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27 March 2018

Inside Russia's Fashion Black Market

If you haven’t already seen it, it’s worth checking out the recent Highsnobiety documentary about “counterfeit culture” in Russia and the former Soviet Union generally.

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Image reprinted from the Highsnobiety documentary “Counterfeit Culture Moscow: Inside the Russian Fashion Black Market”

This is the second in the magazine’s “counterfeit culture” series, which kicked off last year by exploring the strong demand for fake streetwear brands in South Korea. The common thread is a community of consumers who want in on desirable Western brands but, for a variety of reasons, settle for fakes instead.

While this problem exists around the world, the documentary suggests it’s particularly pervasive in modern Russia because of the country’s history. This thriving black market was born under Soviet rule, when the Cold War between the West and the USSR meant western goods were in short supply. When authentic goods were available, sky-high prices meant most people couldn’t afford them anyway.

After the fall of the USSR, American, Asian and European goods could reach Russia, but high import high import duties meant that many items were still out of reach for the average Russian. They are not alone. Consumers in China and South Korea, for example, have repeatedly turned to counterfeit merchandise after various military and financial upheavals made authentic products unavailable or too expensive to afford.

A crime with high profits and low risk

The documentary captures another factor driving counterfeits that brands already know well — the fact that selling knockoffs is a crime with very little risk for the seller.

Generally speaking, governments take a hands-off attitude toward counterfeits unless the merchandise is somehow a public health risk. This attitude means that counterfeit fashion items are sold openly, sometimes in stores on the same streets as legitimate retailers.

The result: A Russian consumer can shop for a day and find everything from couture dresses to leather goods to footwear with fake labels from Versace, Armani, Stone Island and a multitude of other desirable brands.  

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The opportunity for luxury brands

Casting Russians as hungry for fakes may make the market seem less desirable for producers of luxury and premium fashion.  In fact, the Russian luxury market is number 11 in the world, and Russians with income to spend are not interested in owning fake versions of high fashion.

This legitimate interest is made obvious by the many luxury clothing stores in the country. The famous GUM shopping center in Moscow has shops such as Dior, Hermes, Jimmy Choo and Louis Vuitton. The luxury market exists in Russia but needs to be protected from the influx of counterfeit merchandise, for the good brands and consumers alike.

How can we stem counterfeiting in Russia?

Product authentication services like Certilogo make it possible for consumers to buy the authentic brands they want, no matter where they happen to live and shop.

In 2017, more than 35,000 Russians used our platform to verify the authenticity of a  product they had bought or were preparing to buy. And in hindsight we can say it’s a good thing they checked, since more than 2 in 10 of the products checked turned out to be a counterfeit disguised as the real thing.  

Certilogo works by ensuring that each unit of product has a unique code from Certilogo. Codes can be printed in alphanumeric and QR format or activated digitally by “touching” an NFC transmitter with a smartphone.  Codes can be woven into the clothes label, included on a certificate of authenticity, or even put in a hologram sticker on an external hangtag.

What sets Certilogo apart from older forms of authentication — and makes it especially effective in markets where counterfeits are routinely sold as authentic — is that fake or copied versions of the Certilogo Code don’t lose their protection.

A counterfeiter who wants to make a fake look real will copy every aspect of the product, labels, and hangtags — including the label or stickers with the Certilogo Code. Certilogo detects these fakes and clones during the digital portion of the authentication using advanced artificial intelligence and image recognition technologies.

The result is a safe and simple system to guarantee consumers that a product was made by the brand on its label.  

For Russia — and South Korea and China and any other market with high levels of counterfeiting — this means that brands can sell products to interested consumers without accepting additional risks to brand value. Consumers with the power to authenticate cannot be deceived by counterfeiters, so they can shop anywhere in the world with the same confidence and security available in a brand’s own stores.    

Click here to learn more about Certilogo’s commitment to safe, transparent buying transactions for consumers and brands.

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