The most notorious physical markets for counterfeiting in 2024

 

Each year, the United States Trade Representative (USTR) publishes the Review of Notorious Markets for Counterfeiting and Piracy. This report identifies the most problematic markets, both physical and online, that pose significant risks to businesses’ intellectual property (IP) rights, resulting in substantial financial losses while also endangering consumer safety and health.

 

While e-Commerce indeed heightens the risk of fake products entering trade, we can’t ignore that the same issues are also very much present in physical markets.

 

 

The physical markets most affected by counterfeits

Physical markets offer particular advantages to sellers who deal in counterfeit goods. In contrast to online trade, there’s no need to arrange for shipping, and untraceable cash transactions can replace online payments. Both are very advantageous for dishonest traders, as shipping and online payments usually provide clues to the identity and location of criminals.

Similarly, while the reach of physical markets is often smaller than that of online marketplaces, word of mouth is a powerful advertisement and can draw large groups of people, e.g., tourists, to a physical store with the promise of a great deal. This, in turn, increases the profits and scale of a counterfeit operation, making it all the more worthwhile for the trader.

 

 

Illustration of a busy physical marketplace

 

 

The 2024 Review lists 19 markets as especially problematic: Argentina, Brazil, Cambodia, Canada, China, Colombia, India, Indonesia, Kyrgyz Republic, Malaysia, Mexico, Paraguay, Peru, Philippines, Russia, Thailand, Türkiye, United Arab Emirates, and Vietnam. Let’s take a look at the most prominent examples.

 

 

China

The report states that with 84% of the value and 90% of the quantity of counterfeits seized by US Customs, China is still the number one source of counterfeit goods worldwide. When investigating cases of counterfeiting in China, authorities often discover a link between online and physical sellers. Unfortunately, enforcement is weak at physical markets, and sellers often find it easy to evade attention. For example, at the Baiyun Leather Trading Center in Guangzhou, fake leather goods are not openly displayed, but when asked, vendors can show them to interested customers. Some vendors even offer to ship fake leather goods to foreign countries.

 

| China is the number one source of counterfeit goods worldwide

 

The Huaqiangbei Electronics Malls in Shenzhen offer a large amount of fake electronic goods, both in retail and bulk transactions. Various stores in these malls openly display counterfeit goods in their storefronts. The Kindo Garment Market in Guangzhou, on the other hand, is overrun by fake luxury goods, many of them available for shipping to foreign countries as well.

 

 

Kyrgyz Republic

Dordoi Market in Bishkek is one of the largest markets in Central Asia. Fake products are prevalent here, especially shoes, fashion, and luxury products. As Dordoi is historically the center of re-export in the country, it also serves as a transit hub for counterfeits traveling from East to West.

 

 

Cambodia

The Central Market in Phnom Penh is a historic location frequented by many tourists. Counterfeit products are widely available here, including handbags, shoes, apparel, and watches. The majority of these products are imported from China, Thailand, and Vietnam. Although authorities hold an increasing number of raids to confiscate fake products, many vendors are still able to avoid detection and continue their operation.

 

 

Argentina

Barrio Once and La Salada, both located in Buenos Aires, offer a wide array of fake products from apparel and accessories to handbags and shoes. Barrio Once is responsible for 27.7% of all illegal street vendors in the city. La Salada even advertises itself on social media, making it so popular that organized tours arrive there from neighboring countries. Although law enforcement has an increased presence on these markets, the country’s economic situation creates a large demand for cheap and easily available goods.

 

 

Mexico

Two markets, El Santuario and Mercado San Juan de Dios in the city of Guadalajara, serve as central hubs for the distribution of counterfeits across all industries (fashion, electronics, software, pharmaceuticals, etc.) and other dangerous goods, including drugs. Tepito in Mexico City has a similar range of activities. Due to the inherent dangers of these markets, law enforcement is often unable to hold raids to root out counterfeit sellers.

 

 

Canada

Although the country is not particularly known for counterfeiting, the Pacific Mall in Toronto features a large selection of fake electronics, luxury goods, fashion items, and more. While not openly displayed in general, customers can obtain counterfeit goods when specifically asking the vendors about them. However, some high-end counterfeits are even sold as genuine items. The operators of the mall don’t take IP protection seriously and don’t prioritize actions to protect rights holders.

 

 

Türkiye

Thanks to its geographic location, Türkiye is a central transit hub of sales between the East and the West, which unfortunately includes the sales of fake products. The Tahtakale district in Istanbul hosts a wide array of shops selling cheap items, including fake clothing and shoes. Thanks to increased law enforcement activities, these fake products are now somewhat less visible, though still very much available.

 

 

Related topics

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Counterfeits and lookalikes caught by customs in Germany

 

Popular online marketplaces from around the globe

 

 

The issue with notorious physical markets

As the USTR notes, combating counterfeits on physical markets requires more than basic enforcement measures. The organization calls for governments to put specific, targeted measures in place to address the growing problem of fake products sold in physical markets.

 

1. Effective border enforcement measures to curb the international trade of fake products.
2. More resources and authority to customs and criminal officers to seize and destroy counterfeit products.
3. Data sharing amongst countries and law enforcement agencies to increase their knowledge about the activities of various fraudulent sellers.
4. Asset forfeiture, an effective tool against the operators of facilities where counterfeits are manufactured, stored, shipped, and traded.
5. Criminal penalties for trafficking with fake labels and packaging.
6. Enhanced criminal retribution for serious cases, i.e., large volume counterfeit sales and/or severe health risks to consumers.

 

The internet makes the trade of fake products much easier, but it also enhances our ability to detect them. For example, our online monitoring services easily pinpoint IP-infringing product listings, images, social media posts, and so on. On a physical market, detecting infringing offers is much more difficult.

 

On these markets, law enforcement has to rely on raids and physical inspections, usually carried out randomly or based on word-of-mouth tips (except for those sellers that advertise online). The effectiveness of these raids depends on the resources and agility of law enforcement.

 

 

 

AI-generated illustration of a law enforcement agent inspecting a shopping mall

 

 

While these agencies usually have the power to shut down illegal operations on site, sellers can be forewarned by complicit market operators, ensuring that law enforcement doesn’t find condemning evidence. This also means that once law enforcement leaves the premises, the counterfeit selling can commence again.

 

Another problem is the actual foot traffic these markets experience. Law enforcement operations can be seriously impacted by the presence of a large crowd of sellers and shoppers. Another problem is that vendors usually don’t act alone but are part of a well-organized counterfeiting network. If law enforcement manages to shut one vendor down, a dozen others can take its place almost immediately. 

 

 

Physical becomes digital

As mentioned before, the main differences between the online and physical trade of counterfeits are easy to see. While the scale of physical markets is local and their target audience is mostly locals and tourists, online operators have unlimited reach and may target the entire world. Online vendors enjoy the anonymity that comes with the internet, while physical sellers usually have to expose names and faces.

 

Law enforcement also faces different challenges. While the infrequent raids of physical markets may yield high results, finding and prosecuting the criminals behind an infringing online product listing is usually a slow, complex, and international operation. Despite the differences, both sales channels pose serious threats to IP rights, fair competition, and even the health and safety of consumers.

 

However, as noted earlier, many fake sellers employ a hybrid approach. This means that besides selling fake products, they also use their physical stores as a logistics hub/warehouse for storing counterfeit goods sold mostly online. Indeed, quite often the same criminal network can be found behind physical and online offers.

 

| Many fake sellers employ a hybrid approach

 

Therefore, this integrated criminal approach requires similarly integrated solutions from law enforcement and online brand protection experts. Several benefits arise from this integration, like comprehensive intelligence gathering, more cost-effective actions, and a higher level of deterrence to stop recurring infringing activity.

 

As the USTR remarks, such an integrated approach requires a lot of cooperation, communication, and coordination between law enforcement authorities, rights holders, and brand protection experts. Sharing data between various teams and coordinating responses are important for maximum efficiency against fraudsters.

 

Our services support this integrated approach. Our extensive network enables us to gather and exchange intelligence on IP-infringing activities.

 

We offer online monitoring to identify potentially infringing content, such as product listings, images, and ads. Our test purchase service, available in over 50 countries, helps determine product authenticity and trace origins by directly purchasing online and offline.

 

Additionally, we assist in rights enforcement by coordinating content removals online and collaborating with local authorities to document and process offline infringements.

 

 

Conclusion

In today’s interconnected world, online brand protection requires a hybrid approach that effectively addresses both online and offline threats. We at globaleyez offer comprehensive online brand protection services that can be tailored to fit each case.

 

Contact us if you have concerns about the safety of your IP rights, or if you’d like to know more about our approach.