[The Counterfeit Invasion] ③ 94% Made in China... Spreading Worldwide via YouTube and TikTok

China, the "Factory of the World"... Notorious as the Cradle of Counterfeits Since Opening Up
Most Counterfeits in Korea Originate from China... Rapid Growth in Online Sales
Spread Worldwide via TikTok and YouTube... Organized Division of Labor

Editor's NoteThe global counterfeit market is worth 2,000 trillion won. Counterfeit goods have become more sophisticated, and their distribution bolder. It is not only high-end luxury brands that are suffering damage. While consumers remain silent about fake products, K-brands that have entered the global market are being copied in the same way. Local brokers are preemptively registering trademarks, blocking market entry, and companies are being frustrated by enormous legal costs. There are limits to crackdowns and monitoring in the borderless online market. Asia Economy investigated the realities of the counterfeit market, which has grown explosively since the COVID-19 pandemic, and explored countermeasures to prevent copycat products of 'K-brands' that have made waves in the global market.

The majority of counterfeit global luxury brand products distributed in South Korea are produced in China. Once known as the "factory of the world," China has established large-scale counterfeit production clusters in major manufacturing regions such as Guangzhou, Fujian, Jiangsu, Shanghai, and Shandong. These are the same areas where global brands have placed Original Equipment Manufacturer (OEM) orders. Chinese-made counterfeits produced in these regions are sold as tourist goods in local wholesale and retail districts and are smuggled to countries around the world.

With the expansion of the global online market following the COVID-19 pandemic, direct purchases through e-commerce platforms have increased explosively. This year, after the Trump administration in the United States imposed steep tariffs and the production costs of luxury products such as the Herm?s Birkin bag were exposed in China, there has been a surge in cases where Chinese counterfeits are brazenly sold as "OEM genuine products" on video platforms such as TikTok in China.

94% of Counterfeits Are Made in China...Online Distribution Exploded After COVID-19

According to the "2024 Annual Statistics Report on Crackdowns of Intellectual Property Rights Infringement" published by the Korea Customs Service on September 9, 94.4% of the counterfeits detected in South Korea last year originated from China. Vietnam followed with 3.2%, Hong Kong with 1.7%, Australia with 0.4%, and Thailand with 0.1%. The remaining 0.2% came through Taiwan, the Philippines, Singapore, and other countries.

Since the reform and opening-up policy in 1978, China has maintained its notorious reputation as the "epicenter of counterfeits" for nearly half a century while serving as the world's factory. Counterfeit production in China is not limited to luxury bags and fashion; it extends to cosmetics, food and beverages, mobile phones, and even electronic devices and components.

These counterfeits are distributed in the domestic market through two main channels. First, sellers who smuggle Chinese-made counterfeits into South Korea set up large-scale distribution and storage warehouses on the outskirts of Gyeonggi Province and sell them secretly offline in places like Namdaemun and Dongdaemun.

Especially since the COVID-19 pandemic, the online market has become a hotbed for counterfeits. Last year, the Korean Intellectual Property Office's trademark police booked 307 people for violating the Trademark Act, with 75% (233 people) of these cases occurring online. Of the 176,273 items seized, 84% (149,719 items) were related to online transactions. The number of counterfeit products blocked online by the Korean Intellectual Property Office last year reached 272,948, increasing every year since 2020 (137,382 cases).

Counterfeits Openly Sold on E-Commerce Platforms like Coupang and Temu

Counterfeits are distributed through direct purchase by sellers registered on domestic and international e-commerce open markets such as Coupang, Aliexpress, and Temu. These sellers claim parallel imports and sell at less than 20% of the genuine product's price. For example, on Temu, a hat featuring the "Titleist" logo, imitating the golf wear brand, was sold. The product cleverly mimicked the genuine logo by erasing part of it and retaining only its distinctive features. The price of this product was 5,071 won, significantly lower than the genuine product's price of 56,700 won.

Comparison of counterfeit Chanel bag sold at Dongdaemun Saebit Market (left) and counterfeit Titleist sold on Chinese e-commerce platform Temu (right) with authentic products.

'Estrara Atobarrier 365 Cream' sold on Coupang. Unlike the genuine product (left), the product has a sticker attached, making it noticeably different. This product is currently suspended from sale. Screenshot of product reviews on Coupang.

On Coupang, counterfeits of domestic cosmetic brands have been sold, with Chinese sellers (such as Tianyuyu Trading Co., Ltd.) producing and selling imitation versions of Amorepacific's beauty brand "Estrara" Atobarrier 365 Cream, leading to consumer complaints. The counterfeit product was difficult to distinguish at first glance because of subtle differences, such as a different lid shape. APR, which is also popular overseas, has recently posted official notices on its website regarding counterfeit products of its Medicube brand, as consumer damage has increased.

YouTube Shorts and TikTok: Simultaneous Live Counterfeit Sales

Recently, sales through video platforms such as YouTube Shorts, TikTok, and Instagram have surged. Earlier this year, after the Trump administration announced a 145% tariff on Chinese products, Chinese influencers exposed the production costs of luxury brands manufactured in China via TikTok.

At that time, the manufacturing cost of a Herm?s Birkin bag, which sells for $38,000 (about 54.17 million won), was revealed to be only $1,400 (about 1.9 million won). Similarly, Lululemon leggings, which retail for $120, were shown to cost just $5 (7,000 won) to produce. Chinese influencers claimed that many luxury brands such as Herm?s, Chanel, and Louis Vuitton are manufactured cheaply in China and sold at high prices due to their brand value. They also openly shared website addresses and contact information to encourage direct purchases.

Previously, the fact that the production cost of a Christian Dior luxury bag, which sells for about 3.8 million won, was only 80,000 won was revealed through an Italian court ruling related to the exploitation of illegal Chinese immigrant labor, lending credibility to these cost disclosures. As a result, sales of counterfeits through video-based social media platforms have exploded.

Domestic counterfeit sellers also use live broadcasts ("live commerce") on YouTube and TikTok to sell counterfeits, operating organized networks of more than 10 people who divide tasks such as manufacturing, smuggling, live selling, and shipping. They avoid crackdowns by opening and then quickly closing live channels, and even if some are caught by special judicial police, sales are largely unaffected.

<To be continued in Part 4: The Invasion of Counterfeits>