9 Making the Old New Again

By Stacey Tam

As technology advances, people gravitate towards more convenient options, rendering less efficient models obsolete. This principle applied to fountain pens when ball point pens were introduced in 1938 [1]. People no longer had to deal with leaky ink cartridges or clogs in fountain pens, resulting in declining use. Their complexity, however, also led to their resurrection. Technological advancements improved the design and build, making fountain pens manageable. Companies remarketed the fountain pen as a luxury good and status symbol. As a result, fountain pens have steadily increased in popularity since 2008 [1]. However, a shadow market for counterfeit pens emerged, capitalizing on their value. The counterfeiting market’s expansion led to the mass production of fakes to distribute through online websites and street markets.

While producing cheap pens is not strictly legal, many factories manufacture identical copies of well-known brands to sell at higher prices. There are tiers of counterfeiting, as the legality of the pen depends on the degree of likeness to another design. Counterfeiting encompasses “trademark infringement,” where manufacturers duplicate a symbol or design in their good [2]. For example, counterfeiting a fountain pen would involve directly replicating another brand’s design and selling the goods without the consent of the brand. A lesser tier of counterfeiting includes producing knockoffs, where the companies “imitates the product without infringing” [2]. Jin Hao, a Chinese fountain pen company, is known to create knockoffs of brands, such as Pilot and Mont Blanc, without violating any laws [3]. Its knock-off pens may look similar to luxury brands, but they fail to cross the line into copyright infringement due to differences in parts or design. This paper focuses on the market regarding the illegal counterfeiting of identical pens.

Wengang, China, is one of the major producers of counterfeit fountain pens. Creating brush pens for hundreds of years, artisan families branched out to fountain pens following their rise in popularity [4]. However, the village also began mass producing counterfeits. When Shanghai detectives “[raided] a factory and [seized] thousands of counterfeit Parker pens,” the local citizens intervened [4]. They “barricaded the only street leading out of town,” and only police intervention allowed the detectives to leave with a few boxes of evidence [4]. Citizens feared that detectives accumulating evidence would shut down their main livelihood. Their over-protectiveness over a few boxes of illegal pens exemplifies the counterfeiting industry’s deep roots in the community.

While Wengang represents a large portion of the shadow economy, other smaller villages also engage in the illegal market. China generates the most forged goods, encouraging the pervasive counterfeiting culture and failing to dissuade other towns from following suit [5]. While corruption and bribery contribute to the issue, the black market provides citizens’ employment, and subsequently, the local officials’ income tax [6]. In these rural villages with lackluster education systems and employment opportunities, families turn to counterfeiting to provide an income [5]. In turn, the local government reaps the financial capital from taxes to fund community projects to improve roads, etc. The illegal trade has boosted the “town’s annual per capita income to $800” [4]. This value only reaches half the nationwide average, but it exceeds the income of other neighboring villages [4]. In contrast, the central government holds the power to shut down the markets, but the consequences outweigh the reward. If the central government shuts down the illegal factories, citizens are left jobless. Shutdowns lead to increased poverty.  On the other hand, the village’s production of counterfeit goods tarnishes China’s reputation and cuts in the licit market [6]. This predicament questions the black market’s future, as its closure would destabilize communities’ financial means. The country lacks a clear solution that would eliminate counterfeiting while sustaining the local economics.

Since the government has not provided an alternative, licit income for Wengang, the majority of manufacturers engage in the shadow economy. Using cheaper materials factors into lowering costs, but the true reduction relies on the mass production of pens [5]. For example, the Lamy Safari retails for $30 online [7]. An authentic pen will cost $24 to produce based on an average 20% net profit margin [8]. However, Chinese factories produce thousands of counterfeit pens to spread overhead fees, reducing the final cost to $1.50 per pen [5]. The Chinese government also subsidizes raw materials for manufacturers, indirectly decreasing the cost to produce a fake pen. [5]. Cheap E-bay listings sell counterfeit Lamy Safaris for $4, making $2.50 of net income per pen. When compared to the $24 per pen cost for producing an authentic pen, the profitability of counterfeiting is clear. Supply and demand curves demonstrates how lowering the cost will increase the amount bought. Thus, counterfeiters sell more volume to earn a greater profit than the licit manufacturers.

Another factor that influences profit is the model or brand of the counterfeited pen. While Montblanc pens retail higher than Lamy Safari, the latter pen can be produced more easily and accurately. Visual likeness to the authentic goods plays an essential role in broadening distribution. Each country has an agency dedicated to border protection, such as the U.S. Customs and Border Patrol [9]. These agencies are tasked with seizing counterfeit goods to prevent “economic impacts,” such as the loss of jobs from cutting a legitimate business’s revenue [9]. At each countries’ borders, inspectors or customs agents examine suspicious shipments for sign of forgery. The sheer volume of imports and exports means inspectors must quickly visually differentiate the goods. When counterfeit goods are visually similar to luxury brands, they are more difficult to spot, increasing the chance that they are allowed through customs to reach customers. Thus, counterfeiters commonly choose lower-end brands to produce to increase profit. More sophisticated or daring manufacturers, however, may still choose to replicate expensive brands.

While counterfeit pens look nearly identical to authentic ones, a closer inspection reveals differences between the two. In Figure 2, photos from a pen reviewer compares an authentic and counterfeit Lamy Safari [10]. In the first photo, the authentic pen is placed on the bottom. In the second and third photo, the authentic pen is held to the right.

Figure showing the three pictures comparing an authentic and counterfeit Lamy Safari pen. The counterfeit one is noticeable on closer examiniation, as the parts are of a lower quality and do not fit together as well.Figure 1. Comparison between an authentic and counterfeit Lamy Safari

http://www.deskoflori.com/blog/2015/4/16/my-experience-with-a-counterfeit-lamy-safari

Typically, the authentic pens display signs of higher quality materials or standards. In the first photo, the difference between the grips of the pens is examined. The bottom pen, or the authentic one, has a sharper edge on the grip than the counterfeit pen. In comparison, the grip of the counterfeit pen seems bulbous. The second picture examines the difference between the black plastic part in the converter. The converter of a fountain pen contains the ink. It must be connected to another part of the pen, which allows ink to flow through the nib, or the tip of the pen. The authentic part on the right fits the plastic tubing of the converter better, while the fake part seems shriveled in comparison. Finally, the third photo examines not the presence of the part, but the quality of the adhesive holding the parts together. In the authentic pen, the reviewer was unable to remove the black ring due to the strength of the adhesive [10]. The counterfeit pen lacks the part in the photo, as it was easily removed. In addition to these visual differences, the reviewer noted that the nib failed to fit properly in the counterfeit pen, repeatedly falling out [10]. The differences the reviewer found does not apply to all fountain pens, depending on the counterfeiter’s choices. However, a similar analysis of the parts can be done for any pen to determine its authenticity.

As inspectors shift through shipments to look for illegal counterfeits, the goods’ wide distribution encounters risk along each step of the journey. Truck drivers collect the rural Chinese villages’ products and drive them to larger trading cities to expand circulation [11]. For example, Hong Kong’s proximity to the ocean renders it a popular shipping hub [11]. Inspectors attempt to seize the counterfeits in these hubs before they are shipped out to other countries. Inevitably, illegal goods escape their scrutiny and are sent along distribution routes to reach other hubs by ship or by plane [12]. Other popular destinations include Shanghai and Singapore. Repeating this process distributes the goods to farther countries and continents. Similar to the initial hub, each port presents a risk, as inspectors may identify and seize the fake products.

In addition to expanding distribution, the popular trading hotspots have a prevalent fountain pen black market. In Hong Kong and Shanghai, street markets line the city. Often, they sell the counterfeits pens and other fake luxury goods for a fraction of the market prices. Figure 2 details a forum user’s knowledge on how the informal markets supply the fake pens throughout Asia, including Malaysia and China.

Figure shows a forum comment detailing the shadow economy in cities. Bazaars and malls in Malaysia openly sell counterfeit goods, only stopping to close when an inspector walks by.Figure 2. Forum comment on the shadow economy in cities

http://www.fountainpennetwork.com/forum/topic/271547-what-are-the-most-frequently-counterfeited-pens/

Brazil also has a similar strong black-market presence. The business circles’ gift-giving culture drives the demand, and the lower classes desire this status symbol. Thus, factories also produce counterfeit pens to distribute throughout Latin America [11]. The street markets in Manaus’s historical center has a high risk for selling “fashion fakes” [13]. The prestige associated with owning a fountain pen ensures that there is no “shortage of Montblanc fakes sold at street markets in Brazil” [11]. Unsurprisingly, the expensive and well-known brand’s popularity compares to China’s.

As well as selling at markets, counterfeiters utilize the online shopping’s popularity to scam customers. The convenience of purchasing goods online “shifted [the counterfeit market] from underground grey markets such as sidewalk vendors and flea markets to mainstream e-commerce places” [14]. Listings on Amazon and E-bay potentially display counterfeit pens. An initial attempt at checking authenticity can be determined by the price and the seller’s rating. If the price is unnaturally low, or customer reviews cite malfunctioning or no response from seller, then the listing probably advertises a counterfeit good.

Typically, unnaturally low prices indicate a counterfeit, as mass production lowers the cost per unit [14]. In Figure 3, an Ebay listing for a counterfeit Lamy Safari pen is shown.

Shows an Ebay lisiting for a counterfeit Lamy Safari penFigure 3. Listing for a counterfeit Lamy Safari

https://www.ebay.com/itm/Pen-Safari-Fountain-Pen-Limited-Edition-Transparent-Business-Office-Financial/123325225527?hash=item1cb6c19a37:g:2SoAAOSwmOZbfKF8

Clues within the listing reveal its fraudulence. The unusually low price is the first obvious one. The $1 price tag lures customers in, as they browse for goods at the lowest price. The secondary indication is the word “Safari” in the product name. “Safari” refers to the model of the pen, but the name does not mention the brand – Lamy. By only including half of the name, customers that search “Lamy Safari” will still see the listing for the fake pen. Assuming its legitimacy, they unknowing pay an additional $8 of shipping. Ebay stipulations only requires the seller to pay for return shipping if the item is damaged or does not match description, not if the customer has changed their mind [15]. While the pen may be a cheap counterfeit, it matches the description of the item – a fountain pen. Thus, customers end up retaining the pen, as the $8 shipping outweighs the $1 return. Through these methods, counterfeiters sell fakes pens to unsuspecting customers.

Analysis on suspicious listing may deter customers, but only in-person examination of the product will guarantee its authenticity. The possibility of purchasing a fake pen will always remain. Customers have paid full price only to realize it is counterfeit when the pen arrives. Figure 4 documents a forum user’s experience with seemingly purchasing an authentic pen, only to realize that it was counterfeit upon arrival. The Fountain Pen Network, a site where many collectors discuss topics regarding pens, contains multitudes of similar stories, as many people seek to verify their purchase. Most often, their suspicions are confirmed with the help of other collectors on the site.

Forum comment detailling a purchase of a counterfeit Lamy Safari through AmazonFigure 4. Forum post documenting buying a fake pen

https://www.reddit.com/r/fountainpens/comments/895d0u/update_on_a_counterfeit_lamy_safari_from_amazon/

To avoid purchasing a counterfeit pen online, research must be done to find reputable sites to cut out unregulated, third-party sellers. Websites that allows for almost anyone to open a storefront, such as Amazon and Ebay, contains the highest number of fake listings [14]. Regulations might protect customers, but like the inspectors, the site’s sheer size renders it difficult to monitor every store. Counterfeiters utilize this loose surveillance to open a legitimate storefront and sell the pens. To conceal negative customer reviews from bad quality products, stores will pay people to leave fake, positive reviews [16]. In Figure 5, an Amazon review from a store selling fake Lamy Safari pens is shown. Only part of the review was shown, as the rest simply details differences between a real and fake Lamy Safari. The differences are similar to those previously discussed.

Amazon review stating that the product was a counterfeitFigure 5. Amazon review for a counterfeit Lamy Safari pen

https://www.amazon.com/gp/customer-reviews/R3VGZAP58BVXOM?ASIN=B0002T401Y

While this review clearly outs this store for selling counterfeits, this negative review was buried beneath other positive reviews. Filtering the reviews to only show the negative ones will depict a more holistic view of the store selling the product. Some characteristics to note are the date and description of the reviews. Some stores may have corrected problems they had in the past, leading to no recent issues. However, recent reviews citing poor quality products, like the review in Figure 5, indicate that the store is selling counterfeits. The review system for online retail sites can reassure consumers as they scroll through thousands of reviews to gauge whether a product reaches their standards. However, researching lesser-known websites can yield reputable fountain pen sellers. For example, The Goulet Pen Company, one of the larger independent retailers, offers a wide range of authentic pens. Bloggers and other writers praise both the quality of their fountain pens and the customer service for any troubleshooting. The Goulet Pen Company is far from being the only reputable fountain pen retailer. The easiest way to ensure a product’s legitimacy is to purchase from a legitimate source.

As the licit market for fountain pens is projected to grow, the illegal market is expected to grow alongside it. Counterfeiters will always try to supply products at a lower cost, and subsequently, a lower price to consumers looking for a deal. However, the illegal market will adapt to newer methods of distribution. The current distribution of counterfeit fountain pens, starting from its origin in Wengang to its various destinations around the world, has been tracked in Figure 6 below. The need to browse goods at a street-side market or store limited physical sales. With the advent of online retailers, consumers are able to view a host of products to order and have shipped to their home. The globalization of the Internet has widened the distribution of counterfeit fountain pens, as anyone from any country can place an order.  The market may undergo another transformation as technology continues to connect people around the world.

Map of the world pinpointing important cities to the distribution of counterfeit fountain pens. Cities include Wengang, China; Shanghai, China; Hong Kong, China; Singapore; Pengang, Malaysia; Manaus, Brazil.

Figure 6. Cities important to the distribution of counterfeit fountain pens


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Perspectives on Black Markets v.3 by Michael Morrone et. al. is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License, except where otherwise noted.

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