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Counterfeiters are strengthening their presence in Dubai....
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Counterfeiters are strengthening their presence in Dubai. The Federation of the Swiss Watch Industry too!

Monday, 27 February 2012
By Michel Arnoux
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Michel Arnoux

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3 min read

For intrepid travellers the following principle is sacrosanct. «No matter the destination, only the road is important». With a little adaptation, this axiom might also apply to watch counterfeiting.

To combat counterfeiting, one must first of all try to understand the roads taken by fake watches. This approach teaches us many things, not least the following. Firstly, when fake watches leave the workshops in which they were manufactured (in China, in nine out of ten cases), they are delivered unassembled and partially marked, so that the act of counterfeiting cannot de facto be proven. The second lesson, which adheres very precisely to classic economic theory, is that the assembly phase must be as close as possible to the selling phase, both in time and space. In other words, the constituent parts of watches must be shipped as near as possible to the targeted market, where they will be assembled and delivered in one fell swoop. The third lesson: in a globalized world where transactions are executed quickly and at lower prices, the facilities accorded by some commercial platforms make geographical proximity relatively meaningless. Dubai is a perfect example of this, being far from the world’s main markets. With its system of free zones (16 zones in activity, 14 in the pipeline), Dubai facilitates the administration of goods transit to such an extent that geographical distance becomes of secondary importance.

The biggest free zone in the Emirate, Djebel Ali, is very far from our idea of a closed, secure and controlled area where restricted access is protected by vigilant guards. Djebel Ali is simply a vast square of windswept sand where trafficking of all kinds is rife. With no administrative formalities or rigorous customs controls, goods are offloaded and transferred in complete anonymity. In addition, the free zone offers a considerable benefit which customs officers call «technical modification of origin due to breaking bulk». In plain English, goods originating from China, after transhipment to Djebel Ali, lose their Chinese origin and take on the origin of the «United Arab Emirates». Bearing in mind that European and American customs give priority to controlling goods originating in China, one can easily understand the appeal of such transhipments for traffickers of fake products. It is moreover a twofold appeal, since coupling transhipment with the assembly of fake products represents a further cost-cutting measure for counterfeiters.

 

The results fully matched our expectations.

However on the spot, our usual contacts whether private or public, have never given much credit to this hypothesis, deeming it unnecessary and superfluous to devote large sums to tracking down phantom workshops. Should we resign ourselves therefore to continuing our one-off seizures on local markets without looking further afield or higher up the line? After reflection, new investigators were put on the case, using more direct and invasive methods. The results fully matched our expectations. In just a few weeks, our men discovered an assembly workshop run by Chinese nationals, concealed in a private apartment. The police raid seized nearly 17,000 fake Swiss watches. A major breakthrough and the keen satisfaction of seeing our model finally validated. «Only the road is important.»

Article published in FH Revue, 16th February 2012

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