The replica watch industry is an ever-changing environment.  While many of the low-end watches may stay the same over time, the high-end replica watches are constantly in a state of flux.  A high-end replica watch maker may go through several "generations" of product before hitting a sweet-spot.  This means the fake watch buyer gets to be the guinea pig.  It also means that the avid buyer may actually buy several versions of the same watch, just to get the "latest" example from the manufacturer.

Typically the replica manufacturers start off making a new model of watch by using a genuine example as a model.  Sometimes they purchase a genuine watch and tear it apart in order to get the proper measurements and components.  Sometimes they use a laser scanner to get the most accurate measurements and to create the proper CAD files to feed into a CNC cutting machine to get the exact match when it comes to components such as the case and bezel.  While some manufacturers will go to these lengths to create a replica, others will simply use photographs in order to build their first generation replicas, introducing usually a slew of flaws and inaccuracies into the piece.

Blame Panerai for Replica Watches?

Genuine watch manufacturers aid in making the job easy by having a lot of models that are derivative of existing watches.  Panerai is famous for using one base case for all the models in their Historical line.  This means replica manufacturers can use one case design and be able to produce a variety of replicas from that investment. 

This is why there has been a flood of Luminor Marina fakes on the market all based on the PAM-001 case design.  We're now seeing this design played out in the replica market, and in order to meet demand the counterfeiters have moved onto other Panerai cases, such as the one used in the Submersible line.

They will sell the cheapest watch at the highest price the broadest segment of buyers is will to pay.

From the initial design the replica makers will feel out the market.  A lot of early adopters (and people who don't know of the practice) will snap these early watches up.  They'll have a relatively large number of flaws.  Think of it as beta-testing a product before final release, but making the customer pay for the privilege.  The manufacturers typically will get feedback from the dealers and buyers about what flaws are in this first generation.  A number of these issues will be resolved, and then the second generation of the watch will be introduced.

This second generation will have substantially less flaws than the first generation, but of course will not be perfect.  Early adopters may buy this watch even though they may have purchased the first generation example.  Several months may go by now as the replica makers collect more feedback from the market.

Typically a third and even fourth generation model will be introduced, each with fewer flaws than the previous model.  Some people take this as a desire from the manufacturer to produce the best watch possible.  In reality the counterfeiters have no interest in accuracy.  They are primarily interested in two factors: manufacturing cost and marketability.  They will sell the cheapest watch at the highest price the broadest segment of buyers is will to pay.  

Why Common Flaws in Replicas Watches Persist

They would prefer to leave a flaw in a watch even though correcting that flaw would only cost pennies, as long as it doesn't affect the overall flow of business.  To these makers they could just as easily be making fake Gucci bags as fake Rolex watches.  In other words, these aren't some Asian form of Swiss craftsmen.  They only do things that benefit the bottom line.

A good example of this process is the ubiquitous (at least in the replica world) Panerai PAM-111 Luminor Marina replica.  It has gone through several generations:

First Generation
Flaws:

1. Very thin crown with a poor quality crown guard
2. Polished instead of brushed crown guard
3. Silver hands instead of black
4. "12" on dial incorrect
5. "Marina Militaire" on the dial
6. 40mm case instead of 44mm
7. Solid case back instead of display back
8. Incorrect engraving on case back
9. Canon pinion too short
10. Luminosity weak
11. Missing anti-reflective coating
12. Extremely cheap watch strap (ugly brown naugahyde)

Second Generation

1. Fatter (though still not perfect) crown
2. "Marina Militaire" off of dial
3. Fixed "12" on dial
4. Black minute/hour hands, but still silver seconds hand
5. 44mm case
6. Display back, but display crystal too small
7. Display back now showing unfinished Unitas movement

Third Generation

1. Fixed white hand on seconds sub-dial
2. Corrected case back design
3. Added a "fake" anti-reflective coating by polarizing the inside of the crystal
4. Corrected engraving on case back
5. Added  "Panerai" engraving on Unitas movement

Fourth Generation

1. Better crown
2. Some examples have proper brushed-steel crown guards
3. "Swan-neck" modification to Unitas movement to make it emulate a genuine Panerai movement.  Very rough looking.

Fifth Generation (PAM-111H)

1. Updated design for post-2005 Panerais
2. Sandwiched dial, but improper "12" again
3. Updated "Swan-neck" movement, improved finish, but missing regulator

Sixth (and current) Generation

1. Fixed "12" on dial
2. Replaced the genuine ETA Unitas movement with a Chinese copy.  Decent quality, but stuck-on letters instead of engraving (how long until those letters fall off into the movement?)

So after six different versions of this watch are the replicas 100% perfect?  Absolutely not.   While visually they have gotten to the point where they'll usually pass a "on the wrist" inspection, none will pass a reasonable examination by any person who has a basic knowledge of Panerais.  There are still significant flaws in these watches that have persisted over the 18 months this replica has been in production. 

And in reality I doubt they'll ever be brought to be any more accurate.  It's not in the interest of any counterfeiting operation to make EXACT replicas of a trademarked item.  That brings down a tremendous amount of legal heat, and in the end will get them shut down.  So always assume there is some flaw in EVERY replica watch, no matter how accurate you are told it is.