Dana Thomas, author of Deluxe: How Luxury Lost Its Luster, notes today, in a New York Times op-ed piece, that terrorists and other bad actors finance their malicious activities by merchandising counterfeit shirts and handbags. Ms. Thomas talks about going after “the source” of the problem: the manufacturers of counterfeit goods. She’s right in one sense, but the real source is, of course, the consumer. At another point in her piece she notes that people are buying fake goods from New York to Los Angeles, and thereby encouraging Chinese parents to sell their eight-year-olds to clandestine sweatshops. So in the United States, the desire for counterfeited luxury items is fueling crime and misery across the globe.
In Asia, there exists the mirror image of this problem: consumers committing crimes to buy genuine luxury items. The Japanese account for about half of the world’s sales of them: they buy about 20 percent at home and the remaining 30 percent while traveling abroad. Nine out of every ten Japanese women own at least one Louis Vuitton item. Where do they get the yen—I’m referring to the currency here—for these purchases? Yuichi Yamamoto of TokyoFreePress implies that Japan’s women are turning to prostitution to finance their insatiable appetites for Vuitton and other luxury products.
The luxury business turns full circle in China, which manufactures both genuine and fake goods. The Chinese are now the third-largest consumers of real items, accounting for 12 percent of all global sales. That’s up from one percent in just five years. By 2015, China will overtake Japan in the consumption of luxury goods. But the counterfeiters may run out of luck in the world’s largest market. The ernais—mistresses or second wives and perhaps the biggest consumers in this area—will buy only the real thing. That, of course, is a good sign. The Chinese will be able to do what Western societies cannot: put a real dent into terrorist financing.