The other day on the South side of Philadelphia, Federal authorities raided four businesses who were selling counterfeit merchandise. (South Street Businesses Faking It) Rolex watches, Gucci bags and more - all high end merchandise, you name it they had it except it was all counterfeit. In all, investigators removed over $500,000 in fake products, the businesses were closed down and the owners arrested. To make matters worse, this is not the first time some of these same "retailers" had been raided. Back in February (2010) the Federal authorities raided some of these same businesses, taking all of their merchandise.
There are two reasons there is such a high demand for counterfeits products, 1) People looking for deals see that Gucci bag, at a highly discounted price, and buy it and 2) Consumers know the product is counterfeit and see it as an opportunity to be like the "Jones' - they think nobody will know, but them. The epidemic is not just germane to the Philadelphia region, it's a world wide epidemic as globally, retailers loose about $600 billion annually with the losses estimated here in the US at about $400 billion annually - this tells me the US consumer is driving the counterfeit merchandise epidemic.
In recent years authorities have increased their investigation and seizure operations and retailers have hired private investigators (as they did in Philadelphia) to aid the police in their investigations. One of the largest seizures was a joint operation in Arizona, California and Texas that seized seventy-seven containers of fake "Nike Air Jordan" shoes and a container of Abercrombie and Fitch clothing, valued at $69.5 Million.
So, where does all this fake merchandise come from? Most counterfeit goods are produced in China, making it the counterfeit capital of the world. In fact, the counterfeiting industry accounts for 8% of China's GDP. Joining China are North Korea and Taiwan. Some counterfeits are produced in the same factory that produces the original, authentic product, using the same materials.
For additional information, here's an article from the Supply Chain Digest.
Curtis Baillie - Security Consulting Strategies, LLC