FASHION FRIDAYS: Counterfeit shoes -- worry over nothing?
Economics 101 claims that the law of supply and demand dictate market relations. According to this logic, the price becomes the equilibrium point; it functions to equalize the quantity demanded by consumers and the quantity supplied by producer. It suggests a harmonious agreement between producer and consumer, a delicate balance, indexing both the willingness and desire of the consumer for the product and how much the producer will produce to continuously make a profit.
But the shoe industry or rather the Nike Empire doesn’t follow this simple abstraction of capitalism. In the world of limited and special editions colorways and collaborations, the demand for shoes means the prices reach astronomical heights, sometimes 5 to 20 times its original price -- on the box at least. The purposely driven up price defies the logics of the capitalist contract of exchange (see BAPE for more), which make the equilibrium point a mythology to how capitalism truly works.
At any rate, as many on here already know of and may have already participated in, there is a subcultural shoe industry to the subcultural shoe industry. And what I mean is, the lovechild of major corporations and subcultural capital in the form of the illicit world of Fakes and knockoffs. In the recent issue of Complex: The Ultimate Buyer’s Guide for Men, there is an article titled "Fakin’ the Funk," which Adam Matthews uncovers the multimillion dollar industry of knock-off shoes (namely Nike), how tourist drive the demand for fake Nikes and the illicit economies/factories in China (see Ebay stores and other online sites that sell "copies" or "variations"), and the question over intellectual property.
Though I won’t use this space to recount the details of the interesting article ($4.99 at your local Border’s bookstore), what I did find a little surprising was when Matthews notes Nike’s statement in regards to the stakes of the knock-off/counterfeiting industry in China:

Does Nike really care if these ugly things are circulating? You think Nike has to worry about people thinking these are real?
Nike doesn’t disclose the amount of losses it suffers from counterfeiting because it probably doesn’t lose anything! The whole industry of counterfeit, for Nike shoes at least, is based on the lack of accessibility, which is less an issue of price than an issue of actual availability. Nike can’t lose money it isn’t making if the shoes don’t exist in circulation, am I right?
For the most part, kids and shoe fanatics aren’t opting to by fakes like people buy fake watches, Prada, Gucci, and Louie Vuitton gear where it’s a matter of price and where the pattern or symbol is enough to perform a certain status level beyond one’s means. If you check ebay, most everyone selling knock off shoes offers the guarantee that their shoes are a hundred percent authentic and sometimes the additional tag: one hundred percent variations, which seems to be an indication that consumers are searching for the real deal, not that they’re deliberately searching for fakes.
Further, what does Nike have to lose with trademark infringement in the case of the knock off shoes? Nike probably doesn’t have numbers to provide because, it’s my guess, that bootlegging is practically another form of advertisement or that bootlegging probably HELPS their brand. The whole desire for fakes is based around the demand and desire for Nikes, Nikes that no longer exist and cannot be purchased.
The question of intellectual property, I feel, doesn’t apply in this case because it assumes that people are ripping Nike off. It’s not as if you see people making fakes of generic 40 dollar Nikes sold at JC Pennys, Sears, or Mervyns, which is what you see in the case of Louie Vuitton et al. where everything and anything has their patented, trademark pattern on it. My guess, and you don’t have to agree with me, is that the intellectual property card is based on the idea that someone is profiting off someone else’s idea and isn’t paying dues. But in the case of Nike shoes, the circulation of fake Jordans, fake Dunks, or fake Air Max 95s in rare colorways is really consumers enacting and performing their brand loyalty, who wait patiently to purchase the authentic shoes, scouring the internet for that right size and that right price.
To dispel rumors that the Chinese are just a bunch of people who can’t follow industry rules, Matthews mentions that "no one in Hong Kong would wear fakes." This isn’t to say people in other parts of China don’t wear them, but rather to emphasize bootlegging is largely a product of "the west" demands for fakes. So, is the global bootlegging industry to blame for the circulation of fake shoes? What is really being "compromised" in the bootlegging shoe industry? Are Nikes really devalued as a result or is their brand even more inflated than it already is? In this case, isn’t "imitation" really "the sincerest form of flattery"?
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Very thoughtful and thought-provoking entry...
In other words, you're a capitalism-hating, pinko commie. Go back to Russia. ;)
by sarchasmic on Oct 19, 2007 10:44 AM PDT reply actions
Intellectual Property
Trademark law centers around a "likelihood of confusion" standard, i.e. the purpose of trademarks is to lessen consumer confusion. However, if you also think of trademarks, and in this case, trade dress, as a property right, i.e. Nike's exclusive right to use its name/style on its shoes, then it changes things. You say that Nike isn't harmed because these fakes aren't "copies" of actual Nike shoes in the same way other counterfeit products are, but I think they are being harmed in at least 3 ways.
First, if Nike has an exclusive right to use its name, style, etc. on its products, then it has a right to squeeze out all value from the use of its trademarks/trade dress. If that is the case, then the value created from the sales of these fakes is being denied to Nike, since I doubt they are seeing even $1 of it.
Second, once someone has actually bought these fakes (knowing they were fakes or not), if people looking at them on people's feet think they are made by Nike, then their perception of Nike's products has been effected. In this case, negatively, either because of the poor quality of them or because they are aesthetically unappealing (read: fugly). Consumers will think that Nike either makes poor quality products, or ugly products, which is detrimental to their image.
Third, even if people's confusion is cleared up before buying these fakes, their attention has still been diverted. This hurts Nike because consumers, or potential consumers, have been alerted to their "competition". While people may not buy these particular "fugazis", they are made aware that companies other than Nike make "Nike-like" products, and perhaps in the future they will buy other fakes that are more to their liking.
Again, just my $.02 based on my limited knowledge of trademark law.
good points to mull over
i agree that people are using the Nike brand as a means to make profit at the expense of Nike, but i guess i don't necessarily see it as a "loss" for Nike if their plans aren't to fill the demand for shoes in the first place. if Nike continually made Jordan retros, i have a hunch that most folks would just go for the real thing instead of paying 3/4th the amount (or less) for ugly ole fakes. To me, it seems like Nike doesn't necessarily lose money because it doesn't pump money into advertising its classic kicks or really spend any money remaking them anyway. and when they do, people are still rushin, lining up for them in the first place...not for fakes (which would be kinda funny..) if these were fakes of recent shoes like Lebrons and such or the air max 180s, I could see it as Nike demanding they get their cut in some way shape or form.
hmm, it's a complicated issue tho and i'm probably just mad cuz i haven't been able to get some jordan IIIs or IVs for years!
by dj fuzzylogic on Oct 19, 2007 11:39 AM PDT up reply actions
Great post,...
I don't think at this point in time that seeing an ugly pair of kicks is going to change anybody's perception of Nike. They are so engrained in our pop culture that everyone knows that with the variety nike offers, some shoes won't pass the litmus test with some people. I sincerely doubt anyone is gonna boycot nikes cus the jamaica patterned AF1's they saw gave them the willies.
Also, most people who choose to buy $75 fake jordans - usually can't afford to spend $215 for the real version. Those cats would have been scared off by big the price tag and would otherwise have opted to buy the $75 real addidas. If U could afford real J's, you'd buy real J's. Nike would'nt lose money. Addidas would.
THIS IS OOOAKLAND!!!
by Tim N Chris Burger on Oct 19, 2007 11:41 AM PDT reply actions
Damn Sarchasmic!
Anyway, I don't feel sorry for Nike. Their mark up on their shoe price vs. overhead is INSANE!!! They pay 3rd world wages for their employees($0.10-$0.50 a day) and have "camps" that they provide to their laborers as part of their pay that are like shanty towns with little water supply, tiny living conditions and very little shelter from the elements(60 minutes expose 2005). Nike isn't too far off from a lot of other clothing companies in the world. They outsource their labor because they are greedy and want to make more profit and when I say profit I mean PROFIT. They'd have to charge $300 a shoe to make their profit margin if "Jonny and Susie" made shoes for them here in the states. I admire their spirit in providing great shoes, but when you look beyond their marketing with faces like Tiger and LeBron all happy and smiling, there are thousands of employees eating 4 ounces of rice with a 1 ounce piece of chicken for dinner every night wondering if their tooth ache with be dealt with all so that people can wear "hip" shoes.
Nike isn't losing sleep over the fact that kids are wearing knock-off shoes. Bleached white leather with neon colors and graffiti styled font on their shoes aren't taking dollars out of their pockets. It's a non issue. They make bank as it is and the issue of knock-off's is a pimple in the grand scheme of things. Think of it as free outsourced advertising. It is a form of flattery. Nike's policy on production vs. what they pay their manufacturers, now that is something to think about...
That depends...
I think what we are dealing with here is at the juncture of ethics/morality and business/economics, as are many things these days. Sure, we can harp on Nike all day about how they are only paying their laborers pennies a day, but like you said, if things were made in the U.S. at what we consider to be a "fair wage", almost no one would buy their products. Who would pay $300 for a pair of basketball shoes, aside from an exclusive few? Also, should the U.S., who is at the technological frontier devote its labor to making shoes or further advancing that frontier? Why not have a country whose current state of advancement only allows them to make, say...shoes and clothes make them, while we focus our labor on something like nanotechnology?
Additionally, you can say that those people in 3rd world countries are only being paid a fraction of what Nike may charge for its finished goods in the U.S., but, what if, comparatively speaking, those wages were on par with whatever else labor was available in their country? Would you rather those people starve or resort to prostitution/being drug mules/etc. than work in "sweat shops"? I don't have an answer - just throwing out ideas for discussion.
Interesting, except...
Could be I'm just not ethically conscious enough to support my local shoe stores.
Or it could be that larger corporations stomped those into the ground decades ago.
by sarchasmic on Oct 19, 2007 12:44 PM PDT up reply actions
Exclusivity
If Nike wants people to line up for new Dunks on release day because people know that if they don't get their sizes the first day they probably won't get them at all, then that is their decision to make. If people can just get the fakes in unlimited quantities indefinitely thereafter, then Nike loses some of the "hype" - which undoubtedly has SOME value to Nike.
Nike wants to create a "either get these shoes now or you'll miss out"type of phenomenon, then I think that it is their right, as the owner of that trademark/trade dress to do so. While we cannot quantify their actual loss with any degree of accuracy, that doesn't mean that we can claim they aren't being harmed at all.
I believe that Nike occasionally does re-release retro kicks, i.e. Jordans, whose sales would be hurt if people were able to get knock-offs before that actually happens.
But your forgetting about the nature
I know this because because I happen to be of that Target Market. You'd lose sooooo much respect if you had a pair a knock offs.
THIS IS OOOAKLAND!!!
by Tim N Chris Burger on Oct 19, 2007 12:05 PM PDT up reply actions
You are right
I can't speak for everyone
THIS IS OOOAKLAND!!!
by Tim N Chris Burger on Oct 19, 2007 12:40 PM PDT up reply actions
By that rationale, the Rolex brand...
by sarchasmic on Oct 19, 2007 12:41 PM PDT up reply actions
I never
That's a nice theory...
"Rolex SA is a Swiss manufacturer of mostly mechanical wristwatches and accessories renowned for their dependability, prestige, and cost (from a few thousand to more than one hundred thousand U.S. dollars). Rolex watches are considered status symbols by many. Rolex is the largest single luxury watch brand by far, with estimated revenues of around US$ 3 billion (2003).[1]. BusinessWeek magazine ranks Rolex #71 on its 2007 annual list of the 100 most important global brands, top among all watchmakers.[2]"
Just think, if there weren't so many Rolex knockoffs, Rolex might be...the largest single luxury watch brand in the world!
Oh wait, it's already that.
by sarchasmic on Oct 20, 2007 8:34 AM PDT up reply actions
Its funny
Kyoung05, I hear what you are saying about relative pay in 3rd world countries. You're right that its better off they work for Nike as opposed to dealing drugs or prostitution. Yes, their pay is on par with other laborers in their respective countries, but I would love to see how different the US would be in regards to clothing if it were made here. I think priorities would be a little different like what am I going to spend my money on-a pair of $300 kicks or food for myself and/or my family? Man, heavy stuff. Enough of that, I can't wait for the season to start so I can pay $8.00 for a 12 oz. beer and $7.50 for a mass produced beef bi-product delectable called a hot dog. Greedy Mo Fo's, I guess they have to get that money somewhere to pay for guys salaries like JRich and Foyle!!!
Don't get me wrong,
If someone was to pass off $3 wine as $100 gormet stuff, I'm sure you wouldn't wanna go wine tasting with that person.
THIS IS OOOAKLAND!!!
by Tim N Chris Burger on Oct 19, 2007 12:48 PM PDT up reply actions
Good Point
I think if Nike made their shoes in the US, they would know how GREEDY they looked and wouldn't charge the $300 for them in order to keep their profit margin the same. In a nut shell it just demonstrates how f'ing greedy a world we live in.
Out of curiosity...
Or is the amount of work and cost of goods for those wines simply that much more expensive than it is to make some two buck (three in the Midwest) Chuck?
by sarchasmic on Oct 19, 2007 1:16 PM PDT up reply actions
You nailed it...
Paul Hobbs "Beckstoffer To Kolon" Cabernet: $20,000 a ton for grapes.
Just the cost of grapes alone is the reason for variance in prices for wine.
Another is price you pay for your land. Two Buck Chuck is from ranches in Bakersfield and Fresno where an acre costs you $10,000.
Average Napa Valley price per acre is $100,000.
That's it in a nut shell...
Good to know...
by sarchasmic on Oct 19, 2007 1:57 PM PDT up reply actions
quality
by thetruth22 on Oct 19, 2007 2:25 PM PDT reply actions
I know
by thatrabbi on Oct 19, 2007 2:57 PM PDT reply actions
Example
Let's say you own a car - it's yours, paid in full. Now, let's say that when you're not using the car, someone steals it to go joy riding, uses it as a place to nap, goes to the drive-thru, etc. Now, when they are done with it, they clean it up, fills up the gas, and put it back before you need to use it again. In terms of VALUE, aside from a few more miles on the odometer, the value of your car is the same as it was. No appreciable difference, right? I mean, there is no "damage" done to your car, there isn't any less gas in the tank, and the thief only used it while you weren't going to anyways, right?
Now, I don't know about you guys, but whether I was going to use my car during that time or not, I sure as hell wouldn't want someone stealing it to go for a spin. It isn't even about the difference in value pre-steal vs. value post-steal.
It's much more visceral than that. It is YOUR property. You worked for it, you paid for it, and it's yours. One of the fundamental rights as a property owner, perhaps THE MOST important right, is to be able to use what's yours when, where, and however you feel like it. Whether you leave it parked in your garage for a month collecting just or take it to the local racetrack, no one can tell you what to do with your stuff. Conversely, you have the absolute right to tell others to NOT use/take/borrow your stuff - the right to exclude.
This is the same with trademarks. Nike designed its swoosh, designed its Jordons/Dunks/AF1/etc. and built its business from the ground up centered around public perception of the brand and those customers' good will. No one has a right to "use" Nike's property without their permission, regardless of whether you can quantify any loss in profits or not.
I wouldn't argue with you about the ethics
Stealing = wrong
But I think its financial damage to nike is negligible. Nike execs aren't starvin' over it. Perhaps that's the reason they're not going all "RAA" about it. Like I said earlier - those buying the $75 knock off jordan III's were'nt gonna buy the real ones anyway & and I doubt those that would buy the "real" III's are less inclined to get 'em because variants exist.
In an ideal world being right is all that should matter; unfortunately, the real world is far from ideal.
THIS IS OOOAKLAND!!!
by Tim N Chris Burger on Oct 19, 2007 5:33 PM PDT up reply actions
random question
fakes
But for the most part people do not know that they are buying fakes, it is really hard to tell especially when most shoe transactions are done over ebay and online. People just can't tell if they aren't a sneakerhead and even if you are its difficult. Because often times the sellers do not show all the pictures that will guarantee that its authentic, and some sellers believe they are authentic.
Screw rocking fakes.
by dangdang142 on Oct 19, 2007 9:35 PM PDT reply actions

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