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The Total Value Of Counterfeit Goods

Paper Type: Free Essay Subject: Marketing
Wordcount: 1666 words Published: 17th May 2017

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1. Introduction:

Counterfeits, or fake products, actually are “something that is forged, copied or imitated without the perpetrator having the right to do it, and with the purpose of deceiving or defrauding” (The Economist 2003). China is the particular country which is famous for manufacturing and consuming counterfeits. In fact, almost counterfeit versions sold and made in China are found throughout China markets and even in the world. The International Anti Counterfeiting Coalition (IACC) studied that approximately 80% of fake products consumed in the world are originated in China. In particular, nearly everything is counterfeit versions with label “made in China”, such as: luxury goods, electronics, household goods, foods, certificates, official documents, receipts and even counterfeit Apple Store (NEW Momentum 2011).

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The total value of counterfeit goods produced in China increased substantially from approximately between $19 billion and $24 billion a year in 2003 to $176 billion in 2006 (Hays 2008). Moreover, the research of Hays pointed out that counterfeits created 2.4 million jobs, $400 billion in economy activity, and $67 billion in tax revenues. Therefore, investors can find it easy to make quickly profits. However, with a further vision, legitimate products is damaging for the future development of economy as well as society, especially medicine counterfeit products “have caused injuries and sometimes even death for some unsuspecting customers” (NEW Momentum 2011).

Therefore, this paper, with the purpose of limiting manufacture of counterfeiting, discusses the questions of what the impacts of counterfeits are, and how to solve problems of fake products in China.

2. Discussion of findings

2.1. The advantages:

That the majority of fake products originate in China leads manufacture of counterfeits to become one of the China’s largest industries. Actually, the manufacturers can find it easy to imitate the real band’s image and reputation, and these products look exactly like the original in order to trick the buyers (NEW Momentum 2011). As a result, China gains economic growth and takes a lot of advantages. The illegal Chinese copying of goods makes billion of dollars profits each year. In particular, according to Walthers and Buff (2008), the total values of counterfeits in world trade cost over $512 billion and this figure still increase. In addition, counterfeiting is responsible for hundred thousand jobs not only in China but also in many countries over the world. Besides, the original companies can not also deny the advantages of counterfeits because the fake goods also help original companies’ logo and designs spread brand coverage and recognition over the world. Due to the advantages that fake products bring, Grossmand & Shapiro (1988) consider counterfeits as “the world’s fastest growing and most profitable business”. The advances in technology and customer’s demand lead easily manufacture of legitimate product and expansion of this industry in China (Walthers and Buff 2008).

Indeed, if making a question who buys fake products in China, it is obviously that the answer is everyone. Boumphrey (2007) stated (cited in Walthers and Buff 2008) that almost people think it is not absolutely wrong to purchase counterfeits, including 61% of Britons (Fake! 2001, cited in Walthers and Buff 2008) and 69% of Americans (Boumphrey 2007). Moreover, people suppose that buying and selling counterfeits are not criminal activities. In fact, most of people are fond of famous brands, but the cost of these products is too high. Luckily, market products which steal the brand and reputation are purchased just a quarter as much as original price (NEW Momentum 2011). Therefore, the fake products are only the answer for common people.

To meet a huge demand, the term “shanzai” culture is appeared which replace originally describe of a small mountain village (Hays 2008). Now, Hays reports that it is a general statement about fake products with suitable price for middle class in China which makes foreign companies not gain many profit.

2.2. The disadvantages

Although counterfeits maybe good ideas and innovations to make huge profit quickly, their damages for future development are really significant. Indeed, counterfeiting impacts strongly on the sales of original companies, the environment, and the consumers.

Firstly, fake product is considered as a threat, and even Federal Bureau of Investigation calls it “the crime of the 21st century” (NEW Momentum 2011). Counterfeits cause an economy wide effect. The Organization for Economic Co-operation and Development (OECD) studied that counterfeiting is actually relevant to criminal activities happen, especially in transferring economy rent to parties (2007). On the other hand, innovation which is protected by “patents, copyrights, design rights and trademarks” plays a vital role in economic growth (OECD 2007). However, increasing producing the counterfeit makes the innovation process weaken, and limit investment in development of new products. As a result, the fake products impact strongly on the industry. Therefore, the original manufacturers in the world, especially the U.S suffer huge loss from counterfeits. Indeed, the damage of the global automotive parts industry is as high as $12 billion each year, $3 billion of which is in the U.S (NEW Momentum 2011). Furthermore, counterfeits, which have the same brand images, colors, font size as the real product, “fool” the customers in belief that they purchase the original products and are mainly sold in the grey market with affect the brand and reputation of low quality and price the original manufacturer (NEW Momentum 2011). Customers will blame the manufacture of the real if the fake does not fulfill expectations, thus a loss of customers is an obvious problem. Then, they will have intention to buy another product instead of this brand, and even may communicate dissatisfaction to other potential customers (OECD 2007).

Secondly, it is clear that counterfeits have negative effects on the environment. Indeed, the environment is destroyed seriously by production process that eliminates considerable waste (OECD 2007). Moreover, that substandard counterfeit products contain chemically industrial waste can have environmentally damaging consequences. As a result, China is a main country which directly suffers from these damages.

Finally, there are too many counterfeit products in the market from some basic things to medicine. Thus, these products purchased also impact on the customers. In fact, the quality of counterfeit products actually is so poor and low that they really waste money and time to buy another product in a short using time, and safe of customers are rick. Indeed, according to study of Jennings (1989), fake birth control pills, hormones, shampoo and heart pumps which are extremely dangerous and a serious impact on customers’ health (cited in Walthers and Buff 2008). For instance, fake alcohol causes a nervous condition with loss of hand and feet ability of nearly 15,000 people in 1930 (Jennings 1989, cited in Walthers and Buff 2008). Fake drug can be also dangerous to people’s health. Paul Newton (n.d.) of Oxford University reports (cited in BizAims n.d.) that majority of fake malaria drugs were consumed in many countries in South-East Asia such as: Myanmar, Laos, Cambodia and Vietnam, and they not only can not prevent this disease but increase the threat of virus malaria.

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2.3. Solution:

Government should establish multilateral organizations which work with the international organizations, such as: the World Trade Organization (WTO), th World Intellectual Poverty Organization (WIPO), Interpol, and the World Customs Organization to prevent the breakdown of the fake products. In addition, government should develop special programs to raise awareness of counterfeiting (OECD 2007). Indeed, awareness of ills of purchasing fake products has to be paid a serious attention by government, and should be explained for all people. If customers have enough knowledge about the counterfeits that is an activity “supporting the terrorists, gangsters and the crime syndicates that operate illegal and black money rackets” (Matthews n.d.), impacts dangerously on people’s health and safety, customers will be certainly careful in choosing products.

The original companies also have to deal with the increasing problem of Chinese counterfeiting. Efforts to combat the fake products lead laws which are made to limit illegal counterfeits. Especially, Aktary, McCallen, Fullerton (n.d.) state that some famous brands, such as: Gucci, Louis Vuitton, Prada, Chanel, and Burberry “all filed suit in China to stop the counterfeiting of their merchandise”. Besides, the real companies should use hidden marks to trade the original and deliver of their products, and help them as well as customers distinguish the real things from the fakes (Aktary, McCallen, Fullerton n.d.).

3. Conclusion

From all the findings above, if making comparison between the advantages and disadvantages of the counterfeits, the balance maybe tilts at the serious impacts of the fake products. In fact, the counterfeiting brings a lot of benefits for economic growth and common customers in China as well as other countries. However, the sales of original companies, the environment, and the consumers are also affected. Therefore, it requires all people, governments, and companies coordinate together to prevent the growth of counterfeiting. Hopefully, bad effects of Chinese fake products will be limited. If not, it will be a barrier for the general development of the whole world.


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