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January, 2018

Fake footwear proving hard to stamp out in China

Original article: American Journal of Transportation

Globally, footwear is the most counterfeited consumer product and China manufactures most of it. In fact, fake footwear production is on the rise in China, according to a recent report by the American Apparel and Footwear Association (AAFA), an industry lobbying group. The AAFA worries that pending Chinese e-commerce legislation may aggravate the problem by reducing online plaforms' liability for counterfeits on their platforms.

Analysis:

In 2017 both Chinese and global media was full of reports about fake footwear busts. The infringement value of the impounded goods was usually high - in the millions of U.S. dollars. In late December, The Manila Times reported that Philippines authorities seized US$10 million worth of fake goods from 10 warehouses units, much of it counterfeit footwear: Nike, Adidas, Under Armour, Vans, Fitlfop and Crocs. China was the source of the counterfeits. 


Also in late December, South African authorities intercepted four consignments of fake goods shipped from Hong Kong and mainland China at Tambo International Airport. The shipments contained more than 12,000 pairs of phony Nike sneakers as well as 1,600 counterfeit Ralph Lauren Polo and Chanel shoes, according to Kempton Express. In total, the counterfeits are valued at US$1.6 million.


Indeed, in a year when both the Chinese leadership and China's e-commerce giants stepped up IP protection, the fake footwear surge ran against the tide. In the view of O2O Brand Protection, that won't change until the major e-commerce platforms start taking the problem seriously.


And it's not just Alibaba's problem: Amazon has been equally lax about chasing counterfeiters off its marketplace. Fed up with Amazon's indifference, in December German sandal maker Birkenstock terminated its relationship with the online retailer in Europe (it had previously done so in the U.S.), citing a "breakdown in trust." 


The AAFA has concerns of its own about counterfeits. Of course, since 70% of its member companies' footwear imports are made in China and support millions of U.S. jobs in everything from design to logistics, it needs to tread carefully. 


In a September report, the AAFA expresses particular concern about "parasite brands," which mimic the designs, styles, and story of a host brand but use different names. Under Chinese law, parasite brands are usually protected under the the first‐to‐file trademark system. 


To curb the proliferation of parasite brands, the AAFA urges Beijing to "take steps to cancel registrations or stop the companies that own the brands from seeking other forms of corporate legitimacy," such as going public.  

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