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NEW YORK: In Manhattan’s bustling Chinatown, they prowl along Canal Street and have become as common as windows adorned with ducks. In sotto voce the women can be heard constantly repeating a mantra that sounds vaguely like a Latin prayer. But the words are “Gucci, Chanel, Coach, Fendi”.
An investigation by China Daily found that the counterfeit industry in New York and in LA’s Santee Valley, is alive and well. Sellers are operating in new ways to avoid being closed down.
Street vendors hawking knock-off designer handbags have created such a big enterprise that New York City police, behind Mayor Michael Bloomberg, have been cracking down hard on the illegal trade in the past year. Earlier this month, police arrested a vendor driving a van carrying millions of dollars in fake handbags and other goods. Police reportedly found a stash that included 10,000 pieces of Tiffany-labeled jewelry, 3,000 purses with designer tags and 2,000 wallets.
Counterfeit Chinatown
Although Chinatown has long been a landmark that has attracted tourists to its many restaurants and markets, the main reason people now visit the area is to buy counterfeit luxury goods, according to surveys by tour guides for Chinatown Partnership, a group promoting tourism and business.
The government and industry experts say that most counterfeit products, such as handbags, watches and jewelry coming into the US originates in China. Elijah Zuniga, a retired San Diego police officer and former agent for the California Department of Justice, believes China is the main source of all counterfeit goods.
Generally the goods are brought over with legitimate goods, or via an inspector who is bribed. They are then brought up from Mexico, where they can be legally shipped, and are then smuggled across the border. According to authorities, the scale of the operations is enormous. New York Police Commissioner Raymond Kelly said that in 2007, counterfeit goods worth more than $25 million were seized throughout New York. That is about three times more than in the previous year.
However, some claim that in order to avoid getting caught by customs inspectors, the contraband is manufactured in China, but assembled in New York. Jack Hoffman, who had sold fake designer handbags for more than 20 years, said most bags that come to the US from China are generic, not designer. In 2006, Hoffman was sentenced to three years probation when he pleaded guilty to trafficking in counterfeit goods.
Hoffman told China Daily that he bought generic bags in the wholesale fashion district in New York, and attached the labels. “There are people in New York who will hand stamp logos into bags, watches and other items (to make them authentic ‘designer’ copies),” he said. “There is nothing that cannot be copied, down to the finest details.”
Although Chinatown is ground zero for the counterfeit bag trade, when it comes to distribution in New York it is not predominantly Chinese or Asian sellers, according to Robert Barchiesi, president of the International Anti-Counterfeiting Coalition, a Washington, DC-based non-profit group devoted to combating product counterfeiting and piracy.
“There is a great ethnic mix involved.” Its members include more than 200 companies that make everything from autos to luxury goods.
Heather McDonald, a lawyer and expert in anti-counterfeiting litigation, works closely with the police in New York and in LA, and has been on hundreds of raids in both cities. McDonald said that selling tactics for fake handbags and goods is not for faint-hearted buyers. She recalled instances in New York where buyers were marched as far as eight blocks, then down an alley and into a dank basement.
In danger
“When you finally get in to the locked room, the vendors have turned the lights off, and women (buyers) are sitting there in the dark, being told to stay quiet.” A police spokesman in New York who did not want to be named confirmed there had been reports of buyers who found themselves “imprisoned” in a basement, or in danger and had later come to the police for help.
If there is police activity on that block, the sellers may decide to lock the doors and turn off the lights. McDonald said there had been many shoppers caught for hours in a basement. On the street, and down alleys, she worries for their safety because they are carrying cash, and could get robbed.
In New York, sellers have become savvier at avoiding police detection. Fifteen years ago, every store in a six block area in Chinatown would have thousands of counterfeit items on display. Now, the only visible brands are those without trademarks, while the counterfeit items are often hidden behind doors at the back of the store or in basements.
Many deals in New York are now also being done in vans. Interested buyers are shown cards on the street, then led to a van that is circling, or parked nearby. Inside, the vans are jam packed with handbags. The customer can climb in the back of the van and sometimes it will be locked,” said McDonald. “If the police come they will drive off. Buyers have been stuck in the van.”
In LA, once an order is placed for a handbag, it may be delivered by bicycle messenger and handed over in a black bag intended to look like garbage. Sellers also deliver these “garbage” bags full of fake designer bags in New York on foot, then take off in the other direction, and fast.
Police widen the net
Landlords of buildings in New York where counterfeit goods are sold have also been targeted. Barchiesi of the International Anti-Counterfeiting Coalition said that as part of the crackdown, landlords are being targeted with code violations in buildings, and health and safety. Police can now inspect the tenant list and do unannounced inspections. Property owners are being warned that they must get rid of counterfeiters, or face the consequences
In 2002, the industry was mostly operating out of high-rise buildings in mid-town Manhattan. The apartments were also used for storing fake goods. But after busts by police, the counterfeit business in New York then moved to self-storage locations. The mayor’s office expanded the anti-counterfeit program and went after Canal Street last year.
Some experts believe that incidents of counterfeiting have lessened, perhaps because of tougher laws. Since the early 1980s, civil laws have improved in terms of fighting counterfeit and there has been legislation that enhances those laws at a federal level, as well as at a state level.
Brian Brokate, a lawyer who represents luxury watch company Rolex, said counterfeiting remains a serious problem in the US, particularly copyright infringement and in the area of trade marked luxury handbags, watches, clothing and jewelry. Brokate believes the counterfeit handbag industry will always exist because there is a lot of money to be made, and it is considered safer than dealing drugs.
Nothing like an original
McDonald, who said she has been actively involved in drafting new legislation in New York to strengthen penalties for those caught trafficking in counterfeit goods, thinks the soft economy may be encouraging more buyers of fake goods.
“We all know doing this kind business is not morally right,” said Zhang Zhaodong, chief representative of New York Office of CCPIT Patent and Trademark Law Office. He suggests small businesses in China look ahead and seek more long-term opportunities by not making these fake goods. He said that Chinese entrepreneurs should make money by promoting their own brands, not ripping off those established by others.
“If these people could make fake stuff that looks almost the same as the authentic products, why don’t they try to make good quality stuff with their own brands with cheaper prices?” Zhang said.
Wellington Chen, executive director of Chinatown Partnership, backs the view that China does not need to imitate. “We have tremendous talent to design and produce,” he said. “I believe, and sincerely hope, that this is only a transitional phase, and in years to come, China and New York can come together with design talents, so Chinese goods are affordable and well designed, rather than in 99 cent stores.”
Many people don’t see much harm in the counterfeit handbag trade because of the misperception that it only harms wealthy designers whose goods are overpriced anyway. But these vendors are not only ripping off international firms like Fendi or Coach. They hurt all the businesses in Chinatown because they do not pay taxes and thus do not contribute to the community as legal Chinatown vendors do.
But for now it’s business as usual on Canal Street. One man who has sold fake handbags on Canal for more than 20 years, was caught in last year’s swoop. He was fined and warned. However, “I was open for business the next week,” he said. “We have the best handbags in the world. Everyone wants them.”
