Bicycle Industry

Princes, thieves and make-believe | Pinarello fights for its name

‘Chinarello’ has become the lead character in a new online fantasy world where eager players can select a favourite bicycle hero, dress him with a personalized costume – or leave him in default stealth black – then acquire tools (called “components” in this game) that give their hero increasing mobility as they navigate an increasing array of obstacles enroute to rewards, status and ultimate victory.

 

The game platform is open source. Participants can add levels, pathways, and even create new characters. Adding to the game’s mystique, there is no centralized developer and marketing is entirely organic. Though 18-35 year-old males dominate the playing space, it can be easily picked up at any age. All that is needed is an internet connection, time, and tokens; available everywhere, thanks to a partnership deal with all major banks who offer tokens through their on and offline branches.

It sounds easy, and it is. But not everyone is having fun.

Pinarello S.p.A., the Italian manufacturer of Pinarello frames, is potentially the most visible opponent – and target – of this game: a growing trend towards consumer sourcing of counterfeit bicycle frames, mostly from OEM/ODM factories in the manufacturing-heavy southeast-China provinces of Guangdong and Fujian. The decades-old bicycle brand has recently escalated efforts to protect itself from the explosion of lookalike ‘Prince’ and ‘Dogma’ frames that are being offered through popular sourcing sites such as Aliexpress. The notice on Pinarello’s home page (above) is the latest front-end approach to distance itself from counterfeit products.

As with most famous bicycle brands, Pinarello has been relatively forward about its production origins, though perhaps not to the extent of fellow Italian brand, Colnago, who famously partnered with the Taiwanese ‘A-Team’ in 2005.

Screen grab from Pinarello's FAQ section at http://www.pinarello.it

 

‘Made in Italy’ is a powerful hook, with associations of prestige, pioneering spirit, passion, victory and exclusivity. When compelled by market forces to shift production to Taiwan OEM’s, Pinarello faced the same dilemma as others before it. How does one simultaneously project an Italian soul and demonstrate the best qualities of Asia-based manufacturing?

Consumers have grown skeptical to the point of cynical about the origin (still a key value proposition factor) of branded bicycle frames and confused about the multiple supply channels that often exist for the same product. When suppliers neglect to lead communication of product-based process changes – perhaps believing they are either unimportant or commercial in confidence – consumers have pounced on surrogate information, or mis-information, when it inevitably appears online. Over the years, fragmented information forms composite knowledge, often manifesting in robust sentiment across popular cycling enthusiast forums. Threads relating to sourcing ODM frames and fakes are extremely advanced. Participation is amplified by broad and opposing views, highlighting a diverse community behind the discussions. Forums such as roadbikereview.com and weightweenies.starbike.com host an array of related threads.

Naturally, there are contrasting agendas at the fringes. On one side, an underlying theme of “serves you right for farming off production to Asia” exists behind the decision for someone to purchase a frame with obvious design language that, executed well, emulates brand status at a much lower price. At the other end of the spectrum, forum users are taking advantage of modern-day technology/globalization to connect with smaller ODM’s to secure a quality open-mold frameset for their own bicycle build project – no different from importing a kitset car chassis to mount an engine on. In the middle, people are watching, learning, attempting to figure out right from wrong.

As China’s population and per capita income grows, we might assume the demand for counterfeit product will also increase. After all, counterfeits and China have become synonymous – ask any famous Swiss timepiece manufacturer. Or Nike. However, a recent report by McKinsey Insights China (a subsidiary of McKinsey Global Institute) ‘Understanding China’s Growing Love for Luxury’ captured a possible shift in domestic consumer behaviour:

“The percentage of consumers who said they were willing to buy fake jewelry has dropped significantly from 31% in 2008 to 12% this year (2010). Some luxury buyers told us they were sure their friends would spot a counterfeit, a decidedly embarrassing situation. One woman who used her first salary check to reward herself with a luxury handbag told us “it would be meaningless if it was fake.

Half the consumers we spoke with in 2010 said better quality is an important reason to buy luxury goods, up from 38% in 2008. A well-known brand was the second-most important buying consideration, mentioned by 48%. Quality and craftsmanship – which reflect a product’s heritage – are two of the top three consideration factors. And internationally well-known brands have replaced innovative design as one of the top three factors consumers consider when purchasing these goods.”

Foreign brands can only dream the mindset framed in that particular survey of 1,500 consumers (from tier 1, 2, and 3 cities) applied to the entire population today. Production of knock-off products is a long-term problem with no easy solution in sight; which is why premium-positioned brands like Pinarello are desperate to preserve their market share and brand image.

Unfortunately for Pinarello, counterfeiting seems to preference European bicycle brands. This is true for road bikes, but less so for mountain bikes. US brands that entered into Asia-based manufacturing partnerships much earlier than their Italian peers have perhaps been better positioned to “grow into” emerging markets whilst securing market-specific intellectual property rights in order to pre-empt forecasted supply issues. Also, it’s without question that Italian brands in particular possess a heritage that US brands cannot simply create. Re-creating product that satiates consumer desire to engage with that heritage is the profitable domain of counterfeiters.

In spite of Pinarello’s evolving design and resultant fabrication complexities, the brand’s desirability still makes it an obvious target to copy. Perhaps the most recent (2009) production figures from Pinarello reveal a contributing factor in the hallowed Italian brand’s problems. In spite of being globally recognized (some would say revered), it’s production scale is not commensurate with anecdotal demand. Of the 33,000 Pinarello and Opera branded units manufactured in 2009, only 7,000 units were frames. 70% of all units were exported, mostly to markets like USA, Japan, Australia and Spain. Is Pinarello leaving desperate buyers with no alternative but to source copies? Or is it simply a matter of price?

Again, it would be easy to assume consumers in wealthy markets are buying all the authentic product while the less-affluent consumer markets in Asia are fuelling demand for knock-off framesets. Proportionately speaking, there are fewer points of retail sale in emerging markets, due to socio-economics and brand-driven development caution. Ironically though, it appears cycling consumers from some of the world’s most developed countries are amongst the biggest consumers of counterfeit product. After all, even a knock-off ‘Pinarello Prince’ frame sells for upwards of USD450. This is out of reach for the average Chinese, who doesn’t earn that much from one month of labour.

Cycling iQ spoke directly with Pinarello bicycle retailers and distributors across Asia-Pacific to measure how widespread counterfeits might be and to prove or disprove the rumors that Pinarello’s own OEM’s are complicit in their supply. Representatives from Pinarello’s authorized Australian and New Zealand distributors both verified they had seen painted, and unpainted, Pinarello Prince and Dogma copies in their respective markets.

“It’s hard to pinpoint” according to Armstrong Sport, in New Zealand. “They are pretty convincing fakes. However, the headtube profiles are different, and the seatposts are round (on the fake Dogma’s).”

The response from De Grandi Sports in Australia was similar. “We get phone calls from people asking for round seat posts for their Dogma. The Dogma doesn’t have a round seat post. That’s a pretty easy one to spot. We also see frames with no serial numbers.”

A distributor based in Asia, asking to remain anonymous, summarised the purchase triggers and elaborated on the view that Pinarello’s production partners are to blame for leaks of actual unbranded product that may be back-doored.

“I’ve seen (fakes) here. The amount is not a lot as most people here are computer-savvy and know fakes from the real stuff. Most buy for the heck of it, like a fake Rolex just to bash around or to  test the ride quality of these fake Pinarellos. Pinarello S.P.A. is trying their best to combat the factories that produce the fakes. There is a lot of red tape in China. It will take a while before these frames off the internet.”

“I have read on the net that people believe these fakes are coming from OEM guys with excess frames. Trust me, they are not.”

Cycling iQ also contacted four of the factories most widely used for sourcing raw frames – HongFu, DengFu Bikes, Gotobike and Miracle Bike. Representatives from HongFu and Gotobike both stated they did not provide Pinarello copies, whilst communication with DengFu bikes stopped prematurely. Miracle Bike had not responded at time of writing.

Whatever strategy Pinarello takes to squeeze oxygen from their enemies, it will be of extreme interest to brands that are similarly impacted by counterfeit products. It may be purely co-incidental that Pinarello made a trademark application with the Taiwan Intellectual Property Office (TIPO) in April this year, but perhaps it is also a preparatory step towards the elastic and complex IP regulations in China.

 

Note: Pinarello did not respond to emails, but Cycling iQ is still attempting to make phone contact with a senior representative for comment.

Discussion

12 thoughts on “Princes, thieves and make-believe | Pinarello fights for its name

  1. Country of origin is a contentious issue and a unique selling proposition. Some companies choose to manufacture select products in their own country with others produced in China – so they can associate some of their products are manufactured in their country of origin. ‘Italian engineered’, ‘Italian designed’, ‘designed in Italy’, made to __ specifications, and so on are the usual triggers to associate back to a country other than Asia. As for Pinarello this is obviously a USP (sorry for the acronym) and I dare say their campaign is two pronged – inform & protect as you have pointed out.

    As for counterfeiting, I don’t ever see that changing. If you look at the history of trade marks, a ‘trade mark’ is the mark of trade, representative of quality or some other form of reputation. There will always be people/brands trying to associate themselves with the trade reputation of another. I’m surprised and I wonder if this will be a trend bicycle manufacturers other than Pinarello face in the future. Perhaps a positioning point for other countries looking for a part of China’s manufacturing action (such as India or Thailand for example) to protect a western companies IP?

    With pressure from the outside world, trade agreements with the US/AUS etc., over the past 12 or so months both China & Taiwan manufacturers are also beginning to crack down on counterfeiting. In the industry I currently work within we have received numerous requests over the past year from various Chinese manufacturers asking for written confirmation that we give manufacturers permission and authorisation to use our Trade Mark(s) (with examples of the mark) which in turn is presented to a Chinese regulator by the manufacturer.

    China are now making a forward step to ensure its manufacturers do not infringe the IP rights of others, particularly western companies. The old way of thinking was to register the trade mark in the country of manufacture as a measure to protect IP against use, whilst this is valid and asserts some rights, the future looks brighter if China continues to regulate IP.

    Posted by Priestie | December 2, 2011, 08:35
    • Priestie, thanks for reading and for your insight.

      I tweeted this ‘Global Times’ article about China’s crack-down on counterfeiting on Nov 7 of this year – albeit with a slightly cynical tone.

      I agree with you that China has also moved (recently) to give better IP protection. Depending on the scale, IP infringement can be a criminal offence in China with several years imprisonment possible. SIPO’s (State Intellectual Property Office) jurisdiction over trademark matters in the provinces is increasing as regulations are advanced in favour of complainants. The issue will be capacity to process what I assume would be a high load of claims (due to systemic pre-existence of counterfeiting).

      Over the Strait, it has taken the Taiwanese government – a more democratic and nimble model than China’s – a long time to increase the percentage of successful IP claims processed through their courts, and this can be used as a guide to what the future may look like for China; whose IP framework is much younger than developed nations like USA, Japan, Australia, etc.

      Posted by cyclingiq | December 2, 2011, 09:40
  2. It is really that difficult trace the origin? Given the interest in Pinarello and other Euro brands in protecting their brands and ensuring consumers are not misled. Through a few methods – a few test purchases and opening a dialogue, research and pressure on the websites and groundwork on location would surely deliver the information to indentify the sources.

    Posted by Christopher | December 2, 2011, 22:31
    • Good points Christopher. No, it isn’t that difficult at all, and it’s incumbent upon Pinarello to stop it. I’m certain the company has a solid book of contacts in Asia; they need to leverage this.

      If Pinarello want to find – and are able to stop production of – raw frames that substantially reference Dogmas, then I’ve already named at least one source in my article. The design language of Pinarello’s Dogma frame, in particular, makes it quite recognisable to enthusiast cyclists.

      However, do raw frames themselves impose upon Pinarello’s trademark? Or, do they need to be badged as Pinarello to be classified a counterfeit?

      For USD325, I could order a lookalike frame today, source some original decals, have it professionally painted (either by the’OEM’ directly, or one of its subcontractors) and I’d have a very convincing Pinarello copy. Or, I just go to Aliexpress or eBay for a RTR copy.

      The question is: Have Pinarello taken the preventative steps to protect their legal intangible assets? How in-depth and broad was their IP reach before they took production to Asia? These are the questions I personally want to ask Pinarello, but my approaches to the company so far have been ignored.

      Posted by cyclingiq | December 3, 2011, 10:06
      • I think you can protect your IP to the ‘enth’ degree and still come undone. As long as you have protected your IP in markets you sell within (or aim to sell within in the future) – worldwide protection can be quite expensive (however as you point out is a worthwhile investment). Registering under the Madrid Protocol for instance is a safe bet if selling in a range of international markets.

        However, it’s not until infringement occurs, most likely in another market, when you first discover and enforce. I’ve seen this happen countless times. In the case of the frame, Pinarello’s are notably well known for their frame design, therefore they could protect their IP through registering their frame design as a ‘Design’ registration (with possible patents) and Pinarello and Dogma as trademarks.

        Design registration can be an effective measure of protection when you consider the recent Cervélo vs Canyon BB issue. Admittedly I don’t know the full extent of the details of settlement as it were out of court, however the registration allowed Canyon to challenge Cervélo.

        Christopher brings up a good point, but it also depends on the country’s enforcement of IP. For instance a company selling counterfeit goods online from China or Russia for example into Australia can be a difficult thing for government and lawyers to pursue.

        Posted by Priestie | December 5, 2011, 14:27
  3. CyclingIQ, great article, thanks for writing that! Out of curiosity, I looked on the Pinarello.it website and it appears they have taken the FAQ section down, which you had screen-captured. Can you tell us when you took that capture and perhaps you can post the complete website? Searches for “Taiwan” and “China” using their website’s search box yield no meaningful hits. Thanks in advance.

    Posted by Julius Kusuma | January 31, 2012, 01:14
    • Thanks for letting me know you enjoyed the article, Julius.

      The FAQ regarding manufacturing origin is still on Pinarello’s site: http://www.pinarello.com/eng/pina_faq.php

      It’s the fourth last FAQ, titled “Where do you manufacture your frames?”

      Posted by cyclingiq | January 31, 2012, 06:16
      • Thanks, CyclingIQ. Looks like it is no longer linked from their sitemap. Even searching for “PinaFAQ” yields nothing. It seems to me they have changed their website a bit, but great find nonetheless.

        The public is becoming more aware that Pinarello and many marquee names are manufacturing in Asia, and it is great to have a website like yours that writes coherently about the outsourcing process.

        Cheers!

        Posted by Julius Kusuma | January 31, 2012, 06:21
  4. One more question. What do you mean by “units”, in the context of this sentence?

    ” Of the 33,000 Pinarello and Opera branded units manufactured in 2009, only 7,000 units were frames. ”

    Are you referring to complete bikes, or are you including miscellaneous components and clothing items Pinarello-branded items?

    Posted by Julius Kusuma | January 31, 2012, 06:46
  5. fake or not, the OEM frames ride wonderfully. If you are about high performance vs. cost ratio cyclist (not a weekend warrior or brand snob), these ‘unbranded’ frames will not disappoint. They are afforadable, lightweight monocoque molded frames, laterally stiff, vertically compliant, very comfortable on century rides, very fast acceleration in group rides, can climb with ease, customizable and comes with 2 years no question replacement warranty.

    For those who have not seen the frame in person, the so-called round tube “Dogma’s” have the exact dimensions/weight of a similar sized 2008-2010 Prince frame.

    Why did Pinarello stop making the Prince frame? Open your eyes!

    Posted by alfanaC | April 20, 2012, 00:09
    • funny thing is a friend of mine and buisness partner imports hundreds of thousand of dollars of products each year from china to pakistan. After visiting several factories the one two things he noticed was along side of the name brand items there were also the x brand with chineese names on them. They are the same products being shipped to america that were comming off the same asembly line. The second thing there were multple brands being made by the same manufacture. so anyone who thinks that there is a chinese guy in his basement making knockoffs wake up! The way it was explained to me from someone who was acually there was that it is still cheaper and more profitable for brands like pinarello to have bikes made in china to there specs then to make them in Italy or anywhere else. You know they all frown on it and complain but bet your last dollar if you go to a ports in italy you will see new pinarellos be off loaded from the ships that come from china.

      Posted by joe | February 22, 2013, 11:00

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