China has come down hard on its world-renowned counterfeit industry. Bazaars lined with fake watches, shoes and bags have been demolished in recent years. A new law effective Jan. 1 promises to slap online retailers with up to 2 million yuan ($296,000) in fines for bogus goods sold on their platforms.
But Chinese counterfeiters — still the most prolific in the world — have already reshaped their businesses by retreating to even more private spaces online. Many of the country’s best fakers are now hawking their wares via social messaging networks like Tencent Holdings Ltd.’s WeChat. First they market their offerings at home and globally on platforms like Instagram or ByteDance Ltd.’s Tik Tok. Buyers then order and pay through private messaging apps. Such transactions are arguably “friend-to-friend” and not e-commerce as defined by the new law.
These days a knock-off black Dior saddle bag can go for about $255 on a Chinese social media network. That’s one tenth the $3,250 price-tag on the real thing, but still pricier than the average high-street bag. It looks and feels real — a smooth, buttery leather with the heft of a true luxury bag. And it arrives in just a day or two, with what are purportedly Dior’s engraved box, red ribbon and certificate of authenticity.
The skill of the counterfeiters and their growing ability to leverage global social networks has left Beijing playing whack-a-mole as it attempts to stamp out fake luxury goods. Even as China’s rich become ever more important to marquee fashion houses, the bulk of its consumers remain on the outside: Bombarded by marketing for items they can never afford, and hungry for more affordable knockoffs.