Question

In: Operations Management

Counterfeit products are big business globally. So big, in fact, that Chinese industry regulators are hesitant...

Counterfeit products are big business globally. So big, in fact, that Chinese industry regulators are hesitant to shut the practice down; the counterfeit goods market comprises millions of desperately needed jobs within China’s economy. But companies lose an estimated $20 billion in revenue annually because of "fake" goods. Moreover, many worldwide consumers are not getting what they pay for -- consumers may get the brand name or label they want but the product itself is inferior.  

How do you feel about counterfeit products? Can they be justified in any way? Do you see it as an economic benefit or, a total rip-off and unacceptable under any circumstances?

Is there any justification for companies to profit by creating counterfeit products that create local jobs and provide consumers with access to products they typically would not be able to buy?

Solutions

Expert Solution

The counterfeit products have its origin in the peoples' desire to own high grade products at an affordable cost ( because everyone can't afford a Louis Vuitton, a Gucci or the like). Although these high end luxury products are out of bound for most of the world's population, it does not prevent them from owning affordable fashion, even if it is counterfeit. Most of the purchasers know that they are buying a fake item, but then, you get what you pay for. Though the counerfeit products can't be justifed as they dupe customers and result in loss of revenue for real comanies, but then comes the question" Why the customers who can't pay much should be devoid of the fashion" or why there is no regulation on the high fashion companies which price their wares to hundreds of times their production cost, and make it dear for the common people. In this way, the counterfeit products which fulfill the desires of the common people are in no way bad, though illegal. The best way to regulate them is to make the manufacturers of these goods declare that the piece is a first copy or counterfeit. In this way, the buyers of original items ( which is an entirely different class) would stay away from them, while others would happily buy them at the price it comes. It is very difficult to practically do this, but it is a thought.

The only justification for the companies is that they are making the affordable fashion available for the common people, but by doing so, they can't escape the liability of violating the copyright rules for design, names and logos.


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