Generic or counterfeit: the economy we deserve

To find cheaper gear or equipment, we can take advantage of the competition between brands, suppliers, and manufacturers, especially by searching online. But we must beware of miracle cures, such as buying “generic” products, or worse, counterfeits. They are a double-edged sword.

Text: Guillaume Judas – photos: pixabay.com, flickr.com, pixnio.com

Between direct purchase from an Asian mass-produced equipment supplier and receiving counterfeit goods, the line is sometimes very thin, whether one acts knowingly or not.

First, an observation: what we call globalization has changed the way we travel, exchange, and consume. For better or worse. This openness and fierce competition have their perverse and unfortunately inevitable aspects, such as the relocation of millions of industrial jobs, for example, to countries with low labor costs. More jobs for developing countries on one side, a necessary adaptation for the inhabitants of so-called rich countries on the other.

The Western consumer therefore feels cheated twice, as their purchasing power seems to stagnate or even decline, for products that are produced at low costs on the other side of the world, with inequalities inexorably widening between those who are slaves of the system and those who reap large profits.

Accumulated Frustrations

The equipment for our favorite sport is no exception to the rule. In less than 20 years, the manufacturing of bicycle frames has left Europe to settle massively in Asia. In Taiwan – where the standard of living is roughly equal to ours, but where carbon expertise is globally recognized – then in China, or in other Southeast Asian countries. Large textile brands, for their part, relocate to former Eastern Bloc countries, where expertise and an exploitable workforce can be found for two or three times less than in Western Europe.

The trend merely follows that of industry in general, and its purpose for internationally capitalized companies is to remain competitive. But the equipment frenzy of consumers and their legitimate frustrations with the demands they are subjected to, coupled with the decrease in their purchasing power, only perpetuate a phenomenon that ultimately drags our entire economy down.

The world’s factories are now in China, and free trade was desired by those who govern us. The temptation to source directly from the origin is great. Yet this is where the consumer who thinks they are clever gets confused, and becomes partly responsible for the degeneration of our economy.

The equipment frenzy of consumers and their legitimate frustrations with the demands they are subjected to, coupled with the decrease in their purchasing power, only perpetuate a phenomenon that ultimately drags our entire economy down.

Counterfeit, Generic, Authentic: The Differences

The shortcut is easy: everything that comes from China looks alike, everything necessarily comes from the same factories. This is false. In reality, you can find very good quality in China, but also very bad. From original products designed in High Tech factories controlled by leading Chinese, European, or American brands, to counterfeits. 80% of counterfeit products come from Asia, two-thirds of which are from China, with the rest coming from Turkey, Morocco, Egypt, and even India. A lucrative market, counterfeiting is in the hands of organized networks, close to drug traffickers, arms dealers, and terrorist networks, for whom it constitutes a significant financial windfall. As the world’s leading producer of counterfeit products, China also suffers from the phenomenon, as its most innovative companies are also victims of counterfeiting. Far behind, however, are American brands (20% of counterfeits), Italian (15%), French (12%), or Swiss. Since January 1, 2019, a Chinese law requires online sales platforms like Alibaba or Wish (which officially only connect thousands of sellers with consumers) to purge their listings of disputed products. Beijing thus wishes to show its goodwill in the face of American economic sanctions by improving its intellectual property protection.

Conversely, a major brand product, as in cycling, passes on a number of costs to the consumer: project study (engineers and research and development), specific molds, raw material, skilled labor, finishing, transport, VAT, inventory, after-sales service, communication and marketing, and the margin of the various intermediaries, which multiplies the actual ex-factory price by three or four (in the case of a carbon frame, for example). With all associated jobs, most of which are directly in the country of distribution. Companies that revolve around cycling are mostly SMEs, not much different from those that form the core of our economic fabric. At the end of the chain, the bike shop owner/retailer provides a service, stocks bikes, and must at the same time earn a living and pay fixed costs while contributing to our social protection system.

In China, you can also find good manufacturers who produce mass-produced items at reduced costs, using proven technology, and which can be obtained directly from the source.

In China, you can also find good manufacturers who produce mass-produced items at reduced costs, using proven technology, and which can be obtained directly from the source, provided you also pay customs duties and VAT. In cycling, these are called “generic” products. These are serious accessories but far from original, sold without a brand or with an exotic brand. They are distinguished from counterfeits by their lack of intent to deceive the consumer. These manufacturers usually have a catalog from which certain small French or European brands draw to offer the same equipment on our market. It’s a bit more expensive than sourcing from the factory, but the brand handles the order, pays for transport and customs fees, and provides a legal warranty in our territory while allowing you to have a direct contact person with whom it is easy to communicate. By purchasing generic products, you are not breaking the law; you are simply using the system to your advantage. However, you are not working to maintain our economic system, nor perhaps your own employment in the medium term.

The Repercussions of Counterfeiting

According to the Ministry of Economy, Finance, and Industry, counterfeiting accounts for 10% of global trade. In France, the estimated loss of revenue linked to it is 6 billion euros, with the disappearance of nearly 30,000 jobs per year. Losses in turnover cause fiscal losses for the State. Of course, jobs lost in France are found in countries that produce counterfeits, but with illegal workers who do not benefit from any social protection in addition to being underpaid. Finally, the environmental standards imposed on large companies are not respected by counterfeiters, who use polluting, non-recyclable materials.

When a buyer decides to acquire a counterfeit, he doesn’t just bypass an entire distribution network. He makes a pact with criminals whose sole aim is to make money at the expense of recognized companies with a strong reputation for quality, and without any safety guarantee, since even compliance certification logos are copied, and tests are not carried out. He becomes an outlaw, even more so if he decides to resell equipment he will inevitably be disappointed with, as it has nothing to do with the original. Because in terms of quality, there’s no need to expect miracles.