LEVI'S HITS HUNGARY'S FAKES

Byline: Richard W. Bruner

BUDAPEST--Levi Strauss officials here have asked U.S. embassy specialists for help in getting the Hungarian government to crack down on sales of counterfeit jeans.
The problem of counterfeiting has reached hefty proportions for virtually all jeans marketers in Hungary, but it appears to be particularly painful for Levi Strauss. Last year, according to Angelina Kojics, business development manager for the company, a survey by a marketing research firm revealed that 40 percent of the jeans sold with a Levi's label in Hungary were counterfeit.
L szló Bérczes, a lawyer with SBG&K, a firm that specializes in patent and copyright law, said a big part of the problem is that "criminal law provisions are not very strict, making it relatively easy for a counterfeiter to escape punishment."
The law says that if a counterfeiter sells a "significant" quantity of goods, he is subject to arrest. However, complains Bérczes, who handles the Levi Strauss account for his firm, "significant" is not defined.
"The police sometimes use 1 million Hungarian forints [$9,000] as a standard. If the products found are valued under 1 million forints, the police will not continue the investigation, but say that the consumer protection agency must deal with the case. But the consumer protection agency has very limited powers."
If the police do not prosecute, they usually return the products to the counterfeiters, but cut out the offending labels first.
Levi Strauss is the only international brand jeans company that manufactures in Hungary. It opened a representative office here in 1988. It began manufacturing a year later in Kiskunhalas, a tiny town in southern Hungary, close to the border of Serbia. Its factory turns out more than one million pairs of jeans a year, with a work force of about 300. Approximately 60 percent of its output is for export.
Levi Strauss, which operates its own direct distribution network to selected retailers, is eager to protect the image of its jeans. By avoiding wholesalers' distribution, it is able to guard against deterioration of the image, said Kojics, and protect against black market sales. The retail prices for Levi's range from about $36 (4,000 forints) for the Orange Tab product to about $66 (7,300 forints) for the top-line 501 brand.
By contrast, counterfeit 501s sell for $19 to $20 in open-air markets.
According to Kojics, most of the counterfeit products are made in Turkey, China, Thailand or Poland. She complained that the "fabric, finish and sewing are low quality."
She said many brand names--Lee, Wrangler, Diesel Replay (Italian), Reebok, Nike, Adidas--are suffering from the same problem. Last November, several jeans marketers held a conference to discuss ways to combat counterfeiting.
There is still no easy way for the businesses to lobby for new legislation in this country where, only five years ago, the Communist parliament was often a rubber stamp. Bérczes has met with a leading Member of Parliament to try to change the criminal law. The MP promised to introduce him to someone in the Ministry of Justice, where changes in criminal laws usually begin.
Bérczes and Kojics said they also met with Patrick Hughes and Charles English, commercial specialists at the U.S. Embassy, who promised to set up a meeting with the Ministry of Finance. So far, no date has been set.

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