When Horological Imitation is Criminal

When Bill Clinton’s strategist James Caville was asked what mattered most to the forthcoming election campaign, he coined a phrase that would enter the political lexicon: “It’s the economy, stupid”. So anyone who might ask why people buy counterfeit watches might similarly reply: “It’s the price, stupid”.

The fact that demand is high – some 40 million fakes are circulated every year, according to the Federation of the Swiss Watch Industry, and that is around 25 percent more than the Swiss industry produces – might well point to this fact. Indeed, watches are among the most counterfeited products, representing around 30 percent of all counterfeit goods. Why else would anyone buy a fake, if it was not for the fact that the ‘real thing’ was – relatively speaking, and for all sorts of reasons – so expensive?

If only the world of counterfeit watches was so simple. Xuemei Ban, professor of marketing at Northumbria University, UK, who has made a study of the psychology of buying counterfeits, points to some rather unexpected findings of her research. “Of course people would be much less willing to buy a counterfeit watch for the design alone, if it wasn’t a matter of [buying into a status] brand,” she says. But, she adds, the big picture is far more complicated than consideration of fakes has, to date, really given credit for.

Looking the Part

Take fun, for example, Yes, fun. Counterfeit watches have entertainment value akin to fast ‘disposable’ fashion, also known for ‘ripping off’ more expensive designer styles. “In terms of its function a counterfeit may not be as good as the original, yet it still serves a purpose [in that it still tells the time] and lasts long enough to make economic sense,” she says. “It’s like buying a fake Manchester United shirt. For the few times you’re going to wear it, the fake works”.

What is yet more counter-intuitive, her studies suggest, is that counterfeit watches are bought by even those consumers who can afford to buy the real thing. It is, for them, a different way to interact with the brand: they might wear their genuine watch in some circumstances and the fake in others. And, since they invariably look the part, nobody questions whether what they’re wearing is real or fake anyway.

“Wearing a counterfeit gives them a certain satisfaction,” Ban explains. “It’s not just that there’s little risk of [a fall in social standing] for them to wear a counterfeit. It’s that in doing so it cuts against social norms, and there’s enjoyment in that for them. There’s a sense of naughtiness to it all. It appeals to their dark side”. It is, she says, a hard thing for the high-end watch manufacturers to get their heads around: “that there’s a willingness to buy counterfeit watches even among their target audience. They need to admit that to themselves,” she insists. “Denying [the nature of] demand isn’t going to help them tackle the problem. Telling people ‘stop buying counterfeits’ won’t work”.

Willing Accomplices

This is just one of the stranger twists in human psychology behind the ceaseless growth in the market for counterfeit watches. According to Professor Andre Le Roux, of the University of Poitiers’s Institute of Business Administration, who has co-authored several papers on consumer behaviour relating to counterfeits, appealing to the possible financial impact on legitimate watch manufacturers’ bottom lines just is not convincing, not least because – while it certainly happens – it is not clear how many people buy a fake believing it to be the real thing.

Certainly a finer appreciation for the damage to brand reputation – and for many of the big players of the watch industry, the cost of building and maintaining a brand outweighs that of actually making products – is typically one only CEOs and marketing directors properly appreciate.

“Many consumers are ready to buy some form of counterfeit, depending on the product [and its potential harms to themselves] – a t-shirt like a Lacoste polo, say, but not a chemical [or cosmetics or sunglasses],” explains Le Roux. “And most people who buy counterfeits are accomplices of the counterfeiters – they’re ready to buy a counterfeit and, based on the suspiciously ‘good deal’ they’re offered, it’s pretty obvious to them what they’re buying”.

Not a Victimless Crime

The Federation of the Swiss Watch Industry speaks of counterfeiting’s negative impact on employment and revenue – to the tune of EUR 1.9bn annually – across the legitimate industry, through Le Roux is sceptical of the idea that, if only it was not for the counterfeit option, consumers would necessarily buy the genuine article. “Yes, people may, in the abstract, feel bad for the company [making the genuine product]. They may know it’s bad for the economy or might cost jobs. But, frankly, they don’t care,” he says.

Besides, in an age that has more than a tinge of anti-capitalist fervour about it, protecting profits or intellectual property or even reputation is hardly a winning argument, even if all three brand properties are in fact damaged by counterfeiting. Rather, his research shows that, for a minority of consumers, there is even a militant incentive to buying a counterfeit: “It’s a way to express an opposition to the brand [as symbolic of corporate power], a form of retaliation against a brand perceived as ripping the consumer off,” he says. “These consumers want you to know they’re wearing a counterfeit watch. That’s the point. Really, if they’re going to tackle counterfeiting, companies need a much deeper appreciation of the way consumers think”.

Might then, an appeal to a broader morality work in dissuading the purchase of counterfeit watches? Over recent years, the Federation of the Swiss Watch Industry has placed more emphasis on the criminal aspect of counterfeiting – less the fakery itself, so much as the trade being a front for the kind of crimes that, one might imagine, are likely to be taken more seriously by the public. A recent Europol report, for example, concluded that 80 percent of criminal networks the counterfeiting of various products as a means for laundering money; that – and this might read more as a scare tactic – the online purchase of counterfeits is often a front for the stealing of credit card details.

Increased Sophistication

Yet Le Roux’s studies suggest that most consumers of counterfeiters are not conscious of the potential legal penalties facing themselves – in most countries buying a counterfeit watch is, technically, illegal – let alone the wider ramifications for society. And Ban agrees: “We [and others] have done a number of projects about whether ethics affects purchase decisions regarding counterfeits and pretty much all the literature aligns: moral considerations don’t have a significant role”.

Maybe these consumers are just insufficiently informed. “Not enough people are aware of [these negative aspects of watch counterfeiting],” concedes Carole Aubert, head of the Federation of the Swiss Watch Industry’s legal division, “and we need to do a lot more work on [correcting] that. On the one hand there is growing awareness among authorities and consumers that it’s not a victimless crime. On the other hand [is the challenge that] counterfeiting is that much more sophisticated now, both in terms of product and distribution”.

Certainly, the watch counterfeiting market has gone through a sea-change in recent years. As Aubert puts it, the Internet – and latterly social media – has meant that there are “no barriers [to purchase]. It’s not a question of going to marketplaces in tourist destinations anymore.” As Xuemei Ban adds, sales of counterfeit watches have long skewed towards less well-regulated markets where counterfeits have been more readily available; now it is tipping towards those nations – wealthier nations, it is worth noting – where, historically, picking up a counterfeit has not been so easy. Ironically, it is in those countries where counterfeits look to be proving more desirable too.

Rise of the Super-Fake

But then there is also the rise of the so-called “super-fake”. Counterfeit watches are increasingly made using the latest CNC and 3D printing technology on advanced factory lines – mostly in East Asia – and sometimes by those involved in the manufacture of parts for the legitimate watch industry.

Certainly, in “de-localising” production so extensively, Le Roux argues, some watch manufacturers might be held liable for the development of counterfeiting – “because in many cases now the sub-contractor is the counterfeiter. There’s ‘ghost production’ going on alongside the legitimate production”. Even if said sub-contractors may not make the whole watch, co-ordinate

orders for components from enough of them and you have the makings of a decent watch and, perhaps just as importantly, a convincing counterfeit. Pre-owned watch dealer Watchfinder & Co. noted in a report last year that five years ago, 80 percent of counterfeit watches sent into its stores were easily identified as fake, with 20 percent needing closer inspection. Now those figures have been reversed.

Fabrice Gueroux, author of ‘Real & Fake Watches’ and an independent authenticator for many heavyweight collectors, is not surprised. In part, this is, he laments, down to a decline in the quality of some Swiss-made watches – such that, he says, the standard of their counterfeits is sometimes superior. But it is also because, as with any other industry, increased competition among makers of counterfeits – once, he says, dominated by just five mega-facilities in China – has pushed quality up.

Why Pay More?

“You can sometimes close your eyes and hold a counterfeit in your hands and there’s something that doesn’t feel right about it, but [the challenge is that] you need deep knowledge of the genuine watch for that and, of course, that’s what most people don’t have,” he explains. “With enough time even the best fake shows itself, and the very best ones have put in the extra time on the paintwork, the fonts, the bracelet. But even I’m surprised by just how good a counterfeit can now be”.

The effect of this is two-fold. Gueroux explains that, as more of these super-fakes enter the open market and then get passed around the booming secondary market, it only takes one unscrupulous seller pricing their fake cleverly in order to deceive – as a great deal but not such a bargain as to suggest anything dubious – for subsequent owners to assume the piece is genuine from then on. Consequently, it is likely the future will see more people buying a fake without knowing it is a fake. Even the seller will not know.

And Le Roux adds that the improving quality of counterfeits only underscores this whole issue as being one of consumer psychology: if quality was a key reason for buying the real thing, as the gap between the fake and the genuine article narrows – not at the microscopic level perhaps, nor that of the most advanced research and development, but for all that the average consumer, or their peers, can tell – the incentive to pay more also diminishes, at least for all but the true horolophiles.

Arms Race

Perhaps the only means for watch brands to beat counterfeiters – “to create a firewall against it,” Le Roux suggests – is for manufacturers to make their products even more advanced in terms of craft and technology, “but of course always being able to offer some unique product advantage is not at all easy.” And then there is the ongoing parallel arms race of anti-counterfeiting measures the likes of engravings, serial numbers and holograms, all, eventually, convincingly copied too. “You see [the manufacturers] spending a lot of money on anti-counterfeiting tech but it’s all BS,” reckons an uncompromising Gueroux. “The fact is they can’t keep up [with counterfeiters’ capabilities]”.

Besides, those true horolophiles are a minority among even those consumers interested in a ‘good’ watch. “If buying a counterfeit can be interpreted as a kind of wisdom – you are buying the image of a brand without the cost of their product – then, obviously, [given counterfeit’s advance in quality too] why would consumers then pay many times more for the ‘real thing’?” Le Roux asks, rhetorically.

That question, he stresses, is going to be especially resonant in those developing markets that want the consumer trappings of developed markets now – “to show that they’re in the trend of development” – without the incomes to buy them. Around 30 to 40 percent of such consumers search for counterfeits, according to one study. And often that is not even about trying to buy into a status brand on the cheap: in many markets, counterfeits serve a basic need at a price that is cheaper than even mass-market, entry-level watch brands sell at. “The counterfeit watch market isn’t just about wanting to wear a Rolex,” Ban stresses.

Final Battleground

But, perhaps in time, the brand on a watch dial will come to have less resonance. Take the growing prevalence of the ‘homage’ or replica watch – one which capitalises on the distinctive look of a certain model, but often remains brand-free, and is typically openly marketed as a version ‘inspired by’ the well- known original; one which also demonstrates just how quickly the counterfeit industry is now able to respond to the new fashionability of a watch model, even one from a micro-brand not well known among watch fans.

This echoes a similar shift in the furniture market. Excellent replicas of classic furniture designs are undisguisedly sold as “Eames-style” or “Bertoia-style”, despite – arguably – a cost to the holder of the official license to manufacture the designs. They are bought too with zero moral qualms.

Aubert argues that, legally, the situation is different: it varies from country to country, but furniture is typically protected by copyright, and copyright eventually expires. A watch design, in contrast, is not considered an ‘artistic work’ – though maybe it

should be – and so is not copyrightable. But the comparison is perhaps indicative of where the watch world may be heading in decades to come, especially as sales of counterfeits show no sign of decline: towards acceptance, however reluctant, of a parallel market that provides a cheaper alternative for those who want it. Those who want the genuine article – maybe simply because it is the genuine article – will buy it and take satisfaction accordingly.

This also speaks to what may be the last battleground on which the real and counterfeit can face off. Further academic studies suggest even if fake and genuine items are virtually indistinguishable, for some consumers the counterfeit choice nonetheless remains a primer for self-doubt, and increasingly so in a culture that is said to value authenticity. It is a concern particularly prevalent among younger consumers and, “since they’re key to the future of our clients”, says Aubert, is something the Federation is leaning into. Not for nothing did the Fondation de la Haute Horlogerie base its anti-counterfeiting campaign of a few years ago around the statement “Fake Watches are for Fake People”.

Tarnishing Everyone

What Le Roux calls “social image” – how buying a counterfeit changes the assessment of a consumer in the eyes of their peers – remains a factor. More intriguing perhaps is what it says to the consumer about themselves. According to research by Moty Amar, professor of marketing at Ono Academic School in Israel, the buying of counterfeits can still have an element of what is called “moral disgust” to it. This negatively affects both the use of the counterfeit watch – owners struggle to escape feeling somewhat ambivalent about it – but, more problematically for watch manufactures, impressions of the genuine article too: it makes the real thing feel like a counterfeit itself.

Therein, arguably, lies the real problem with counterfeit watches. It is less to do with deceived consumers, lost sales, or the undoubted annoyance of the fakers free-riding the value created in brands over many years – and let us not overlook the fact that watch manufacturers are not above producing their own close versions of other companies’ more iconic designs either. Rather, it is more to do with the way counterfeits tarnish the whole enterprise of watchmaking, at least for those brands powerful enough to warrant copying in the first place.

And that, Gueroux points out, brings us back to square one, which is the conundrum for all high-end brands, almost by definition: that they have created a desirability that not everyone can access legitimately. And, in the case of watches it seems, that some do not even want to access legitimately. It’s a sorry conclusion, he admits, but people are people. And, as such, counterfeiting “is a battle the manufacturers can’t win”.

This article first appeared on WOW’s Summer 2024 issue.

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