in most cases it is quite easy to tell a fake... if you could make an watch of the same quality as a rolex you would be better off having your own brand instead of faking it.
sure there are high end fakes but they dont get sold for $200. i believe part of the reason they exist is simply to prove how good you can make a fake but there is not necessarily a large market for them... people pay $200 for replica watches but the cases and bracelets wear out as quickly as other $200 watches..., the crstals scratch and fade, the pieces age... you can tell they are fake.
incidentally, while i would not buy or wear a fake watch (unless it was particularly interesting) i would also NOT pay full price for alot of 'genuine' car parts... like BMW M3 splitters... i'll go with the rep all day long.
funny, i cant even really justify why but that's how i feel.
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