Mainland China and Hong Kong together account for the largest share of counterfeited products in the world. The reasons are well-documented: China has the manufacturing infrastructure, the technical know-how from decades as the factory of the world, and a consumer culture that values luxury signals intensely. By 2025, Chinese consumers represented approximately 25% of global luxury spending. That appetite for luxury, combined with industrial-scale manufacturing capacity, creates the conditions for a counterfeit market unlike any other.
For fashion and luxury brands operating in China, counterfeiting is not an abstract compliance problem. It is a commercial reality that requires active management and a clear strategic response.
Understanding Chinese Culture Around Copying
One of the most important differences between China and Western markets: in China, copying has historically carried less moral weight than in the West. The learning model in Chinese education emphasizes mastery through replication before innovation. Deng Xiaoping explicitly encouraged adopting Western techniques to accelerate economic development in the 1980s. China’s strategic choice to become “the factory of the world” was partly a deliberate comparative advantage play: if you cannot win on original innovation, win on execution, production efficiency, and scale.
This context does not excuse counterfeiting, but it explains why addressing it in China requires more than legal enforcement. It requires building a brand presence strong enough that Chinese consumers actively want the authentic product and fear the social consequences of being seen with a fake.
The Scale of Counterfeiting in China
Counterfeiting in China historically accounted for 15% to 30% of industrial production, with approximately 5 million people employed in the grey market economy. That represented roughly 8% of China’s GDP. Almost 70% of luxury bags and jewelry purchased online in China were estimated to be counterfeit at the peak of the problem. Fashion and cosmetics remain the most affected categories.
The “black chameleon” strategy describes how many Chinese consumers managed counterfeit purchases: mixing authentic luxury pieces with counterfeit ones to avoid being identified as wearing fakes. The fear of losing face (Mianzi, 面子) was a deterrent against full counterfeit wardrobes. But having a few authentic anchor pieces alongside fakes was socially acceptable for many consumers who aspired to luxury but lacked the budget.
The Counterintuitive Reality: Fame vs. Damage
The question “fame booster or image destroyer?” has a nuanced answer. A brand being actively counterfeited signals that it has achieved desirability in the Chinese market. No one counterfeits an unknown brand. If your brand is being copied at scale, you have market presence. The copies increase your brand’s visibility among aspirational consumers who cannot yet afford the authentic product but who are building desire for it.
The damage is real but often overstated in isolation. Revenue loss from counterfeiting is estimated at approximately 10% of sales in the luxury accessories category, with losses in accessories reaching close to 30 million euros at the sector level. More significantly, counterfeit products that fail to maintain quality standards damage the brand’s quality perception among consumers who bought a fake believing it was genuine, and among authentic buyers who encounter fakes in public.
China’s Anti-Counterfeiting Progress Since 2020
Since 2019, China has significantly strengthened its intellectual property enforcement framework. The e-commerce law passed in 2019 placed new obligations on platforms like Alibaba and JD to remove counterfeit listings and take liability for fraudulent sellers. Both companies have invested substantially in AI-powered detection systems that identify suspicious listings at scale. Alibaba’s anti-counterfeiting technology reported removing hundreds of millions of suspicious listings annually.
The results have been measurable. The share of counterfeit luxury goods sold through major platforms has decreased. The counterfeit market has migrated toward less regulated channels: social commerce group buys (WeChat group purchasing), cross-border gray market channels, and offline market venues in specific cities.
For international brands, the progress is real but incomplete. Active monitoring and enforcement remain necessary. Brands that assume platform policies have resolved the counterfeiting issue without their own monitoring programs consistently find ongoing issues.
Daigou and the Gray Market
Separate from outright counterfeiting, the daigou (代购) gray market remains a significant factor for luxury brands in China. Daigou agents purchase authentic products abroad at lower prices and resell in China, undercutting official retail prices. The practice surged during COVID-19 when travel-retail arbitrage was impossible. As international travel resumed, daigou volumes recovered. For brands with large price gaps between their Chinese and international retail prices, daigou is a structural drain on margin and control. Brands have responded by narrowing global price gaps and investing in China-specific release timing to reduce arbitrage incentives.
How to Protect Your Brand from Counterfeiting in China
Trademark Registration Is Non-Negotiable
China operates on a first-to-file trademark system. If you have not registered your trademark in China, another party can. International brands that delayed China trademark registration have faced situations where Chinese entities already hold their brand name or logo. Filing early, across all relevant trademark classes, is the foundation of any brand protection strategy in China.
E-Commerce Platform Monitoring
The major platforms have brand protection programs: Alibaba’s IP Protection Platform (IPP), JD’s brand protection tools, and Pinduoduo’s increasingly active enforcement. Brands should register with these programs and conduct regular monitoring for counterfeit listings. Both manual review and AI-assisted monitoring tools are available through brand protection agencies. Weekly monitoring cycles are the minimum for actively targeted brands.
Digital Branding as Counterfeiting Defense
The strongest counterfeit deterrent is a brand presence so well-established on Chinese digital platforms that consumers know exactly where to find and buy the authentic product. A brand with a strong Xiaohongshu community, an active Tmall flagship, and credible consumer reviews creates a reference point that makes counterfeit alternatives visibly inferior. When Chinese consumers can easily access and verify an authentic purchase path, the counterfeit option loses much of its appeal.
FAQ: Counterfeiting and Brand Protection in China
Should fashion brands be worried about counterfeiting on Chinese social commerce platforms?
Yes. While Tmall and JD have strong anti-counterfeiting enforcement, counterfeit sales continue through WeChat group purchasing channels, Pinduoduo (though improving), and emerging live-commerce environments where product verification is harder. Any brand with significant China sales should include social commerce monitoring in its brand protection program, not just traditional platform monitoring.
Is counterfeiting always bad for a luxury brand’s image in China?
Not entirely. Being counterfeited confirms market desirability. No one copies a brand that nobody wants. However, widespread low-quality counterfeits that damage brand perception, or fakes that deceive consumers into believing they are buying genuine products, are unambiguously harmful. The “fame booster” dynamic applies mainly to top-tier luxury brands with strong authentic demand; for mid-market brands, counterfeit saturation primarily damages quality perception without the upside of elevated aspiration.
How does China’s first-to-file trademark system affect international fashion brands?
It means any party can register your brand name or logo in China before you do. Chinese trademark squatting is a documented problem: entities register foreign brand names speculatively and then extract licensing fees or block the brand’s legitimate entry. International brands should register their trademark in China at the earliest possible stage of China market consideration, before any public announcement of China market interest that might prompt squatting registrations.
What is the most effective channel for building anti-counterfeit brand trust with Chinese consumers?
Xiaohongshu is now the most effective channel for building genuine consumer trust around product authenticity. A strong RED community with authentic user reviews, creator partnerships, and verifiable product content creates a knowledge base that consumers reference before purchase. Zhihu (China’s Q&A platform) is also effective for educational content around “how to identify authentic products,” which simultaneously builds trust and increases the perceived risk of buying counterfeits.
How can brands reduce daigou without alienating their overseas Chinese customer base?
By narrowing global price differentials. Many luxury brands have actively worked to reduce the price gap between Chinese domestic pricing and European or US pricing. This reduces the economic incentive for daigou at scale while improving margin retention on China-market sales. Brands also use China-exclusive releases, digital activations accessible only through Chinese platform accounts, and loyalty program benefits tied to China purchases to give consumers reasons to buy through official China channels rather than daigou agents.
About Fashion China Agency
Fashion China Agency is a Shanghai-based digital marketing agency specialising in fashion, luxury, and lifestyle brand entry into the Chinese market. We help international brands build awareness, drive e-commerce revenue, and build communities on Xiaohongshu, Douyin, WeChat, and Tmall. Our team of 40+ China specialists covers content strategy, KOL management, paid media, e-commerce operations, and live commerce. Founded by Philip Chen and Olivier Verot, with offices in Shanghai and Paris.
Philip Chen is co-founder of GMA (Gentlemen Marketing Agency), one of China’s leading independent digital marketing agencies. Over 12 years working with fashion, beauty, and lifestyle brands on China market entry. Connect on LinkedIn.