COUNTERFEITS Consumer Attitude and Behaviour towards Luxury Fashion Counterfeiting Business STAGE 1
Nottingham Trent University School of Art & Design 31 / 2012 Institute of Vocational Education – Hong Kong
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2018/19
Module: FASH30006 Fashion Concepts & Innovation Project
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Module reference: FASH30006 Module Leader: Cassandra Ng
FASH30006 Fashion Concepts & Innovation Project Declaration This submission is the result of my own work. All help and advice other than that received from tutors has been acknowledged and primary and secondary sources of information have been properly attributed. Should this statement prove to be untrue, I recognise the right and duty of the Board of Examiners to recommend what action should be taken in line with the University’s regulation on assessment contained in its handbook. I confirm that this work has gained ethical approval and that I have faithfully observed the terms of the approval in the conduct of this project.
Signed …………………………………………………………………………………………………………………………………… 10/2/2019 Date ………………………………………………………………………………………………………………………………………… (Word count:_______1635________)
Fig. 1 LV twist bag
Fig. 2 LV advertisment
Content Introduction
P.1 - P.2
Background
P.3 - P.4
Purpose and Aims Preliminary Literature Review
P.5 - P.6
Proposed Research Methodology
P.7
Expected Outcomes
P.7
Work Plan
P.7
Image References
P.8
References
P.9
Bibliography
Fig. 3 LV twist bag
P.4
P.10 - P.11
INTRODUCTION Counterfeit culture is a thriving market eroding the fashion retail industry. According to Irish Tech News, counterfeit products take away more than $500 billion from the fashion industry every year (Irish Tech News, 2018). It is an ever growing problem that the ďŹ gure of counterfeit goods grew
$211 billion within six years. As of last year, the counterfeit market of apparel, textiles, footwear, handbags has been amounted to $450 billion and still growing (The Fashion Law, 2018).
Counterfeit culture is especially serious in Korea and China where the hub of counterfeit goods are. Streetwear, sportswear and luxury brands such as Supreme (Fig. 1, Tripsavvy 2019), Nike (Fig. 2, Vogue, 2018) and Gucci (Fig. 3, Business Insider, 2018) are the most counterfeited brands. Fig
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Fig. 6 Supreme bag
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Fig. 7 Nike sneakers
In Korea, the fakes are all over the street, and seldom do the Korean care whether it is counterfeits. In China, counterfeit luxury goods are their big business. The Chinese manufacture and sell the fake goods, they even open knock-off shop to pretend as the real luxury brand’s store. Counterfeit culture is damaging the fashion industry and the benefit of the brands and customer. To crack down the counterfeit business, technology is the stronger tools to fight with fake goods. Quick Response Code (QR code), Radio Frequency Identification (RFID) technology and blockchain technology are all being used in protecting the fashion brands and customer. These are the possible solution of counterfeit products.
The project is to study the counterfeit culture, including its cause of existing reason, consumer attitude, and impact to the fashion industry as well as the possible solution. Through the project, it can help to apply appropriate research methods, and build up good research, analytical and problem solving skills. With the specific topic of the project, it also helps developing good understanding of the topic.
Fig. 8 Supreme counterfeits
Fig. 9 Counterfeit drawing
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BACKGROUND In the recent fashion retail industry, customer shopping experience, growing consumerism and counterfeiting are some of the most concerning issues. Nowadays, fashion retailers attach importance to unique shopping experience to customer. A special and convenient shopping process can gain customers’ attention and strong impression, as well as to build up brand loyalty. Therefore, diverse retail techniques are being used for their in-store entertainment, searching or trying products, and getting latest information. For the in-store entertainment or enhanced experience, augmented reality (AR) and virtual reality (VR) are usually used. For instance, Christian Dior created VR glasses named “Dior Eyes” (Fig. 4-6, LVMH, 2015) to let visitors have a sneak peek behind the scenes at the fashion shows in London. For a faster apparel try on, magic mirror helps customer previewing the dressing effect before going to fitting room. It reduces the time during shopping.
Fig. 11 “Dior Eyes”
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Fig. 10 “Dior Eyes”
To enhance the relationship between the brand and customer, fashion brands develop mobile application to collect data from customer, and give them message when they go through the store. However data is easy to be leaked out following by the increasing use of technology. New technology also makes counterfeits easier to produce, distribute and sell. With the advanced technology, counterfeiter can effortlessly mimic manufacturing process, using the same or similar technique to imitate the real material and design, copying the authentic goods, then make a fake one. Nowadays, customers have more choices for one products. They can buy from numerous channel either physical retail store or online store, and also mobile application as well as e-commerce. Moreover, customer can even choose whether to buy a counterfeit one or real one, or a second-hand one. On the other hand, customer may also drop into the trap of counterfeits when the distribution channel are more and more. This will be the challenge to fashion industry. Counterfeit goods will only lead to lost sales of fashion brand.
Looking to the trade war between America and China, America is imposing tariffs on Chinese imports with a justification of the theft of American intellectual property including the counterfeits of major American brands (The Business of Fashion, 2018). Meanwhile, China seems to start facing up the counterfeiting problem of its country. For example, Guangdong province stopped the export of counterfeit Louis Vuitton bags to Dubai and America.
However, the counterfeit problem is not easy to crackdown by one’s own effort. When the counterfeit goods are selling in physical store, it is still be able to chase the counterfeiter, but when it comes to online platform, investigation are getting difficult.
PURPOSE and AIMS This project is going to study the fashion context in recent years, and the fashion retail technology environment by the counterfeit culture issue. Through the project, it is hoped to investigate the reason of how counterfeit culture growing big, then to identify the problem it brought to the fashion brands. Besides, it is going to find out the attitude and behavior of customer behind the counterfeit culture. With all the research done about counterfeiting problem, it is hoped to develop the high technology and to formulate some suitable and possible solution of the counterfeit culture.
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Fig. 12 Knock-off store of LV
PRELIMINARY LITERATURE REVIEW With reference to The Fashion Law (2018), counterfeit includes the others trademark andusing it without authorization, or having a trademark substantially indistinguishable. According to International Anti-counterfeiting Coalition (n.d.), counterfeit goods are normally made from lower quality materials or components, intending to sell a cheapimitation of similar or exactly the same goods of the brands consumers know and trust. Counterfeit products mainly imitate the western brands. Different people have different perception on the counterfeits, but the meaning of counterfeit products is totally deviating far from the original one that the brand attached. Counterfeit problem is especially serious in Korea and China. Although Korea is now a fashion leading country, it is also a hub of counterfeits and having lots of knock-off brands. 5
As said as Young Jon Koo who is a street style magazine photographer, Korean actually have their favourite or interested fashion brands, but those brands are not all available there. If they really want to buy it, they have to pay at least twice of the original price for the reseller. As Korean are obsessed with fashion and the trend is going fast, they care more about the style and price instead of concerning the authenticity of the product. Since they cannot buy the brands such as Supreme and Champion from official retail store, many knock-off brand and counterfeit goods appeared. Some of the Korean choose to buy counterfeits, and some of them just vague about what they bought. Based on the research of Highsnobiety, no one really cares or know they are wearing fakes, they do not even feel guilty to sell or wear counterfeits.
China is another biggest counterfeiting country. Based on the report of 2018 Global Brand Counterfeiting, China is estimated as the 86% fakes goods origination. The counterfeit goods seller even sell the products squarely, and the customer also know about that. The counterfeiter produce the fake goods in low quality to reduce the cost, then sell higher than its value by using the reputation of the real brand to get the biggest profit. They will set a higher retail price first, then tell the customer it is a high quality imitation, similar and cheaper than the real one. Then they will negotiate the price with a strong attitude to customer and urge them to buy. The final selling price is usually much lower and different between different customers. They try to get the biggest profit from every different customer by asking them their ideal price, then lower the price to match their requirements. This is the selling skills of the counterfeits seller. Except from counterfeit goods, in Guizhou, there is a knock-off shop (Fig. 7, Zigor Aldama, n.d.) of Louis Vuitton (LV) called “Loius Vuitton”. It has the same decoration, logo, displays with the real one. The fake store changed the name a little bit to avoid lawsuit, then they mislead the customer with their trust of the real LV to gain money.
Counterfeits bring a lot problems to fashion brands. They lost money due to counterfeit products with no doubts. If the customer brought a fake goods without knowing it in the first purchase of that brand, they will misunderstand the brand with the lower quality counterfeits. This makes the brand losing the customer and break the trust. As the Louis Vuitton source said (Business of Fashion, 2016), counterfeits can damage the reputation and consumer confidence of the brand. To solve the problem, there are some methods is being used. Some tracking technologies such as RFID and Near-field Communication (NFC) chips are common to validate the products. The fashion brands are also adding QR code, holograms and a mobile platform for customer to check the products information. For better monitor the products, blockchain technology is used which distributes data storage across multiple points. It ensures that each transaction or entry is being locked and secure. Blockchain technology also provides higher transparency in supply chain and production for customer in checking the design and product authenticity. Meanwhile, it is convenient for the brand to chase their products.
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PROPOSED RESEARCH METHODOLOGY
To better know the orientation of the counterfeit culture, a visit to those counterfeits store or browsing the online store can help observing the seller, products and customer. Besides, it is feasible to purchase both fake and real products to observe and do comparison. Additionally, as to understand the motivation of customer buying counterfeits, or how they drop into the counterfeits trap, questionnaire is suggested to grab the information. However, there is difficulty in getting primary research in China and Korea where are the core place of counterfeit culture.
General customer brought the counterfeits without knowing it is a fake goods. Methods are needed to help differentiate and authenticate the products, so as to protect the rights of brands and customer.
Expected Outcomes
Work Plan
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Stage two will be started from 11 February, there will be two weeks for doing research, collecting questionnaire. The another two weeks is planned to analysis the research and data. In stage three, the first week will be for forming and generating the ideas of final work, and also for consulting the others work. Then, there will be one week to finish the report, two weeks to do the visual outcome.
Image References Fig. 1 Glow Paris (2019), Louis Vuitton’s Twist Bag, Online image, Available at: http://www.glowparis.com/louis-vuitton-twist-bag/ Accessed: 10/04/2019 Fig. 2 ELLE Korea (2019), Bae Doona and Kang Daniel Met the Twist World, Online image, Available at: http://www.elle.co.kr/elletv/ELLETVView.asp?MenuCode=en0105&SubMenuCode=en010501&intSno=22999 Accessed: 10/04/2019 Fig. 3 Glow Paris (2019), Louis Vuitton’s Twist Bag, Online image, Available at: http://www.glowparis.com/louis-vuitton-twist-bag/ Accessed: 10/04/2019 Fig. 4 Dior (2019), Mini Dior Oblique Saddle Bag, Online image, Available at: https://www.dior.com/en_hk/products/couture-M0447CTZQ_M928_TU-mini-dior-oblique-saddle-bag Accessed: 10/04/2019 Fig. 5 A Closer Look (2018), Real vs Replica Gucci How to Spot a Fake Gucci Belt, Online image, Available at: https://www.google.com/search?hl=zh-TW&biw=1280&bih=530&tbm=isch&sa=1&ei=3COqXImVJM2xmAWJha7wBg&q=gucci+Counterfeit&oq=gucci+Counterfeit&gs _l=img.3..35i39j0i19j0i8i30i19.432190.433460..434205...0.0..0.96.348.5......1....1..gws-wiz-img..... ..0i7i30j0i7i5i30j0i8i7i30.YWpYUdTv_Xs#imgrc=b95cFkNsRq03CM: Accessed: 20/01/2019 Fig. 6 Newbold, A. (2018), "Counterfeit Nike Air Jordans Ring Worth $73 million Shut Down", Vogue, Aug 9, p.1, Online image, Available at: https://www.vogue.co.uk/article/counterfeit-nike-air-jordan-ring-new-york Accessed: 20/01/2019 Fig. 7 Schrader, R. (2019), "The World's Most Shameless Fake Stores", Tripsavvy, Feb 25, p.1, Online image, Available at: https://www.tripsavvy.com/the-worlds-most-shameless-fake-stores-4109283 Accessed: 15/03/2019 Fig. 8 Macgilp, R. (2017), "Counterfeit Culture - Inside South Korea’s Fake Fashion World", Fashion fix daily, Oct 26, p.1., Available at: https://www.fashionfixdaily.com/counterfeit-culture-inside-south-koreas-fake-fashion-world/ Accessed: 15/03/2019 Fig. 9 Kim, M. (2018), "Is It Real and Does it Matter? How Korea’s Counterfeit Culture Shaped My Style", Vogue, Oct 3, p.1, Online image, Available at: https://www.vogue.com/article/korean-counterfeit-fake-luxury-vogue-editor-style-value?mbid=social_onsite_pinterest Accessed: 20/01/2019 Fig. 10 -11 LVMH (2015), Dior Creates its Own Virtual Reality Headset, Online image, Available at: https://www.lvmh.com/news-documents/news/dior-creates-its-own-virtual-reality-headset/ Accessed: 20/01/2019 Fig. 11 Aldama, Z. (2018), “Is that a Loius Vuitton? No, it’s a Plada, China’s Knock-off Economy”, Inkstonenews, Aug 31, p.1, Online image, Available at: https://www.inkstonenews.com/business/how-chinese-counterfeiters-are-making-money-street-and-online/article/2162237 Accessed: 17/01/2019
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References Business of Fashion, ‘A Turning Point for China’s Stance on Counterfeit Luxury Goods’, Accessed: 16/01/2019 Business of Fashion, ‘Can New Technologies Thwart Counterfeiters?’, Online, Accessed: 17/01/2019 Business of Fashion, ‘Nike and LVMH are Sticking Up for China in the Piracy Fight’, Online, Accessed: 17/01/2019 Business of Fashion, ‘Why South Korea is the Home of Counterfeit Culture’, Online, Accessed: 16/01/2019 Business Wire, ‘Top Challenges in the Fashion Retail Industry | Infiniti Research’, Online, Accessed: 17/01/2019 Collina Broadcast, ‘Beijing Fake Market Spree!’, Online video, Accessed: 16/01/2019 Harvard Business Review, ‘8 Ways Brands Can Fight Counterfeits in China’, Online, Accessed: 17/01/2019 Highsnobiety, ‘Counterfeit Culture | Seoul: Inside the South Korean Fashion Black Market’, Online, Accessed: 16/01/2019 Highsnobiety, Counterfeit Culture | Seoul: A Look Inside Korea’s Fake Fashion World, Online video, Accessed: 09/01/2019 Ink Stone News, ‘Is that a Loius Vuitton? No, it’s a Plada: China’s Knock-off Economy’, Online, Accessed: 17/01/2019 International Anti-counterfeiting Coalition, ‘Counterfeiting costs everyone’, Online, Accessed: 16/01/2019 Irish Tech News, ‘The Beginning of the End to the $500 Billion Counterfeit Fashion Industry’, Online, Accessed: 16/01/2019 LS Retail, ‘6 Technology Trends Reshaping the Luxury Fashion Industry’, Online, Accessed: 17/01/2019 The Fashion Law, ‘The Counterfeit Report: The Big Business of Fakes’, Online, Accessed: 17/01/2019
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Bibliography Business of Fashion, 2016, ‘Can New Technologies Thwart Counterfeiters?’, Available at: https://www.businessoffashion.com/articles/fashion-tech/can-new-technologies-thwart-luxury-fashion-counterfeiters-rfid-nfc-alibaba Accessed: 17/01/2019 Business of Fashion, 2017, ‘Why South Korea is the Home of Counterfeit Culture’, Available at: https://www.businessoffashion.com/articles/news-analysis/highsnobiety-releases-documentary-on-south-koreas-counterfeit-culture Accessed: 16/01/2019 Business of Fashion, 2018, ‘A Turning Point for China’s Stance on Counterfeit Luxury Goods’, Available at: https://www.businessoffashion.com/articles/global-currents/a-turning-point-for-chinas-stance-on-counterfeit-luxury-goods Accessed: 16/01/2019 Business of Fashion, 2018, ‘Nike and LVMH are Sticking Up for China in the Piracy Fight’, Available at: https://www.businessoffashion.com/articles/news-analysis/nike-and-lvmh-are-sticking-up-for-china-in-the-piracy-fight Accessed: 17/01/2019 Business Wire, 2018, ‘Top Challenges in the Fashion Retail Industry | Infiniti Research’, Available at: https://www.businesswire.com/news/home/20180316005392/en/Top-challenges-Fashion-Retail-Industry-Infiniti-Resea rch Accessed: 17/01/2019 Collina Broadcast, 2018, ‘Beijing Fake Market Spree!’, 17/03/2018, Available at: https://www.youtube.com/watch?v=rgvfKvl7zWA Accessed: 16/01/2019 Harvard Business Review, 2018, ‘8 Ways Brands Can Fight Counterfeits in China’, Available at: https://hbr.org/2018/05/8-ways-brands-can-fight-counterfeits-in-china Accessed: 17/01/2019 Highsnobiety, 2017, ‘Counterfeit Culture | Seoul: A Look Inside Korea’s Fake Fashion World’, 24/08/2017, Available at: https://www.youtube.com/watch?v=BALbGfjjsbc Accessed: 09/01/2019 Highsnobiety, n.d., ‘Counterfeit Culture | Seoul: Inside the South Korean Fashion Black Market’, Available at: https://www.highsnobiety.com/video/v/counterfeit-culture-seoul-inside-the-south-korean-fashion-black-market/GQ1MVXGv/08pHWw4p/ Accessed: 16/01/2019 Ink Stone News, n.d., ‘Is that a Loius Vuitton? No, it’s a Plada: China’s Knock-off Economy’, Available at: https://www.inkstonenews.com/business/how-chinese-counterfeiters-are-making-money-street-and-online/article/2162237 Accessed: 17/01/2019 International Anti-counterfeiting Coalition, n.d., ‘Counterfeiting costs everyone’, Available at: https://www.iacc.org/resources/about/what-is-counterfeiting Accessed: 16/01/2019 10
Irish Tech News, 2018, ‘The Beginning of the End to the $500 Billion Counterfeit Fashion Industry’, Available at: https://irishtechnews.ie/the-beginning-of-the-end-to-the-500-billion-counterfeit-fashion-industry/ Accessed: 16/01/2019 Lin, Y.C., 2011, Fake Stuff - China and the Rise of Counterfeit Goods New York: Routledge LS Retail, 2018, ‘6 Technology Trends Reshaping the Luxury Fashion Industry’, Available at: https://www.lsretail.com/blog/6-technology-trends-reshaping-luxury-fashion-industry/ Accessed: 17/01/2019 The Fashion Law, 2018, ‘The Counterfeit Report: The Big Business of Fakes’, Available at: http://www.thefashionlaw.com/home/the-counterfeit-report-the-impact-on-the-fashion-industry Accessed: 17/01/2019
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