BANGKOK – Arjun, an ethnic Gurkha immigrant to Thailand from Myanmar, has sold counterfeit watches for years on the street outside tailors’ shops in Bangkok’s Nana district, where sex workers are ubiquitous.
His customers, mostly tourists, are under no illusions when handling the rhinestone-studded $70 watches. He will try to convince them that his wares are quality fakes: “Not from China! It’s better – from Thailand!”
Without so much as an attempt at haggling by prospective purchasers, he will lower the price to $60 and offers an even bigger discount for bulk purchases. And should a police officer walk past, he would not bat an eyelid.
Bangkok has long been a destination for tourists seeking to buy counterfeit Swiss watches, and the response from the authorities has often been inconsistent. When Lady Gaga, the pop star, tweeted to say she wanted to buy a fake Rolex on her arrival in Bangkok in 2012, she sparked protests and a clampdown on the counterfeiters by the authorities. But a few weeks later, business for vendors was back to normal.
“There’s a big contradiction in attitudes and action here,” says James Evans, an intellectual property lawyer at Tilleke & Gibbins, a Thai law firm. “They are disappointed that somebody with such fame tweets that to try to make a joke – and it clearly did hurt.”
From the Thai authorities’ perspective, clamping down on vendors tackles the problem only on a superficial level. Raids are more effective when carried out on the elusive suppliers and manufacturers of counterfeits.
More than 95 per cent of the world’s counterfeit watches are produced in China, according to the Federation of the Swiss Watch Industry (FH), whose anti-counterfeiting unit includes a specialist section staffed by expert watchmakers to analyse fakes.
Many of those counterfeits make their way to Thailand, though the size of that country’s counterfeit watch market is nearly impossible to quantify, the federation says.
Raids in Thailand have been carried out at a steady rate of between 2,000 and 3,000 a year since 2006, mostly by customs officials, according to the Department of Special Investigation (DSI), Thailand’s equivalent of the US Federal Bureau of Investigation. Thailand’s Department of Intellectual Property held a destruction ceremony in Phuket last year, during which counterfeit goods worth millions of dollars were destroyed.
Thailand’s central intellectual property and international trade court takes on counterfeiting cases. But, according to the DSI, luxury watches are a low priority for the courts, because fakes do not pose a risk to health or safety – unlike, for example, fake car parts.
Even when watch counterfeiters are prosecuted, the penalties are considered lenient, says Mr Evans. “The maximum penalties are so rarely handed out, and even if they are, they’re too low.”
The Office of the United States Trade Representative’s Special 301 Report, on arrangements in the countries with which the US does business, gives Thailand a low ranking for intellectual property enforcement. A lack of ex officiopowers for customs agents was among the reasons cited.
A military coup in May has caused further frustrations. Mr Evans says that while Thailand’s National IPR Center of Enforcement was established last year to address enforcement issues, momentum with government agencies has slowed.
“It’s more difficult to carry out raids, more difficult to get authorities involved, and even the pieces of legislation that were close to being finalised are on hold,” he says.
These include an amendment to the Trademark Act, as well as seven other pieces of intellectual property-related laws that cannot be passed without a functioning legislature.
It is also difficult for luxury brands to claim damages for lost revenue, because counterfeiters are not targeting the same customers as those for legitimate goods.
According to the FH, Thailand ranked 16th in the world in 2013 for Swiss watch imports and has maintained a steady ranking for years, despite its counterfeit market. Hong Kong and China top the rankings for both legal and illegal markets.
“We are very concerned about counterfeits, but somehow we cannot control [them],” says Omega’s Thailand brand manager. “If we try to do something about it, we have to go through a cumbersome process in court. We just have to do our best to make our brand successful in legal retailers.”
Nevertheless, the FH estimates losses from intellectual property infringement in the luxury watch market amount to SFr1bn a year. Yves Bugmann, head of the federation’s legal division, admits the problem is difficult to tackle, but he says it is a question of willingness.
“Counterfeiting should be punished no matter what,” he says. “We work with the Thai authorities and they do good work, but it’s a question of human resources, and how many of those they want to engage in this fight.
“I understand there are other tasks they have to do, but in most places in Thailand you can easily buy counterfeit Swiss watches, so they could do more.”
Meanwhile, back in Bangkok’s Nana district, trade is brisk for Arjun. In the past, he and his fellow vendors have been forced to pay fines after intermittent clampdowns, but he says plentiful supply means he is no longer worried.
“We get our merchandise not far from Bangkok; we don’t even have to cross borders,” he says.