Most people consider counterfeit watches a low-rent business, generally sold by a sketchy guy on Canal Street or at a flea market trying to stay three steps ahead of the police.

And yet, watch counterfeiting has turned into a more sophisticated trade than most imagine, particularly now that it’s moved largely online. A bust earlier this month by Border Patrol agents discovered some $28 million in counterfeit watches. By some estimates, manufacturing fake watches is now a multibillion-dollar business. 

Even worse, counterfeits are getting more sophisticated, mimicking, as one recent report has it, not only the watches’ look, but their feel, their inner workings, even their smell. (Their smell!) Some watchmakers now even adopt a tone of grudging respect toward their copying counterparts:

“That was one of the first times I’ve held in my hand a fake tourbillon watch, a real high-precision mechanism. The counterfeiters have now mastered ultra-complex movements,” said Michel Arnoux, head of the anti-counterfeiting unit of the Federation of the Swiss Watch Industry, at his office in Biel.

Most point to China as the source of these ever-more-sophisticated fakes, particularly Chinese organized crime.

Buying counterfeits is considered by some as a harmless, victim-less crime. Lady Gaga even caused a stir when she Tweeted about buying a “counterfeit Rolex” in Thailand. But of course, supporting the counterfeit trade is anything but harmless. People who buy them are often supporting organized crime, with links to all sort of unpleasant industries, including terrorism. And not all counterfeits are sold as “replicas.” In some cases, the scammers have gotten so sophisticated they can sell their items as real, at full retail value, which happened with a group of websites recently shut down by the Immigration Service.

It is generally not easy to crack down on sellers of fakes. Companies often get injunctions against the big replica sites. But once one site goes down, the fakers simply set up a new one elsewhere.

All of which remains a real problem for the industry—and not just the big companies. Counterfeit watches are also a problem in the growing market for secondhand watches, which in turn causes headaches for many jewelers who buy on that market.

It’s not clear what to do about all this. Companies already spend millions protecting their intellectual property every year. Law enforcement officials have made a number of high-profile busts lately, but they have bigger problems to worry about. Still, this growing sophistication should have our attention. Now that the counterfeiters have upped their game, our industry may have to up its game as well.

Rob Bates

JCK News Director