Econ 101 for NYT Reporters: Unauthorized Copies Are Not Necessarily Counterfeit

December 01, 2016

The NYT had a major article focused on a Chinese man who makes his living by exposing retailers for selling unauthorized versions of clothes, shoes, and other retail products. His income comes from the government, which rewards people who find unauthorized copies of products being sold in stores. The article repeatedly refers to these items as “counterfeit.” This is inaccurate.

While all the items noted in the piece are in principle being sold without the consent of the named manufacturer, many would not qualify as “counterfeits.” The difference is that in many cases, the buyer knows that they are not getting a product made by the named manufacturer. They are willing to buy the product anyhow because it comes with a substantial discount. In this case, the product is not actually a counterfeit, since the consumer knows what they are buying.

This is not just a semantic point. If the consumer is being deceived, they are an ally in cracking down on the practice. On the other hand, if consumers willingly buys a product, knowing that it is not actually the named brand, then they will resist efforts to crack down.

Clearly China’s law in this area is designed to crack down on both actual counterfeits, in some cases raising serious safety issues, and also unauthorized copies that allow consumers to buy products at large discounts. It would have been helpful to be clear on this distinction so that readers would have a better idea of what is at stake.

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