaba declared a zero-tolerance policy towards counterfeits, and created a new person team to ramp up the fight against fake good in the Chinese market. In , Alibaba was again under consumer and government pressure when Taobao was found to have over , vendors selling fake goods , up from , vendors the previous year.

To assay consumer anger and protect investor relations, Taobao in mid launched an initiative to crack down on the fake goods being funneled through their site. Pinduoduo, the third-largest e-commerce platform in China, is another site criticized for selling low-priced knockoffs. In August the State Administration for Market Regulation investigated Pinduoduo and announced that Pinduoduo should strengthen platform management and better regulate activities of third-party vendors. Pinduoduo soon removed more than 10 million fake items from its site and blocked more than 40 million product links suspected of copyright violations.

It is working with over luxury brands to fight counterfeiters and has created a hefty million RMB account to refund consumers who were unwittingly sold fake products. There are many intricate ways in which sellers of fake goods in China have evaded regulation online.

One common trick is for sellers to redirects clients to separate websites, where they can browse options and place an order.


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Accordingly, some sellers of fake goods will display a price for their product that is consistent with the price for the real thing, or display a price that is outrageously high. Officials routinely inspect physical stores, but they may not take the job too seriously because they know local vendors rely on the income.

Regulators let the stalls peddling cheap and fake goods slide, instead choosing to target merchants who lead interested buyers to unmarked apartments , back rooms, or closets full of high-quality fake Gucci, Prada, Michael Kors, and Louis Vuitton handbags. Louis Vuitton. They send spies and they sue. So we hide.

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There are dozens of apps on the Chinese Apple iOS app store that offer to verify luxury goods. Authentication company Zhiduoshao has hundreds of thousands of users who pay 49 RMB for a product to be checked virtually by an expert. Authenticators tell users what kind of photos to upload, and then carefully inspect the monogram, fabric, and technique. Often, the process only takes a few minutes. Users upload photographs of the item in question and choose who they want to check their product. Appraisers each have areas of expertise, such as bags, jewelry, or shoes.

Private companies offer training courses that teach appraisers-in-training how to inspect a wide range of luxury brands and products, with advice about texture, logos, stitching and everything else that a counterfeiter might get wrong.

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A day program can cost up to 40, RMB. Authentication companies in China have an uneasy relationship with the brands whose integrity they claim to protect. Brand wariness of authentication services is rational because Chinese counterfeiters are now imitating these authenticators too. Seemingly authentic sites copy the names, website layouts, and imagery of established authentication platforms like Zhiduoshao in order to scam consumers seeking product verification out of their money.

In one case, consumers discovered that an authentication app was faking reviews and authentications to sell knockoff goods. An effective strategy combines IP protection, export and customs controls, and retail market controls. But no matter how sophisticated the anti-counterfeit strategy is, where there is a demand there will be a supply.

The only surefire way to shrink the market for counterfeit products in China is to deter consumers from purchasing fake goods in the first place.

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However, typical deterrence strategies that luxury brands have used in the West will not work in the Chinese market. Most consumers who purchase counterfeits in China are well aware that the quality is not on par with the real product. When consumers buy fake goods, they do so despite the possibility that the product will fail them. Additionally, the prevalence of sophisticated fakes means that consumers can easily buy counterfeit products with nearly genuine quality. Thus, highlighting the poor performance quality of counterfeit goods is not an effective deterrence strategy for brands to adopt in China.

Where in other countries purchase of knockoff goods is a punishable crime, in China consumers are not liable for their counterfeit purchases. Deterrence of counterfeit purchases in China cannot then be fear-based. There are two main deterrence strategies that luxury brands can adopt to dampen Chinese consumer demand for fake goods: the ethics emphasis, and the psychosocial emphasis. The translations below need to be checked and inserted above into the appropriate translation tables, removing any numbers. Numbers do not necessarily match those in definitions.


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