Tuesday, June 13, 2006

Vacation Story

A few weeks ago, I decided to try a little experiment. I walked up to
one of the ubiquitous watch dealers in Iteawon, and was offered
“Rolex” watches. Not bad fakes by the way, the still had the one tell
tale sign of fake, a clicking second hand. A good rule of thumb, if
the secondhand is obviously ticking it’s not real.

Anyway, when I was there, I was shown a variety of “Rolex’s”. The
sales lady must have had about 50 of various models behind the
counter. In addition a few fakes of other makers. I asked if she
could fulfill a bulk order, and she said yes, but it will take time
to assemble the watches. On average, a single fake was about US$100,
and a order of ten cost US$75 for each watch.

Now I just got back from a vacation in the Philippines. While walking
the streets I was a approached to by a “Rolex”. Normally I avoid
these people, but since I am in the business, I decided to inspect
the merchandise. His opening offer was US$40 for the watch, and as I
walked away and he screamed numbers I realized I could have gotten if
for US$25 if I really pressed.

What was remarkable in both these cases, is they were the same fakes.
No I don’t mean same model, but the same ultimate maker. They had the
same construction, packaging (plastic bags and rubber bands), and
even the same serial number on the back casing. This is some factory,
likely in China, making and distributing enough fakes to supply
everything from higher-class retailers in Seoul to low market street
peddlers in Manila.

Which gets me to my real question behind this all. Why are the prices
so different? We are talking about a 60% difference in price. Are
there more middlemen in Korea? Are they greedier? Are the smuggling
costs higher? Or simply are Koreans willing to pay more?

Regardless, it can give you some sense of what the factory actually
sells them for. I would figure US$5 (each chain charging half, so
street guy US$40, distributor US$20, importer US$10, factory US$5).
Quite a change from a few thousand-dollar watch!


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