The Hidden Costs of Cheap Bags
by Lillie Binder
The sidewalks of Canal Street in New York City's Chinatown are usually so crowded with pedestrians that some have to walk on the street. The long stretches of street vendors selling discounted luxury items and electronics make up one of the world's most notorious black market hubs. Hustlers alternate between shouting at passers-by offering their best deals and whispering code warnings about police into their walkie-talkies. Men and women, young and old, working class and wealthy, tourists and locals, go from shop to shop seeking the fashion world's latest, most expensive items at the cheapest prices. While each knows that these bags may not be authentic, or their sales legal, the underground market continues to thrive every year, particularly in the market of counterfeit designer handbags.
Counterfeit goods, such as fake designer handbags, make up a $450 billion industry worldwide, comprising up to nine percent of international trade, according to the World Economic Forum, an independent organization that works with different world leaders on improving the global economy. The production of these goods is concentrated especially in Eastern Asian countries like China, where factories produce copies of everything from prescription drugs to car parts to designer handbags. In these countries, the use of sweatshop factories and child labor is rampant. Who knew the specific threat that fake designer handbags impose on international human rights standards? And more importantly, who cares?
To combat the forces of the global counterfeiting industry, the United States police have taken action. The police carry out random checks on street vendor booths, but punishments are far from severe. Many of the booths do not have the proper permits to sell on the sidewalk and many claim to sell real designer products that are often not real. The police routinely charge these vendors with a minor misdemeanor, fine them, and confiscate the offending items. However, the police generally ignore the labor relations injustices that go into the sales of these bags. The final word from one NYPD officer was, "we don’t care where or how things are made, just whether they're legal or not." However, this blasé attitude is problematic because under several international labor agreements, the production practices are actually not legal.
The police in France and the U.K. have begun punishing people who buy counterfeit goods with fines and jail time, whereas in the United States it is only illegal to sell the products. Vendors in the U.S. caught selling illegal items have rarely punished with these penalties, but they do risk up to ten years in jail and/or a $2 million fine by federal law. In some cases, with regard to fake bag sales, the police have reacted quite severely. A 2003 Denver Post article reported that a woman’s “(counterfeit) purse party” was raided by police who confiscated 269 bags worth $163,000 and arrested the organizer. This incident, among many other similar ones around the country, set an example to all of the criminals in our cities selling fake bags. However, many of them continue to flourish under police radar due to the sheer volume of them on the streets.
National governments also have reason to protest the
counterfeit street sales. Most knockoff vendors are cash only businesses
that do not charge sales tax, and therefore cheat local governments
out of millions of dollars in taxes every year. The International Chamber
of Commerce reported earlier this year that the world economy loses
$600 billion per year due to knockoffs, and U.S. companies alone also
lose up to $250 billion per year to knockoffs. The world of counterfeit
bags creates a nefarious "parallel economy" where only a group
of criminals benefit from the street exchanges.
The Federal Bureau of Investigation has also suggested a possible connection
between the counterfeit goods industry and terrorist groups. The International
Anti-Counterfeiting Coalition director Ruth Orchard has said that, "profits
from counterfeit bags sold at their local market stall are used to fund
highly organized international terrorist networks- [such as] Hamas and
even Al Qaeda." Our current War on Terror should include a War
on Fake Bags. Ms. Orchard said that, "It is now widely agreed that
the bombing of the World Trade Center in 1993 was funded partly by the
sale of counterfeit designer textiles from an illegal outlet in New
York's Chinatown." Terrorist-wary New Yorkers would surely hesitate
before buying another fake bag in Chinatown if they were aware.
Fashion designers themselves are also obvious victims in the industry of fake bags that causes them millions of dollars of lost revenue every year. In retaliation, several major designer brands are beginning to respond aggressively to the counterfeiting by dispatching private investigators to the streets. Louis Vuitton, for example, one of the most widely copied designers worldwide, has hired forty full-time lawyers and has spent almost $28 million in investigations. A recent New York Times article exposed the way the brand’s hired investigators conspire with landlords to bring some of the illegal vendors to court and force others to post warning signs that their shop is not an authorized vendor of the brand. London's Daily Mail also reported in 2005 that Burberry hired a small legal team that “uncovered a series of Al Qaeda manuals that recommend the selling of fake designer items as the simplest way to fund terrorist activity,” which confirms the fears of the United States F.B.I.
However, ultimately, from the typical passerby perspective,
sidewalk vendors simply sell what people want at prices they can afford.
Unfortunately, people just do not really know what they are buying.
I tried to find out myself by asking a few street vendors where or by
whom a few bags were made, and most answered defensively with responses
like, "You haven't heard of Balenciaga? So popular right now!”
or just a haughty, “The people who buy my bags usually know what they
are buying!"
Most of the bags in New York City’s Chinatown I came across were clearly
labeled with "Made in China" stickers. These stickers probably
indicate that the bags were actually made by sweatshop laborers in China.
The bags offered in Chinatown are almost never real (which can be discerned
fairly easily by examining quality and style differences) and if they
are real, they cost hundreds of dollars as they are proudly marketed
as “stolen." For usual knockoffs, though, cheap materials and despicably
cheap labor transform a $2000 bag into a $20 one. Sadly, in consequence,
the cheap bag that costs the consumer so little actually costs many
overseas workers their basic human rights.
The International Labor Organization sets regulations for different
industries in participating countries all over the world, including
standards for decent work hours, minimum working age, minimum wages,
and decent employee treatment. Yet these laws are far from being widely
enforced. One main reason for this is that the global economy today
aims to make trade the most free and accessible as possible between
developing and industrialized countries. Sweatshopwatch.org, an international
watchdog group against the exploitation of workers, alleges that globalization
leads to trade agreements that can only "include very weak social
clauses- provisions that set labor, social, and environmental standards."
This means that, in international companies’ efforts to expand their
trading, they often compromise efforts to protect workers’ rights, if
those extra wages would cost them too much of their own profits.
The specific violations of the standards of the International Labor
Organization (in which China supposedly participates) should shock an
uneducated consumer. In 2000, one BusinessWeek undercover investigation
at a multi-purpose Chinese sweatshop found that, "900 workers were
locked in the walled factory compound for all but a total of 60 minutes
a day for meals." The factory owners severely restricted the personal
freedom of its workers, and allowed for many types of physical abuse.
"Guards regularly punched and hit workers for talking back to managers
or even for walking too fast, and fined them up to $1 for infractions
such as taking too long in the bathroom," the investigation revealed.
Human Rights Watch, another international organization that protects
individual freedoms and rights, has reported finding hundreds of sweatshops
in Guangdong, an industrial city near Hong Kong in China. The organization
believes products of these sweatshops are commonly distributed throughout
China. A five story mall in Shenzhen (another city near Hong Kong) that
only sells knockoffs of designer labels is being investigated, as well
as the famous outdoor shopping center Silk Alley which sells more of
the same in Beijing.
The Chinese government is ostensibly doing all it can to control the
illegal underground industries as well as maintaining decent labor relations,
by establishing a vast supervision system. Over the past fifteen years,
China has formed a “government-trade union-enterprise tripartite.” Appointed
bodies on a federal level down to specialized groups in twelve provinces
- including Shenzhen and Beijing- have organized more than 3,000 committees
to handle labor disputes, and to stop unjust practices at work and punish
the perpetrators (typically with fines and confiscations). Even under
all of this supervision, the sweatshop problem remains out of control
in China today.
In fact, a London Daily Mail 2005 report said that, "70 percent
of counterfeit items seized worldwide last year came from factories
in China.” The report also described the use of child labor in these
factories, explaining that, “young children are preferred because their
nimble, small fingers are deemed more suitable for intricate stitching
on small handbags that make the copies look so convincing.”
International Labor Organizations conventions deem the hiring of children
under the age of fifteen for industrial work illegal. In China, specifically,
the federal government set the age of sixteen as the minimum employment
age. Child labor is clearly another major issue that the Chinese government
needs to control before the global counterfeiting problem can be solved.
These major labor problems do not just affect China, however. With the
sales of their products throughout the world, the problems become a
global responsibility. Fake designer bags, in particular, are typically
smuggled into major cities throughout the world by different stealthy
methods such as assembling the products in different stages, in different
countries along the way, and then attaching the designer labels last
to get past border inspectors. Once in other countries, although shoppers
sense that buying these bags is wrong, they still do it all the time,
all over the world. Vendors need to stop selling these bags and shoppers
need to stop buying them before we improve human rights in these East-Asian
industrial countries.
Does the ordinary sidewalk shopper take all of these concerns into consideration at once- the involvement of sweatshops, child labor, tax evasion, or intellectual property theft? Most likely not. A 2005 poll conducted by the United Kingdom Anti-Counterfeiting Group showed that one third of the women "saw 'no harm' in purchasing counterfeit items if the price and quality were right.” In the U.S., in my own informal poll among some fellow students at New York University, the majority of the women I asked said the same thing.
"To be honest, I don't really pay attention to where
things are made," said sophomore Katie Romick. "It doesn't
stop me from buying the things that I like."
Some women I talked to about this had discouraging experiences with
fake bags and would not purchase one again. “I accidentally bought a
fake Dior bag at a flea market. It had a fake authenticity card....
[but] the day I used it, the insides ripped and the whole thing fell
apart,” said sophomore Patricia Chang.
Other women would never even consider it, and just keep walking past
the booths and screaming vendors. As senior Tiffany Washington said,
“I hate fake bags because they’re made in sweatshops, they’re poor quality,
they take away from the prestige of a real bag, and they make the person
carrying it look cheap.”
The many reasons against buying a fake bag outweigh any reason to do
so.
Websites referenced:
http://www.businessweek.com/2000/00_40/b3701119.htm
http://www.iacc.org (International
Anti-Counterfeiting Coalition)
http://www.ilo.org (International
Labor Organization)
http://www.sweatshopwatch.org
http://english.people.com.cn/features/lsspaper/lss2.html
(on Labor and Social Security in China)
http://www.uschamber.com/press/releases/2006/february/06-18.htm
(U.S. Chamber of Commerce)
http://www.weforum.org (World Economic
Forum)
Newspaper articles referenced:
Beauprez. Jennifer. "Accessories to Crime Parties, Vendors Part of Wide Trade in Faux Designer Goods." The Denver Post 30 Nov. 2003: K1.
Fraser, Katie. "The True Cost of Cut Price Fakes." The Express (U,K.) 27 July 2005: 25.
Lev, Michael A. "A Marketplace of Fakes: Nothing is Real." The Chicago Tribune 16 April 2000: E16.
Ramirez, Anthony. "On Canal St., Ferreting Out the Louis Vuitton Imposters." The New York Times 29 Jan. 2006.
Thompson, Andrea. "The Human Cost of a Fake Label."
Daily Mail (London) 14 March 2005: 37.
