Let Them Eat Fake Cake: The Rational Weakness of China’s Anti-Counterfeiting Policy

Let Them Eat Fake Cake: The Rational Weakness of China’s Anti-Counterfeiting Policy

Description

This chapter examines the following questions: How did China become the world's leader in luxury goods sales—a category that relies heavily on intellectual property (IP) rights for its market value—while at the same time achieving unchallenged global dominance in “IP theft”? How can authentic luxury products, with their often-stratospheric prices, have such astonishing market success in China when knockoff versions are so easily produced and so widely available? It begins by describing China's approach to IP and its thriving luxury goods market. It then examines China's equally robust knockoff economy, and explores how copying and counterfeiting occur in China. Finally, it speculates on how to reconcile the success of both legitimate branded luxury goods and counterfeits in China. The chapter argues that much of the harm assumed to flow from counterfeits is difficult to demonstrate empirically in the luxury goods sector, and there are good theoretical reasons to doubt its magnitude. Indeed, the conventional wisdom about the harm caused by counterfeits is more a matter of inference than evidence. And there is some evidence, including evidence from China itself, that counterfeits can strengthen brands as well as undercut them.

Source Publication

The Luxury Economy and Intellectual Property: Critical Reflections

Source Editors/Authors

Haochen Sun, Barton Beebe, Madhavi Sunder

Publication Date

2015

Let Them Eat Fake Cake: The Rational Weakness of China’s Anti-Counterfeiting Policy

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