Fake or Counterfeit - Whats the difference?

Both fakes and counterfeits are a huge concern in the luxury industry, but is there a difference between them? Yes, and knowing the difference can make a huge difference to how a lux company would deal with the problem at hand.

Fake: These are products which have the brand name on it but no attempt is made to hide that it is not the "real thing". Either the product is not a part of the lux brand (say a Rolex perfume or suit) or is made with a different design or made with such inferior raw materials that customers are in no doubt to the product being not the real McCoy. Fakes are also sold as such very openly to customers in designated markets (albeit shady ones) as a fake or replica at a much lower price. Customers go to these markets with the intention of buying a fake.

Counterfeit: These are products that are made and sold as the genuine product on unsuspecting customers. The product quality is maintained (mostly) and sold in regular lux retail outlets. The price is also not discounted as in Fakes. The customer also has no knowledge that the product is not geneuine.


A market of Fake Chanel bags

Obviously for the luxury industry, the overiding concern are the counterfeits. Lux industry is generally not too concerned with fakes since sales are generally not lost due to it. Customers who buy fakes have no intention of buying the real product and are not the lux industry's customer base. But every counterfeit sold is a direct hit on the lux company's topline and a blow to customer satisfaction in the long run due to inferior material or lack of branding due to loss of exclusivity caused by flooding of the market. Lux company's now take counterfeiting seriously and have taken several measures to put a stop to it. Since counterfeiting involves a larger and more sophisticated facilities for manufacture, the industry is teeming up with local governments to tackle the same.


The new Chanel store

On an interesting side note, Michele Norsa, the CEO of Ferragamo states that the Chinese customers are the most astutue customers when coming to identifying counterfeits. The level of awareness and much more than American customers. The average Chinese consumer typically investigates each purchase and takes an informed buying decision  only after being completely satisfied with the genueiness of the product.