Trump Administration Expected to Crack Down on Marketplace Sites in New Counterfeit-Centric Memo

Almost 10 months after Donald Trump signed a memo aimed at combatting the import of counterfeit goods into the U.S., with an emphasis on “third-party online marketplaces,” including “Alibaba, Amazon, and eBay,” and less than two weeks after reports that the $1 trillion behemoth that is Amazon will do more to prevent the sale of fakes on its sites, the Trump administration released its official plan to cut down on the ever-increasing counterfeit trade. 

A booming industry, the total trade in counterfeit and pirated goods tops $1.5 trillion across the globe, according to the International AntiCounterfeiting Coalition. Counterfeit and pirated goods, as well as trade secret theft, cost the U.S. economy, alone, as much as $600 billion a year, or 3 percent of the U.S. gross domestic product, Steve Shapiro, the unit chief for the FBI's intellectual property rights unit told CNBC.

Given the jurisdictional issues when it comes to counterfeit sellers (most are located outside of the U.S.) and other practical roadblocks at play, the fight against fakes is a complex one. “Foreign sellers face little risk of prosecution,” an administration official told Reuters. As such, strong U.S. government action "is necessary to fundamentally realign incentive structures." 

Speaking to CNBC on the heels of the signing of Phase One of Trump’s trade deal with China this month, which follows from claims of rampant infringement of American intellectual property by Chinese entities, Peter Navarro, the Director of the National Trade Council at the White House, revealed that as of now, “if you’re an intellectual property rights holder, whether you’re Michael Kors or Louis Vuitton or Pfizer selling prescription drugs, the onus is really on your company to police the internet, where a lot of this counterfeiting occurs.” 

“That’s not right,” according to Navarro, who says that “the Amazons and the Alibabas, Shopify” – which “have been facilitators of the Chinese counterfeiting” – need to act on their “responsibility to police the problem.” He further noted that sites like “Amazon and eBay” are “making a bunch of money … selling this counterfeit stuff,” without “accepting [their] full responsibility,” which is almost certainly a reference to marketplace sites’ recurring attempt to disclaim liability by asserting that they are not the “sellers” in such equations but merely middlemen. This is what Amazon argued in a recent case over the sale of a defective dog leash that a consumer purchased from its site. 

That case – which could have sweeping impacts for Amazon and its vas third-party marketplace – is still underway, with a Third Circuit Court of Appeals hearing en banc expected this year.  

As for the Trump administration’s latest counterfeit-specific plan, on Friday, the Department of Homeland Security’s Office of Strategy, Policy & Plans released a report entitled, “Combatting Trafficking in Counterfeit and Pirated Goods,” stating that at the forefront of the “best practices for private sector stakeholders” is “the idea that e-commerce platforms, online third-party marketplaces, and other third-party intermediaries such as customs brokers and express consignment carriers must take a more active role in monitoring, detecting, and preventing trafficking in counterfeit and pirated goods.” 

An increased focus on the crack down on counterfeits will be a welcome development for fashion and luxury brands, in particular, which is a particularly hard-hit segment of the market when it comes to the scale of the manufacturing and sale of counterfeits. After all, luxury goods are amongst the most commonly affected, with fake luxury products – from logo-bearing sunglasses to fake leather goods and shoes – accounting for “between 60 to 70 percent” of the total sales of counterfeit goods, per Harvard Business Review, “ahead of pharmaceuticals and entertainment products and representing perhaps [the equivalent of] one quarter of the estimated $1.2 trillion total trade in authentic luxury goods.”

With that in mind and given the need for luxury brands, in particular, to maintain the image of exclusivity associated with their valuable trademarks, brands routinely spend tens of millions of dollars each year to police unauthorizes uses of their trademarks. HBR reported in May that LVMH Moët Hennessy Louis Vuitton, the parent company to 75 luxury goods brands, including fashion houses like Louis Vuitton, Dior, Givenchy, and Celine, “employs at least 60 lawyers and spends $17 million annually on anti-counterfeiting legal action.” 

All the while, luxury titans have been busy lobbying governments “to extend enforcement bodies’ powers to seize and destroy fake goods, and to block access to websites that sell counterfeit goods,” per HBR. If the impending memo is any indication, the Trump administration is willing to up the ante. oa here

The It Bag Goes Unisex in China

Today Chinese millennial men are looking beyond beauty. The It bag market is the next step to make their style statements heard. Photo: Dior. Illustration: Haitong Zheng/Jing Daily.

Actor Feiyun Chen endorsing the hand case from Dior x Rimowa’s collaboration. Photo: @Dior’s official Weibo.

A street snap of actor Xiao Zhao wearing the GG Supreme messenger bag went viral. Image: Sina China

The term It bag is often perceived as heavily feminine. Across the globe, women have long been the key demographic to success in the It bag business, and China is no exception. The much-diffused internet slang “包治百病,” appropriates the ancient Chinese medicine saying of “cure guarantee” in a pun to spell “bags cure all types of illness” in today’s context. Yet it’d be naïve to exclude Chinese men in this fashion frenzy. As gender norms continue to relax among the Chinese youth, sporting an It bag is increasingly indispensable to the total look of a Chinese male fashionista. A “unisex” shopping trend, embodied by behaviors like men buying women’s bags or women buying men’s bags, is on the rise.
In the November Beijing launch party of the Dior x Rimowa’s collaboration, Chinese male celebrities dominated the stage. Actors Feiyun Chen, Han Dongjun, and Lin Yi were all there to wear and promote the collaboration’s cross-body hand case. Sean Gao, a marketing manager based in Hong Kong, told Jing Daily that the hand case is already in his wish list. “I like it because it has a strong, firm look, and it is gender-neutral. In my day-to-day, I usually do shoppers because a shopper is not specifically designed for men or women,” he said. A quest for the more gender-inclusive design was the underlying sentiment.
But there have also been a rising number of Chinese men, straight or gay, that are opting for women’s bag, regardless of the gendered indication. Eric Liu, a Shanghai-based fashion blogger, told Jing Daily that he buys from the women’s bag section because the men’s section usually lacks choices. Unlike Sean, Eric doesn’t think the designer’s gendered intent as important. “The first made-for-women bag I bought was Marc Jacob’s Snapshot. It has a gender-neutral look and a cool chain design. As a straight man, I don’t feel embarrassed about wearing a bag designed for women because no one has pointed that out,” Eric said. However, he admits that most of fashion’s big names still have a limited offering of men’s bags. In his opinion, the existing choices are either too “street,” too utilitarian, or simply not fashionable enough.
Deny it or not, China’s fashion scene is undergoing an accelerated transformation of gendered identity. The number of male fashion bloggers on Chinese social media is spiking, boosted by now widespread “Little Fresh Meat” male idol phenomenon. On Weibo and Little Red Book, popular hashtags such as #男生怎么穿 (what men wear) and #实用男包推荐 (practical men bag recommendation) give a sneak peek into the country’s male fashionista community, although the so-called “practical” style tips often gear towards choices that are more trend-forward than practical. From posting about everyday tote, utility pouch, to logo-laden fanny packs, Chinese men fashionistas pursue the It bag just as fervently as women do.

The “It bag” dude community on Little Red Book. Photo: LRB screenshot.

In the West, the general implication for “unisex bag” still leans on the talk of utilitarian backpacks or, at most, a weekender bag for elegant occasions. An It bag for men is reserved for a closed and exclusive circle of urban fashionistas. In China, however, owning fashion-forward, big-name bags is a much more mainstream practice among the millennial men. Thanks to the broad gender fluidity trend in fashion, many old-time It bags for women now have launched their men versions: Fendi‘s Peekaboo, Dior’s saddle bag, Loewe’s Puzzle bag, Louis Vuitton‘s Soft Trunk collection, to name a few. According to social posts, some Chinese women also opt for these men’s versions for a more oversized, effortless chic look.

Dior’s China brand ambassador Junkai Wang wearing the brand’s iconic Saddle Bag. Photo: @Dior’s official Weibo.

A series of media images in China have injected this sense of gender fluidity among the youth, blurring their boundaries of traditional masculinity and femininity. In early 2018, the Chinese TV talent show “Idol Producer” gave rise to a wave of K-pop-style male idols wearing a chest-pack, neon-color jacket, bleached hair, and earrings. While delicate-featured male idols proliferate, young Chinese women are buying more power suits and increasingly attracted by a “girl boss” identity. In October 2018, Japanese condom brand Okamoto published a post titled “Boys buy bags, girls buy condom” on its WeChat account, saying that the ratio of women buying condoms on its e-commerce had risen from 30.6 % to 40.1% during November 2016 and June 2018.
In a country where systematic gender inequality and traditional family norms still persist, these signs of youth social changes would have all be seen as culturally outrageous just a decade ago. But today, even the adjective Chinese millennials use to praise women and men have radically changed. For example, the more relevant way to compliment a woman is to say she is “very alpha” instead of “very pretty.” To praise a man, they are adopting languages like “fashionably coquettish” (骚气 in Chinese). Though the notion of “coquettish” is often associated with an overtly flirtatious woman in the West, it refers to the androgynous cool appeal of a modern Chinese male idol.

In beauty, big names such as Givenchy Beauty, Estée Lauder, and Guerlain have tapped young androgynous idols Jackson Yee, Wang Kai, and Yang Yang to capture the Chinese beauty consumers, now both female and male. But Chinese millennial men today are looking beyond beauty. The It bag market is the next step to make their style statements heard.
In 2019, a Gucci bag “the GG Supreme messenger bag” has been closely associated with actor Xiao Zhan, as the street snap of him wearing that bag got viral on the Internet. Celine, the French house mostly known for its women’s bags, appointed male idol Li Jian to carry the brand’s logo handbag on the September issue of Elle Men. Are these bags marketed to their female fans, or style inspiration for the fans’ boyfriends, or other Chinese men? Perhaps the answer is not important. What is important, is to have something that is “It” and cool enough to put on. oa here