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Coach takes new approach to counter Chinese fakes
Coach, the US handbags and accessories group, says it is taking a higher-profile approach than many of its competitors in fighting counterfeiting in China, a market that offers huge potential for the future.
- Financial Times
- Published: 00:00 May 1, 2007
Coach, the US handbags and accessories group, says it is taking a higher-profile approach than many of its competitors in fighting counterfeiting in China, a market that offers huge potential for the future.
Foreign luxury goods companies all have extensive anti-counterfeiting programmes in place in China and use private investigators and lawyers who work with local authorities to combat the manufacture, sale and export of fake products, but many prefer to keep such policing operations quiet.
Carole Sadler, the New York-based general counsel for Coach, said, however, that the company's approach was to be as "vociferous and vigilant" as possible. "We want to deter people," she said in an interview in Beijing after touring the company's operations in China. "My goal to promote a zero-tolerance policy towards counterfeiters and show them at every level the risk they are taking."
The aim was to keep the "brand's integrity intact" and communicate that to consumers, and also ensure that the pirates were constrained to the point that their counterfeits did not swamp real products in the market.
Focus
Coach, which promotes itself as an accessible luxury brand, sells about 95 per cent of its bags, jewellery and shoes in two markets, the US and Japan, with a focus on marketing the products through its own stores.
It expects to have eight stores in China by the end of the year, but it lags well behind market leader LVMH, the French luxury group, whose sales to Chinese both at home and abroad make up a much larger share of its global business.
LVMH has aggressively fought piracy, both though public law suits and also more quietly, behind the scenes, in pressing the authorities for raids on counterfeiting factories.
Coach is different from other luxury brands in that it manufactures extensively in China itself, something that others say they have largely avoided because of the potential stigma of the "Made in China" label on luxury goods, even for Chinese consumers.
Sadler says she believes this is now changing, with more luxury goods companies beginning to bring some of their manufacturing onshore as Coach has done.
She said that the biggest issue for Coach in enforcing its intellectual property rights was a lack of consistency in enforcement at the local level in China.
"You may get a great Public Security Bureau [police department] in one area and then find they are not looking to be taking action in another area," he said.
Transparency
The reason for such inconsistencies were often not clear, she said, because of the lack of transparency in the Chinese system.
With the help of the Chinese authorities, she said, Coach had seized millions of counterfeited products in thousands of raids.
Sadler said that seizures of counterfeit goods were divided equally between the US and China but that nearly all the fake products were manufactured in China. But she said Coach was confident that the local companies it had contracted to manufacture on its behalf could be relied on not to add extra product lines to sell on the black market.
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