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Financial Times
April 5, 2003
WATCHES & JEWELRY
About 10 years ago, savvy tourists in Hong Kong would pride themselves on being able to tell a fake Rolex from the real thing because the watch's second hand, instead of moving smoothly around the face as it does in the genuine article, ticked around in one-second increments.
It was not long before the counterfeiters managed to iron out this wrinkle in their merchandise. But at between Dollars 5 and Dollars 10 each and sold on small street-side stalls or at "flea markets", these "Rolexes" and other luxury brand watches were clearly fakes - often made from non-brand models that had been altered by repainting the dial with a different logo or stamping the back or movement with the marks of the luxury item.
The buyers of such watches were often usually fully aware that they were not acquiring the genuine article.
However, John Anderson, director-general of the UK-based Anti-Counterfeiting Group, believes that in the UK the market for cheap fakes of luxury brand watches is on the wane. "The cache of wearing a fake Rolex, which was high five years ago, has gone right down," he says.
He says that, at the lower end of the market - where a broader range of companies, particularly sporting goods makers such as Nike and Timberland, are extending their brands into watches and other products - the counterfeiters are out there with cheaper versions. The branded model might not be expensive, but the fake is cheaper - and not difficult to produce.
"There are watch factories all over the world and the basic machinery for turning out a Dollars 5 watch is pretty much the same wherever you go," says Mr Anderson. "So, if they are turning out cheap Dollars 5 watches for cheap Dollars 5 watch distributors, they might as well turn out cheap Dollars 5 imitations."
Today, technology has made it possible to manufacture most parts of a watch as well as allowing counterfeiters to remove existing registration marks and replace them with new numbers.
These items - particularly if they have high price tags on them - are often difficult to distinguish from the real thing. "As far as production goes, they are getting better," says Michael Kessler, president and chief executive officer of Kessler International, a corporate investigation company based in New York. "The copies used to be flimsy and cheap. Now it takes a good, close look to tell a fake from the real thing."
To foil customs officers, the various parts are often shipped separately with, for example, a container of unmarked watches for which the fake logos are packed in a small bag in somebody's suitcase. The watches are then assembled in the countries in which they are going to be distributed.
Mr Anderson also identifies a growing market for fake Rolexes made with real gold and diamonds. "It costs perhaps Dollars 10,000, but you are faking something that might cost Pounds 30,000 to Pounds 50,000," he says.
The fakery is not limited to the products themselves; certificates are often copied. Sophisticated computers and printing equipment has led to the creation of a small industry producing near-perfect fake boxes, packaging, hang tags and even instructions.
The incentives behind all this activity are clear. The internet has created an easy marketing and distribution channel without geographical borders and where vendors are very difficult to track down. "The profit motivations have skyrocketed because of the internet," says Mr Kessler.
As a result, some luxury watchmakers will not sell their product over the web at all. The first thing that appears when visiting Rolex's website, for instance, is a pop-up box informing readers that "genuine Rolex products are sold through official Rolex Jewellers and are not available on the internet". The message is clear: any Rolex watch offered on the web is likely to be secondhand, of doubtful origin or a fake.
Ascertaining the veracity of watches sold over the web is problematic. When it comes to offline sales, however, there are many signs that can help those who want to make sure they are not sold a counterfeit product to tell the real from the fake.
Most importantly, consumers should find out as much as they can about the watches they are interested in. This will help them to identify any deviations from the original.
First, examine the details. Look closely at logos and details of the watch face and its hands. Parts, such as clasps and buckles or the watch backs, may be made from an inferior metal.
Often, fake watches are sold in a range of colour combinations or textures that would not be available for the genuine model. And despite their skills, counterfeiters are rarely able to produce fake watches with working stopwatch functions and automatic movements.
The trouble for watchmakers, however, is that there are millions of consumers - particularly in the developing world - for whom acquiring the genuine article is not a priority.
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