For those unfamiliar with the China market, the scale and severity of fake goods can be difficult to comprehend. It is estimated that Chinese counterfeiting costs foreign firms approximately 20 billion USD a year in lost profits.

Counterfeit goods are produced within every product category, from engine lubricants to mobile phones. In 2007, Microsob estimated that 82% of Windows operating systems being used in China were pirated. Moreover, Chinese law makes prosecution of these counterfeiters extremely difficult.

Dealing with the issue of counterfeit goods can be extremely problematic for companies that rely heavily on brand recognition, as they are often a victim of their own success. Brands that have achieved significant market share are the primary targets of counterfeiters. Iconic brands that have not been changed for some time are particularly vulnerable.

Easily available counterfeits can devalue a brand’s exclusivity. Thus, ultimately, it is important for brands to ensure that packaging is difficult to reproduce convincingly and that anti-counterfeiting measures are taken to ease consumer fears and keep counterfeiters guessing. Producers that rely heavily on their brands need to be creative in their sales strategies and product positioning while also creating an incentive to buy high-quality, branded goods.

Therefore, when considering new brand concepts or pack designs, it is important to take into account the prevalence of counterfeit goods in the Chinese market.