Subsistence and Resistance in the Consumption of Counterfeits in South Africa

1 Subsistence and Resistance in the Consumption of Counterfeits

This paper explores the widespread and enduring counterfeit trade in South Africa, a multi-billion Rand secret industry that flourishes despite the SA Customs Office’s efforts to quash it. Counterfeit goods inundate South African consumers, particularly those at the lower Living Standard Measurement (LSM), through informal markets and unscrupulous resellers. Counterfeit goods span a range from painkillers and car parts to luxury items and prepared foods. Counterfeiting is not unique, but it is ubiquitous in South Africa where it is almost impossible to stop the tide of cheap goods that arrive weekly and by the ton. Customs agents have only been able to destroy a fraction of confiscated items, as resellers quickly receive replacements from overseas shippers and illegal factories. In addition, this paper outlines the prevalence of counterfeit goods within South Africa through research and qualitative interviews with customs officers and legal personnel involved in counterfeit prevention. The counterfeiting problem in Africa has reached an unprecedented scale, encompassing cultural, economic, and health dimension. “Globally, the trade in counterfeit pharmaceuticals is worth up to $200bn (£150bn) annually, with Africa among the regions most affected, according to industry estimates. The World Health Organization (WHO) says 42 % of all fake medicines reported to them between 2013 and 2017 were from Africa.” (Mwai, 2020).

2 The Counterfeit Problem in South Africa

Counterfeits refer to goods bearing trademarks/features that are identical or only slightly deviate from those of registered trademarks/features – thus infringing the registered trademarks owners’ rights (Chuchu et al., 2016). As a signatory to the World Trademark Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS, 1994), South Africa enacted the Counterfeit Goods Act in 1998 to combat the domestic proliferation of counterfeit goods. As TRIPS states,

This Act provides brand holders with criminal and civil remedies to effectively address the counterfeit goods trade. It paves the way for counterfeit goods to be seized in terms of a valid search and seizure warrant and for the suspect to be criminally prosecuted and pursued civilly for an interdict, delivery-up, disclosure, an enquiry into damages, and payment costs.

Quantifying the extent of counterfeiting in South Africa is a challenging task, as stated by Jadon Woolmarins, a legal expert at Kisch Attorneys in Cape Town. Describing the issue as akin to “drawing lines in water,” Woolmarins highlights the difficulty in estimating the size of the market (2019, personal interview). Annually, hundreds of millions of Rands (equivalent to tens of millions of US Dollars) worth of products are illicitly brought into the country, quickly circulating in informal markets.

Woolmarins underscores a particular focus on counterfeit luxury goods, with shoes being a major interest of buyers, revealing that a pair of R200 shoes in informal markets may mimic those sold for R1,500 in legitimate shops. Counterfeiting extends beyond luxury items to encompass various products like food, creams, tobacco, and condiments. Tragically, in 2019, the purchase of contaminated food from the counterfeit market in Cape Town resulted in one fatality and 32 hospitalizations, with the source remaining untraceable (Woolmarins, 2019). The allure of bargains is evident, with buyers able to acquire items such as toothpaste for only R2 (US $00.11), compared to the authentic counterpart priced at R22 (US $1.22). This substantial 90 % discount on products that closely resemble the genuine articles proves irresistible to consumers. A recent raid in West Rand recovered over 300,000 counterfeit hair braid packages (Swanepoel, 2022).

Emphasizing the perilous and time-consuming nature of investigating the South African counterfeit market, Woolmarins (2019) cautions that law enforcement must exercise caution as “People wind up throwing rocks at the police and trademark enforcement officials”. The complexity of prosecution is also a factor that makes counterfeit products a tenacious part of the informal retail landscape in South Africa. “The complexity and the quantity of these products takes more and more of lawyers’ time [to prosecute]. To put this in perspective, there must be an affidavit drawn up for every item confiscated”. How many items get confiscated? “In Johannesburg we can raid an entire building and confiscate two 16-tonne trucks worth of counterfeit goods. Three days later is completely stocked again. We can raid them three times in a week.” (Woolmarins, 2019).

Amanda Lotheringen, Senior Manager of Copyright and IP Enforcement at the Intellectual Property Commission of South Africa (CIPC), points out that the monetary size and scope of the problem is very hard to define save for the fact it is grievous. She states, “We might look at hundreds of billions of dollars lost to [South African Revenue Service] in import duties alone.” Furthermore, “The impact on the country is not just in rands, but in the reputation of the country as an economic destination.” (Lotheringen, 2019, personal qualitative interview). She points out that “counterfeit products can kill you,” noting that it is almost impossible to track how many South Africans have been adversely affected by counterfeit medicines as well as other everyday counterfeit products bought daily by cost-conscious South Africans, including “deodorants, shoe polish, clothing and footwear”.

3 Counterfeit Culture: A Semiotic Discussion

Counterfeiting extends beyond high-end products, encompassing personal care items, foodstuffs, pet food, and car parts, attracting budget-conscious consumers. The fact that these products are often clearly counterfeits and sold in underground conditions offers an interesting insight into how consumers at the bottom end of the market perceive the underlying brands. During the pandemic, fake cigarettes outsold authentic ones despite inferior taste and quality, revealing consumer eagerness for brand simulacra. Because of the ubiquitous nature of counterfeits within the country, ongoing research is necessary to understand the impact of counterfeit consumption on authentic brands, exploring power dynamics between media-driven brand conception and consumer behavior undermining control measures.

Looking at the overall preponderance of counterfeit goods might shed light upon the attitudinal biases South African counterfeit consumers might be developing towards legitimate products and, by extension, the brand names attached to those products. Understanding the breath-taking array of counterfeit products available to consumers looking for a bargain as well as delving into why these consumers are willing to buy these illegal goods in sometimes dangerous conditions also allows for considering how brand damage (or support) is affected by the local counterfeit industry. At this nascent stage of research, this paper attempts to provide an overview of the nature of the counterfeit sales industry in South Africa.

This paper engages in semiotic analysis to explore brand meaning for consumers purchasing counterfeit products. The concept of an ambiguous signifier bears much weight here when issues of authenticity are foregrounded. A consumer who knowingly buys (or perhaps inadvertently buys) a name brand that is clearly either deeply discounted or else faked is participating in a game of sorts, where the actual meaning and representation of the brand have become distorted and perhaps transformed into something else. The consumer wants to participate in the sign-system of the brand where the signifier (the place of sale, the expense, the luxury and even the efficacy) of the product bearing a brand logo is clearly not present or inferior to its authentic counterpart. Consumer inclination, rooted in semiotics, is influenced by pricing signals and a poststructuralist concept of linguistic thirdness.

4 Subsistence Versus Resistance

Analyzing the consumption of counterfeit products unearths a crisis in both authenticity and classical economics, situated between the Kuznets Curve (Kuznets, 1955) and the Easterlin Paradox (Easterlin, 1974). This arises from an uncertainty at the heart of the act of knowing and willing consumption. Excluding unwitting consumption of counterfeit goods – a likelihood given the vast quantities of counterfeit products that reach South African shores and corruption that eventually see counterfeit goods reach the open market – can the knowing and willing consumer of counterfeit products (a rational, self-interested actor) know to a certainty whether their actions are impelled by subsistence or resistance?

An easy schema of subsistence versus resistance can be developed. Some counterfeit goods are preferred for their relative inexpensiveness. These are the kinds of goods that would form part of the monthly “bread basket” of regular expenditure and have a utilitarian outcome in their use. Consider such items as car parts, gas, painkillers, and fast-moving consumables like ketchup, peanut butter, canned goods, toilet paper and toothpaste. The utility in such items plainly makes an argument for subsistence. On the other hand, purchase of counterfeit Veblen goods – high-end luxury brands, the demand for which rises as the price rises, named for 19th century economist Thorstein Veblen who first defined this kind of conspicuous consumption – easily conforms to Strain Theory notions of consumers of such counterfeits self-defining as those able to attain (I use “attain” in the full nuance of the word’s connotative complexity) the status attendant to such Veblen goods – or for those unable to differentiate, the counterfeit of such goods.

This schema aligns with two economic theories in a relatively unproblematic manner. Subsistence purchasing – in trying to offset ever-increasing inequality of wealth distribution, in technical speak, an increasing Gini Coefficient; South Africa having endured an increasing Gini Coefficient consistently since 1997, and also having been the only nation to have done so for so sustained a period – connects to the Kuznets Curve; a theoretical model that describes three phases of growth; relative equality, accelerating inequality, and ostensible equilibrium with the development of a social safety net. Resistance purchasing connects the Easterlin Paradox, a model that describes the relationship between wealth and happiness. Easterlin’s model predicts that change of condition in wealth will only influence happiness if such change is not uniform through a social group or the whole of society.

Despite its apparent simplicity, this schema appears to unravel. South Africa seems to have stalled at the second phase of growth described by the Kuznets Curve, accelerating inequality. Since 1997, the Gini Coefficient has spiraled out of control, however a turning point, where an expanding middle class forces the development of a social safety net, has yet to be reached. Is there no end in sight? Under this perspective, subsistence purchasing shifts from subsistence into resistance. And by a similar logic, resistance purchasing that provides the individual consumer with a means to escape economic uniformity and engage in the (affordable) consumption of (fake) Veblen goods begins to adopt the proportions of subsistence in that it provides such consumers with ongoing and ready access to inauthenticity economies of scale that are primarily driven by influencer reputation and influencer activism.

While personal research in this area is nascent, and the literature on this research opportunity is limited, the significance of this field is crucial. The Kuznets Curve describes a path of sustainability for neoliberal market principles in that the Curve describes a correcting mechanism for a rapidly increasing wealth-gap. The Easterlin Paradox similarly implies a sociological function in attempting to simultaneously model income inequality and dissatisfaction at both a personal and societal level. Consumption of counterfeit goods reveals a potential shift in what was previously considered a corrective measure and significant indicator in neoliberal economics. It acts as a bellwether of escalating wealth inequality, suggesting a potential practical utility beyond theoretical implications.

These conjectures form the basis of a larger amount of research that focus on the size and scope of the counterfeit problem in South Africa and, crucially, the attitudinal ramifications of such widespread and normalized consumption of fake goods throughout the country. This is creating, we argue, a situation where customers themselves have a changing relationship with authentic consumer brands.

5 Consumer Attitudes Towards Counterfeits in South Africa

Recent research highlights diverse attitudes of South African counterfeit consumers, revealing varying levels of brand knowledge and relatability. The prevalence of counterfeits plays a crucial role in shaping these attitudes. It became clear that customers were selectively concerned about counterfeits. Young customers in one South African study found that the amount of factory rejects sold to them had desensitized them to the real products, and the utilitarian value of most counterfeit products offered to them as enough to heavily influence a purchase decision, save for in extremely desirable brands that carried heavy social capital such as sneakers (Omoruyi, 2021). Consumers use objective and subjective knowledge of brands to make a decision on the value of counterfeit brands and, moreover, South Africa “Generation Y” consumers (AGE) are more influenced by international brands when making the brand purchase decision.

South Africa is a destination ground for counterfeits and while demand here is relatively low compared to other countries (at least as far as luxury items are concerned), South Africa is in a prime position to sell these people status-affirming items. And South Africa is a young country, where approximately 35 % of the population falls into the so-called Generation Y category, and the country has an average age of 27.6 years (Worldometers, 2023). But the widespread availability of counterfeit goods creates the situation that is especially difficult to monitor. To date, “Neither the SAPS [South African Police Service] nor the DTI [Department of Trade and Industry] has a strategy for dealing with criminals involved in counterfeit trade. Even the Specialised Commercial Crime Unit does not have strategy to police counterfeiting (Thenga, 2020). The SAPS, the DTI and the Specialised Commercial Crime Unit follow a generic strategy referred to as the National Crime Prevention Strategy to fight crime including counterfeiting. Not even an in-house policy exists on how counterfeit crime should be policed.” (Insight Strategy Group; International Trademark Association, 2019).

The efforts on the part of South African authorities, particularly South African Customs and the CPIC to clamp down on counterfeits are dependent upon numerous agencies and organizations within the country working together. The CPIC blames the spread of counterfeiting on the “escalating cost of buying originals, the developments in technology making piracy increasingly possible [as well as] growing demand from consumers seeking cheaper options.” (Lotheringen, 2018).

As a response, the “South African IP Training Manual for Senior Law Enforcement Officials” was developed, drawing on the Training Manual on Intellectual Property (IP) Crime Prosecution for Law Enforcement Agencies and Prosecutors published by the World Intellectual Property Organization (WIPO) (2016). The main role players would be SAPS, SARS, IPR holders and the CPIC. These sweeping search and seizure operations that are promoted by the CPIC focus on counterfeit items and items that are counterfeited affecting the creative sector, clothing and apparel, and medicines and consumer goods (including pharmaceuticals). Targeted sweeps and intelligence-driven prosecution as well as – crucially – targeted public awareness with a focus on the youth are key in reducing the effects and proliferation of counterfeit trading zones within the country (Budeli, 2021).

The focus on younger consumer is of special interest to most anti-counterfeiting actions worldwide. The CPIC in South Africa references information about “Gen Z” (as well as Gen Y). The International Trademark Association makes special note of the attitudinal research conducted regarding “Gen Z”, which they define as “a cohort of individuals born from 1995 to 2010”. By 2020, Gen Z consumers comprised the biggest cohort of consumers worldwide. The findings are surprisingly congruent across South and North America, Asia, Eastern Europe, profiling an interesting new group of consumers that, despite their physical distance from one another and obvious cultural and language differences. This, of course, speaks to the sameness of global branding that creates an interesting uniformity of demand for both authentic and counterfeit versions of the same global brands. The CPIC in South Africa incorporates this information into its consumer profile of counterfeits. 87 % of these “Gen Zs” who have heard of IP rights believe they are just as important as physical property rights, while, at the same time, 80 % of these people believe fake products are “sold everywhere”. More disturbingly, 79 % of those surveyed have purchased counterfeit products in the last year, partly because three in five Gen Zs feel they cannot afford the lifestyle they want. 57 % of Gen Zs say they can only afford the fake version of the brand they want, despite 81 % of those same Gen Zs arguing that fake products are “unsafe”.

However, the study reveals that 52 % of respondents had morally ambiguous stance towards buying a counterfeit product, with 13 % of them saying it was “okay or totally okay” to buy a counterfeit. Of the aforementioned 79 % of Gen Z respondents who had bought a counterfeit product in the past year, 31 % deemed themselves “Heavy Purchasers” who purchased counterfeit products “all the time or frequently”. Given the perceived ubiquitous nature of counterfeit products, this is hardly surprising (Insight Strategy Group, International Trademark Association, 2019).

Figure 1:

Gen Z is most engaged with counterfeit apparel and shoes & accessories Gen Z has high awareness of all of the counterfeit The counterfeit industries explored were selected from an initial recommended category list provided by the research team, refined by input from INTA’s representative offices, which identified categories with high instances of counterfeiting and that were present/represented across markets. Exposure: How often do you usually see the following categories of fake products being sold? Frequency: Within the past year, how often did you purchase fake products within each of the following categories? [Note: Frequency was only asked for categories respondents see at least “rarely.”]. Spend: Of all the money you’ve spent on products in each category within the past year, what percentage would you say you’ve spent on fake products? Your best guess is totally fine! [Note: Spend was only asked for categories respondents purchase at least “rarely.”]

The findings also suggest that fake products are easier for Gen Z’s to find than real versions of the same products; they believe they can only afford the fake version of “some brands” and 57 % believe their purchase will help the seller, with one respondent anonymously stating that “I would support someone with a micro entrepreneurship. I would purchase goods from that person”. Heavy purchasers, crucially, tend to believe that the counterfeit products “makes them look good” and helps them “express themselves”, usually, it may be deemed in social situations and on social media, where self-image is a form of self-expression and identity creation (Insight Strategy Group, 2019).

This tension between the ethical considerations of young consumers and their desire to consume counterfeits as an expression of their intrinsic values is noteworthy and warrants scrutiny. This is because the very definition of “luxury” is here being quite obviously subverted into another fashion. Luxury, expensive goods, (such as footwear and sportswear) products often associated with items purchased of either confirmation or expression of social status or else for their purely hedonic benefit. But as Wang et al. identify, this appears to be a kind of cognitive dissonance, as the hedonic approach to luxury implies a consumer who act upon emotional, with pleasure the driving force of embracing luxury situations and products. Amplification of status incurs feelings of pride, and the pleasure of having a much-desired item, but at the same time the guilt and ephemeral feeling of ownership.

Thus, the concept of “Masstige”, put forth by Wang et al. (2022), supports a more subtle form of luxury consumption that illustrated that for many, the concept of luxury itself has shifted from “extraordinary experiences to different types of self-orientated processes embedded in everyday life”. Luxury is, in this manifestation, an “inside-out process” that allows conformation of one’s selfhood. It is, at one level, a conformation and display of one’s personal values, and indeed a usage that enables a consumer to show off identity rather than status or pure hedonic pleasure. The concept of Masstige therefore is centred around consumption an expression of selfhood, and, crucially a mans through a “more empowered and controlled present”. This linkage of luxury goods with “control” and “empowerment” has obvious overtones to the South African context. Luxury products and experiences allow people to create meaning, represent the self, express well-being, and “individuals are free from socially or contextually embedded roles and can see themselves from a third angle.”

6 A Hauntology of Branding?

By examining the semiotic structure of purchasing, and acts of subsistence purchasing, resistance purchasing and subsistence-becoming-resistance and resistance-becoming-subsistence, can a hauntological element in the sense Fisher (2012) uses be identified in the context of counterfeiting? Consider the following.

The consumer is not simply buying a cheap product, instead they are buying a product that, while cheaper, may have a false trademark suggesting superior quality. Arguably, this aligns with the hauntology of the parent brand, where a “ghost” of quality is perceived in the faked product, despite its obvious inferiority or, in cases like computer parts or pharmaceuticals, its potential danger and ineffectiveness. In the dead product of the counterfeiters the ghost of the brand whose sign has been used as a totem of quality rather than an assurance of prestige, quality and efficacy. These include drugs that go beyond mere “lifestyle” applications such as baldness cures, to dangerous replications of drugs used for “asthma, malaria, cancer, HIV/AIDS, tuberculosis, blood pressure and heart conditions, diabetes, and severe diarrhea. In Africa, the three forms of drugs most frequently counterfeited are those aimed at malaria, HIV/AIDS, and tuberculosis” (Kapp, 2002).

This is most prevalent in the South African context, where consumers encounter a diverse range of counterfeit products, even products that are usually rather inexpensive in their authentic format but yet cheaper as counterfeits. One might wish to enjoy the flash of a fake luxury watch and put up with the inferior quality – but to buy a fake toothbrush simply because it bears a known personal care name is more perplexing.

7 Conclusions

Positioned at the crossroads of the Atlantic and Indian Ocean shipping routes, South Africa grapples with an inundation of counterfeit goods. This paper refrains from delving into the precise origins of this inundation, considering ample existing studies in the literature. Similarly, it does not explore the nature and production origins of such goods as sufficient literature already addresses these aspects. The distinctive conditions within the South African economy, characterized by a lower standard of LSM, rampant corruption fostering accessible marketplaces for counterfeits, diminished law enforcement efficacy due to both reduced government spending and increased corruption, and a spiraling Gini Coefficient, create an ideal testbed for analyzing counterfeit consumption. This kind of study is underdeveloped in literature and therefore becomes research-worthy. This study reveals that the unique conditions of consumption, marked by widespread poverty alongside extensive exposure to a globalized market of prestige brands and luxury goods, lead to a division in consumption intentions. Subsistence consumption is driven by the need to obtain high-quality goods (with counterfeits between competitive with the quality of established brands, leaving cheaper, non-counterfeit brands unable to compete at those levels of quality). Resistance consumption occurs when counterfeit luxury brands or knowingly consumed – arguably driven by strain theory – in response to the cultural inundation by advertising that causes these luxury brands to be desirable. Using the economic concepts of the Kuznet’s Curve and the Easterlin Paradox, the existence of an inflection point was theorized where subsistence consumption can transition to resistance consumption and vice versa. It was found that the best tool for analyzing the consumption of counterfeits in South Africa was to apply a semiotic frame of analysis, using first Hayek’s notion of price-as-signal, then a poststructuralist notion of linguistic thirdness. Acknowledging counterfeiting as a semiotic postulate, Fisherian hauntology emerges as a key driver facilitating the transition between subsistence and resistance consumption at the inflection point.