Experts warn of fakes in expanding luxury goods market
China’s booming economy and the rising purchasing power of Chinese customers have resulted in the rapid expansion of the country’s luxury goods market. Set against the backdrop of this expansion, experts have warned consumers about the risk of counterfeit products on the online secondhand luxury market, which has been exacerbated by the rise of the daigou channel — Chinese for “buying on behalf”.
Chinese people spent up to 630 billion yuan ($91.16 billion) on luxury products overseas in 2016, and when their spending on luxury items in China is added, their spending accounted for 46 percent of all luxury goods’ consumption worldwide, according to Chinanews.com.
As well as traditional stores, Chinese customers also purchase luxury products on social networks such as WeChat, Weibo and at online shopping malls.
Statistics released by the Secondhand Luxury Goods Working Committee in China, a nonprofit organization established by Chinese secondhand luxury goods enterprises, about 60 percent of the luxury goods bought through overseas daigou channels are fake.
The products sold through this channel are usually cheaper than those bought over the counter within China.
“Some of (those involved in daigou) will make videos or live broadcasts to convince their buyers that they are selling products from the counters of genuine brand retailers,” said Zhang Chen, an expert on luxury bag authenticity identification at Beijing Price Certification Center.
“But what they really send to customers is different to the product they showed on the video,” Zhang said, adding that each video can be used to attract more than one buyer.
Some providers involved in the daigou network even go as far as to decorate their offices to resemble an overseas Louis Vuitton counter. They ask their staff to dress up as shop assistants to lend further credibility to their videos, which shows the lengths they will go to in order to sell their fake products, Zhang said.
In a bid to avoid some of these risks, a number of customers turn to traditional brick and mortar stores across China. These stores, however, are also vulnerable to fake products.
Last year, there were 2,500 brick and mortar shops selling secondhand luxury goods in China, a 20 percent increase from 2015.
About 60 percent of these shops stocked fake products due to their inability to authenticate products, according to the secondhand luxury products working committee of the China Resale Goods Trade Association, which works to regulate the market.
The process of identifying authentic luxury goods is complicated because it requires a wide range of knowledge and experience, Zhang said.
Those new to the process can initially focus on the stitching, materials, logos and types of branding on the products they are examining, Zhang said.
The most reliable method of authenticating luxury products is to check whether the manufacturing techniques used on a product are commensurate with its time to market, or the length of time from its conception to its appearance in shops. Customers can also send their items to secondhand product identification organizations, Zhang said.
At present, the domestic luxury product sector is still very much in its infancy, said Yan Linbing, director of the committee.
Many customers find it hard to authenticate products and preserve their rights, and the authorities are often unable to find sufficient evidence to prosecute those suspected of selling fake goods, which opens the door to unscrupulous traders, Yan said.
As a result, customers must rely on authenticity identification organizations to protect their rights and interests. They can send their luxury watches, bags, jewelry and other goods they want to authenticate to the secondhand luxury goods working committee, he said.
The committee can provide an electronic or paper version of the third-party authentication certificate within five to eight working days of receiving an item. The certification can be used as judicial evidence in any subsequent complaint procedure.