Every time I give a talk on the luxury business today and I get to the subject of counterfeiting, the same thing happens. The room grows absolutely silent as I put forth the facts: It is estimated that up to 7 percent of our annual world trade — $600 billion worth — is counterfeit or pirated; that fakes are believed to be directly responsible for the loss of more than 750,000 American jobs; that everything from baby formula to medicine is counterfeited, with tragic results; that counterfeiters and the crime syndicates they work with deal in human trafficking, child labor, and gang warfare; and that counterfeiting is used to launder money, and the money has been linked to truly sinister deeds such as terrorism.
No one utters a word, not a sound, as I recall the raid I went on with Chinese police in a tenement in Guangzhou and what we discovered when we walked in: two dozen sad, tired, dirty children, ages 8 to 14, making fake Dunhill, Versace, and Hugo Boss handbags on old, rusty sewing machines. It was like something out of Dickens, Oliver Twist in the 21st century.
Then I read the following passage from my book, Deluxe: How Luxury Lost Its Luster. "'I remember walking into an assembly plant in Thailand a couple of years ago and seeing six or seven little children, all under 10 years old, sitting on the floor assembling counterfeit leather handbags,' an investigator told me... 'The owners had broken the children's legs and tied the lower leg to the thigh so the bones wouldn't mend. [They] did it because the children said they wanted to go outside and play.'"
The audience gasps. From time to time, I see tears too. And afterward, I always hear the same response: "I had no idea." Always. Most consumers believe that buying fake goods is harmless, that it's a victimless crime. But it's not. It's not at all.
In the five years that I have been writing about this issue, I have seen two things happen: The illegal enterprise is getting stronger and more professional, and the consumer is slowly but surely becoming more aware.