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Made in Italy: Safeguarding Artisans from Counterfeiters

This report explores the current impact of counterfeiting on the artisans behind Made in Italy’s luxury brands. In an era of “disruptive technologies”, we explore rather how centuries old Italian craft traditions can be supported by emerging technologies, such as blockchain, and the manner in which they can be leveraged to protect this portion of Italy’s heritage. 

To read our full report on how blockchain can help the artisans behind Made in Italy’s luxury brands reduce the impact of counterfeiting, download the full report.

The Made in Italy label is renowned for its quality. The label, and specifically the artisans behind it, have been instrumental in shaping how luxury fashion is produced. However, in recent years, artisan numbers have been dropping rapidly - threatening the entire label.

The Italian government has allotted €15 million to develop blockchain and other technology solutions to protect the label. This report evaluates several areas in which blockchain can be employed to protect the entire industry - from large brands to small artisans. 

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What is the Made in Italy label and how have Italian artisans shaped luxury fashion?

To read our full report on how blockchain can help reduce the impact of counterfeiting, download the full report.

The Made in Italy label is simply the “Made in” label that comes standard on most products. However, Made in Italy stands out compared to other countries' labels as it is synonymous with luxury and fashion. 

If it were registered as a brand, this label would be the third largest brand globally, behind only Coca-Cola and Visa. This label has had a major impact on fashion and luxury markets around the world. When the US was developing highly industrialised production, Italy invested in its artisans, formulating fashion production that was both fast and of extremely high quality. Small Italian labels founded by artisans are responsible for seasonal fashion-line releases. 

However, online retail has brought about rapid changes, and while these changes make it easier for consumers to find products, they place a strain on existing businesses to adjust. This is compounded by demands for even faster production cycles, all of which has endangered artisans who previously relied on foot traffic in their stores or exclusive partnership with large labels.

All of this lends to rapidly declining artisan numbers. And, artisans are further impacted by growing counterfeit operations that steal their designs and lower the value of the entire luxury sector.

How is counterfeiting impacting luxury fashion and the Made in Italy label?

To read our full report on how blockchain can help reduce the impact of counterfeiting, download the full report.

Counterfeiting is defined by trademark and copyright infringement. While this is often seen as a victimless crime, counterfeiting only becomes profitable when it is done at scale, and generally relies on cheap, exploitative labour and low-quality, potentially dangerous materials to turn a profit. 

Leather goods - particularly handbags - and clothing are two of the largest targets of counterfeiters. In Italy alone retailers and wholesalers lost €7.9billion in sales to the counterfeit market in 2016. Along with massive sales loss, counterfeiting resulted in 88,000 job losses, or 2.1% of full time equivalent employees - a massive hit to the already struggling artisan community.

Additionally, for those without the resources to effectively combat counterfeiting, it can discourage innovation and business growth. So, while counterfeiting is not the only issue facing artisans, it brings into relief many of the greatest obstacles to their existence and where they have been left behind in changing supply and sales environments.

To ensure that craft traditions carry on, aggressive steps against counterfeiting need to be taken, to provide an environment that fosters design innovation without the risk of intellectual property theft.

What solutions to counterfeiting can blockchain provide?

To read our full report on how blockchain can help reduce the impact of counterfeiting, download the full report.

While blockchain alone cannot eradicate counterfeits, the secure distributed ledger can provide a better system for tracking products through the supply chain. This is imperative as supply chains are increasingly fragmented, with up to 50,000 suppliers and sub-suppliers in some cases. This fragmentation makes it easier to infiltrate with counterfeit materials or finished products. 

Therefore, the main areas that blockchain could improve are:

  • goods and raw material authentication 
  • secure and up-to-date intellectual property rights ledger
  • enable closer, more secure and private brand/client relationships
  • proof of sustainable and ethical practices
  • post-sale services and authentication certificates.

Blockchain platforms are already being developed to provide multiple companies with more user services, but more solutions need to be integrated earlier in the supply chain. And, while the industry definitely has incentives to improve their systems and reduce counterfeiting, these initiatives must be taken with the artisans who built the label in mind to protect the traditions and legacy of Italy in the future.