Predatorial Merchantilism: Mexico artisans losing trade to Chinese knock-offs

Knock-off product from China has caused havoc globally, destroying whole industries in other countries and causing massive job loss. The definition of predator is an animal that naturally preys on other or a person or group that ruthlessly exploits others. Merchantilism  the economic theory that trade generates wealth and is stimulated by the accumulation of profitable balances, which a government should encourage by means of protectionism.

China’s trade policy, is basically to exploit other countries, while givin g little back, in terms of opportunity in China.

 

This China behavior hit all, from top brand such as Louis Vuitton, to the latest, being Mexico’s artist hand-made nativity scene figures. These nativity scene figures, hand-made in Mexico, that China is knocking-off, are also mostly related to Christianity, where inside China, the government is cracking down on all religion, including Christianity.

The following is sourced from the Economist (for full story)

IMITATION is supposed to be the sincerest form of flattery, but that is not how most brands see it. Businesses, which feel the revenues lost to counterfeiters all the more acutely in a downturn, are making an even greater effort to root out impostors. Complaints from Louis Vuitton, a luxury-goods firm, for example, led to nearly 9,500 seizures of knock-offs last year, 31% more than in 2008. Lawsuits brought by companies against manufacturers and distributors of counterfeits are at an all-time high, says Kirsten Gilbert, a partner at Marks & Clerk Solicitors, a British law firm.”

“Governments are also boosting their efforts to crack down on counterfeiting, which deprives them of tax revenue in addition to harming legitimate businesses. Counterfeiting and piracy cost G20 economies €62 billion ($85 billion) a year in lost taxes and higher spending on unemployment benefits, according to a study by Frontier Economics, a consultancy.

The EU, America and Japan, among others, are also discussing a new treaty, called the Anti-Counterfeiting Trade Agreement (ACTA), that would strengthen international controls on counterfeits and piracy. It is expected to be launched later this year. But in China, where 80% of the world’s fake goods are thought to be produced, officials are loth to crack down on a thriving local business. China is not expected to sign ACTA—undermining it before it has even been unveiled. Perhaps China could make a just-as-good fake treaty instead.”

From the wikipedia:

Counterfeit consumer goods are goods, often of inferior quality, made or sold under another’s brand name without the brand owner’s authorization. Sellers of such goods may infringe on either the trade mark, patent or copyright of the brand owner by passing off its goods as made by the brand owner.

The term “knockoff” is often used interchangeably with “counterfeit,” although their legal meanings are not identical. A “knockoff” is a colloquial term which describes products that copy or imitate the physical appearance of other products, but which do not copy the brand name or logo of a trademark. They may, or may not, be illegal under trademark laws. Such products are considered illegal when they are intended to confuse consumers. And someone can be a counterfeiter even if he doesn’t make the products, but knowingly sells them to others.

Another overlapping term is “pirated goods”, which generally refers to copying copyrighted products without permission, such as music, movies and software. Exact definitions are determined by the laws of various countries.

Counterfeit products exist in virtually every area, including food, beverages, clothes, shoes, pharmaceuticals, electronics, auto parts, toys, and currency. The spread of counterfeit goods is worldwide, and in 2015 the Organisation for Economic Co-operation and Development (OECD) estimated the global value of all counterfeit goods reached $1.77 trillion, up from approximately $550 billion in 2008.

Counterfeit products make up 5 to 7% of world trade and has cost an estimated 2.5 million jobs worldwide, with 750,000 jobs lost in the U.S. alone. However, the Government Accountability Office found that many estimated figures were unreliable.

Artisans losing trade to Chinese knock-offs (source)

Makers of nativity scene figures are losing market share to China

Mexico News Daily | Tuesday, December 22, 2015

One of the most iconic Christmas celebrations in Mexico is the setting up of the nacimiento, the nativity scene that represents the birthplace of Jesus Christ. But more and more of the figures used in the scene are coming from China, threatening the livelihood of artisans.

A proper nacimiento will include the infant Jesus and his parents, the angel Gabriel, the Three Wise Men, shepherds, farm animals and the Devil. The bucolic scene can fit on the top of a coffee table or under the Christmas tree, or extend over a garage or a home’s front yard, limited only by the creativity of its owners.

But the cheap Chinese copies of the nativity figures have had a negative impact on their sales by artisans from Amozoc and Tepeaca in the state of Puebla, who have lost up to 50% of their market share in the last five years.
The director of the Amozoc Chamber of Commerce reports that of the town’s 77,000 inhabitants, half are artisans, and that 40% of their yearly production is exclusively Christmas-related.

Silvia del Rocío Beltrán stated that the handicrafts have been undervalued by consumers, who prefer buying low-quality Chinese knock-offs for 15 pesos apiece to purchasing the domestic product from markets or studio-workshops, where the price of each figure can range from 20 to 55 pesos.
In the last five years, 100 such family workshops have shut down as they were unable to compete, said Beltrán.

In an effort to counter the trend, Puebla’s artisans have started to promote their handicrafts by making seasonal trips to neighboring states, such as Veracruz, Hidalgo, Tlaxcala and Oaxaca, hoping to save their businesses from bankruptcy.

The state of jalisco had been seeing a similar situation but through a promotional campaign launched three months ago it has managed to turn the tables.
Entitled “La artesanía está de moda” (Handicrafts are in fashion), the campaign has “given very good results,” said the director of the Jalisco Handicrafts Institute.

“We managed to reverse the trend. Foreign figures are still being bought in Jalisco, but we managed to reappraise the state’s products in the consumer’s eye,” said Camilo Ramírez.

According to the last census, of the 400,000 artisans in the state, 25% produce Christmas-related figures, mainly in ceramics, glass, wood, and even piteado, a decorative embroidery on leather.

About 430 workshops in Jalisco are dedicated to producing artisanal nacimientos, providing a livelihood for at least 1,100 people.
Source: El Economista (sp)

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