Kagiso Monnapula is a young entrepreneur who operates where the tackie hits the tar. In this fascinating blog he suggests that Chinese counterfeiting could be used to the advantage of those who are being ripped off. Citing the example of the EFF’s red berets and singer Zahara’s unprecedented rise to fame, Kagiso applies some lateral thinking. And given what it costs to fight through the courts, his ideas should be taken seriously – not just by small businesses. – AH
By Kagiso Monnapula*
My friend’s younger brother makes his own hip hop dashikis and sells them to his school mates and Facebook friends.
I advised him a while ago that he should position himself to make a bit more profit since Chinese manufacturers had caught on to the growing popularity of the dashikis and were producing them. I told him that soon the dashikis will be on every street corner and demand will grow. Choose the number of customers your capacity can cater for and add your signature styles to your designs.
The reality is, China fulfills two functions in the world economy today. It is the biggest manufacturer AND the biggest counterfeiter of manufactured goods. Global trade has had to adapt or die.
There is probably no place in Africa where you will find as many Chinese wholesalers as in the Johannesburg CBD. From Crown Mines, Fordsburg and all the way to Doornfontein, counterfeit Chinese merchandise populate shop shelves like cell phones in the hands of South African consumers.
Soon after the introduction of the EFF beret, I started suspecting that China was counterfeiting the head regalia and shipping it into the country illegally. My suspicion was confirmed when I saw Chinese shop selling the beret.
Should I own a brand in the future, particularly a clothing or apparel brand, I am going to deliberately position it to be counterfeited by China. The issue is less about intellectual property rights and more about market access, brand popularity and increasing demand.
Business today is about being smart and less about infrastructural might.
A bad manager would quickly run to the law to invoke violation of trademark and copyright. A strategic business will use the popularity that counterfeited items brings to increase demand for its brand. Don’t focus on the short term profit China will score from making fake duplicates of your product. You could never match that king of manufacturing capacity and thus were never going to make that kind of profit anyway.
If you are a small business without huge reserves, don’t even think of going to court. You may risk losing everything. Instead of finding fault, recognize the opportunities to exploit.
Use the time in which your brand is on every street corner and shop shelf to increase sales. The demand will already be there. Target items you will have the capacity to produce, add a bit of unique detail to the designs and show a customer service ethos that will make every person you will sell to feel special.
Keep in mind that the number of sales you will achieve is only a fraction of total demand. Use social network sites to create awareness that you are the official owner of the brand but don’t criticize items coming from China as yet. The time for that will come!
Chinese manufacturers understand basic consumer traits. The more a person sees a product on every street corner and shop shelf, the more they think everyone must be buying it and that they should too.
From this background, supply comes before demand.
Chinese manufacturers also know how to effectively respond to demand. Their trend watchers are always on the ground detecting the next fashion style.
At the speed of light they will focus on a brand in demand and drop it at the same pace once the next fashion wave affects another brand.
In the first stage you used the opportunity to push sales and inform customers that you are the official owner of the brand which has (un)fortunately been counterfeited. The second stage is where the real work is. This is the time to consolidate the demand China created before consumers forget altogether about your brand.
@kagisom47 Of course Kagiso. If people in high buildings listened more to those on the ground, the world would be a much better place.
— Alec Hogg (@alechogg) March 16, 2014
They already know it, now show them that you have much more to offer. Create a new marketing campaign using funds collected from the increased sales volumes. Get issues of access sorted out. Open a new store or two. Get other retailers to stock your product. Create a brand image around the product.
Now you can criticize the earlier counterfeited merchandise. Go for the conscious of the consumers, tell them local jobs are lost to Chinese counterfeiting.
Within a short space of time your brand is selling. You are reaping the rewards and your customers are getting the benefits of authentic quality.
The EFF is in a much better position. Profit from the popularity of the beret is not meant to be in money but in the collection of votes. The counterfeited berets will act as an election poster for the party. This is good for its election campaign.
Chinese counterfeiting does raise some questions to consider. The afro-pop musician Zahara stole the show taking eight awards at the 2012 South African Music Awards when she had been a recording artist for a little under six months. Her CDs and DVDs could be found on any busy street corner in the country at that time, selling for 90% less than the shop price. Those copies were pirated. With all this, Zahara still managed to reach record breaking sales volumes second only to what the late legendary Brenda Fassi had achieved.
Without fake CDs and DVDs, Zahara would have not managed to sell as many original copies and become as popular in such a short space of time. The story is clear here. Improve access and your brand will flourish. The cheaper your product easier it is for consumers to buy it.
I am not promoting counterfeiting but it is a world phenomenon no single small business can fight. For a number of reasons, brands the world over look to China for outsourcing. That trend will not change any time soon. In the meanwhile if you are a small business looking to grow your market you may want to use China to your advantage.
* Kagiso Monnapula is a young South African who is determined to change his future. Read another of his blogs, “Bootstrapping Soweto style” and keep an eye out for more contributions. He promises to write more regularly when he finds the time away from his fledgling business.
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