Unauthorized products. Office in Beijing, was shocked by the importance of fakes over there. Talked to his manager “let’s do something about it”. So started talking to fakesters, those who track them down, lawyers.
Disclaimer: not making fun of a serious challenge… want to offer a new way of thinking about this problem.
Fakes have been around for a very long time. As things were done, they’ve been copied. Also a learning strategy. The US was well-known in the early 20thC for ripping off European patterns and re-using them. *(steph-note: did I get that?)*
Hollywood: desire to move as far away from NY as possible.
Some facts: survey in the last weeks in Germany.
2 out of 3 Germans have heard of seen fakes in the last 3 years; other numbers I didn’t get: => fakes are socially accepted. Quality is very similar to the originals (50%: we can’t tell the difference). One reason? Many fakes are produced in the same factory. 15-20% of all goods produced in China are fakes. 35 mio jobs directly created by fake industry.
Generating jobs for the masses remains the focus of the Chinese government.
Connected to organized crime. Has gone global. Big business. Fakes: twice as big as Walmart. Illegal and shady, connected to crime, stealing, cheating, lying.
But if these people are so successful, they must be doing something right. So looking at it as a success story, what can we learn from them?
Fakes do something for consumers that the originals don’t — many people buy the fakes on purpose. Consumers need *good enough* solutions. Many fake buyers are your brand customers — they consider themselves to be. => it might not be the best idea to spy on them, sue them, punish them.
So how about finding news ways to integrate this customer base? Find a way to get them to commit to paying more for the real brand.
Fakes truly expose the brand gap. Brand bubble. Overvaluation of brands, and loss of trust in them on the other side. Declined 50% in 10 years.
Brands rely too much on their products, and products can easily be cloned these days (particularly in the digital world). What makes the difference: relations. One way to deal with that is better bonding with the customer. But what companies do is invest in brand protection. Very cost-intensive, particularly in the digital world. Can’t control anymore. Money short these days: many companies will have to reconsider these strategies.
The more they criminalize fakes, the more fakers become criminals. The more fakers become criminals, the more they connect to organized crime. Instead of buying bigger arms, how can brands win over and connect better with their customers?
And what can brands offer to those who can’t afford the premium?
Let’s talk about the fakers. In the brands’ shadow initially, but now have started to live on their own. Business is very demand driven and highly competitive. “We fake on demand and only that what we can sell.” Retail-driven.
Brands are busy running their empires, and fakers adapt products to local needs. New features, bigger variety of styles. In return brands begin to watch the fake industry to learn what customers might need.
Chinese middle class emerging: fakers go upscale. High-class fakes where you really can’t tell the difference. Just price difference, but not as cheap as you might expect. Premium quality, boutique stores, warranties, services => higher prices.
Fakers will develop retail brands and become the H&Ms of emerging markets. It’s still early days though. Real threat that competitors will emerge from this initially shady business.
Fakes attack prices — mix fakes with originals, sell fake parts to manufacturers… One container: big percentage of fakes amongst the originals. Makes it very difficult for customs. Sell directly through online stores.
So how much further will we let them take over?
To sum up: if you have a problem, you fight it. If you can’t fight, you criminalize. When you can’t do that anymore, you need to integrate. What do brands have to offer aside from their logo? Why don’t brands collaborate with the best fakers?
One last thought: the way the US dealt with alcohol in the 30s.
Not to say fakes are good, but the way we deal with them needs to be looked at.
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- LeWeb13: Tony Fadell, Nest Labs Founder [en] (2013)
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