From cigarettes to fashion accessories to food products to medicines, more than 50% of the global market are filled with counterfeited products. Do you realise that the Nike t-shirt that you are probably wearing right now may not even exist in the design portfolio of Nike Inc. It may have been produced by a small time designer who sits in the busy lanes of New Delhi in India and charges less than $1 to give you the swoosh in any colour, any form and any design as requested! A true form of ‘customisation’.
Counterfeit branding in one way is the smartest way of doing business in the 21st century. Think about it. Large global corporations spend millions of dollars developing a brand and once the brand becomes popular, millions of businessmen on the other side of the world start thinking about the strategy to increase their product lines! In other words, people running the counterfeit market seem much more smarter than an investment banker. They do their business at the cost of large corporations.
Only in India, the “fakes” market is estimated to be worth more than $2 billion and it’s growing by nearly 20% every year. With the weak execution of Intellectual Property Rights and the growing corruption, there is no doubt that very soon one may find himself driving a counterfeited car! If you think it won’t happen to you, think again. There are nearly 128 ‘known versions’ of Parachute Hair Oil, 113 of Fair & Lovely cream, 44 of Vicks VapoRub, and 38 of Clinic Plus Shampoo. The reasons they are so popular with counterfeiters is because they are money-spinning brands with wide appeal, easily reproduced and sold in the Indian market. The problem is manifest across all product categories throughout the country - medicines, FMCG products, cosmetics, foodstuffs, aerated soft drinks, liquor, watches, clothes and even currency . Consumers are often unaware that they buy products that resemble what they want. This is worrying companies because fake products often ride on the success of the original product, eating into sales, and, in some cases, harming the consumer. For counterfeiters, it is the easiest thing. Put a passable product into a tube, with markings that resemble the original and market it in rural, semi-urban areas, through promoters, agents and retailers willing to make a quick buck. For most, the con job is easy to carry through.
Consider the figures. Counterfeit products comprise $200 billion a year. Ironically, it is even endemic in countries such as China, which is known for flooding the world market with low-cost priced products. In China, losses from counterfeiting are estimated at approximately 20 per cent of total sales revenues for MNCs such as Procter & Gamble ($150 million), Nike ($70 million), Unilever ($24 million), Gillette ($20 million), Johnson & Johnson ($15 million) and $6 million for BestFoods.
Most of the products copied are top-selling brands and consumers could be seriously affected while consuming low quality adulterated products, particularly in the food and drug categories. These are usually manufactured under unhygienic conditions and without proper technical supervision. According to a study conducted by AC Nielsen in India on 30 FMCG companies, eight out of every ten consumers who purchased pass-off products felt cheated and only knew after purchase that the product was a pass-off. Surprisingly, 42 per cent of all the consumers surveyed were aware of the existence of pass-off brands in the market and either saw them in shops, read about them in newspapers or saw them on TV. Though brands such as Pepsi and Coke in India have dropped prices substantially to make their products the flavour of the masses, spurious products still score because of poor consumer awareness. And fake product manufacturers reap windfalls because there are barely any input costs, no safety standards involved, excise or taxes paid.
It takes more than the vigilance of a trademark team to combat smart counterfeiters. Unfortunately, say sources, the cost of the battle is to be borne totally by such companies. According to one source, adopting tamper-proof packaging and hologramming practices are prohibitive exercises that will raise prices and repel the cost-sensitive Indian buyer. Hologramming can cost between $500,000 and $5 million! Ironically, higher prices can push customers to switch product loyalties better than the best ad campaigns. Despite the seriousness, almost all the companies are vague about the methods to educate consumers. They are shying away from aggressive methods, mainly because the Indian consumers’ tendency has been to totally avoid the imitated product rather than determine whether it is authentic
SOMETHING TO SPICE YOU UP FURTHER
According to the Web site of De La Rue, a UK-based commercial security printer and papermaker involved in the production of over 150 national currencies and a wide range of security documents:
Ten per cent of perfumes and cosmetics and 11 per cent of clothing and footwear bought by consumers are fakes.
There are around 160 Web sites offering `genuine’ Chanel products, despite the fact that Chanel doesn’t sell any of its products on the Net.
The US FDA recalled $7 million worth of intra-aortic pumps used during open-heart surgery after it discovered malfunctioning counterfeit parts in the devices.
Counterfeit baby formula resulted in some babies developing rashes and seizures after imbibing.
US investigators discovered that more than 600 helicopters sold to US civilians and NATO were equipped with counterfeit parts.
Fake perfumes have been found to contain urine as a stabiliser.
Each year in the UK, it is estimated that 4,100 jobs are lost because of counterfeiting - wrecking industries and draining funds which otherwise would have reached public services.
Although the whole issue may first appear to be a simple yet rampant case of copycatting, in fact it demonstrates that there is a real need for stricter protection laws of brands, enforcement of those laws, and harsher punishments for merchants and makers of counterfeit goods. But as far as knocking out counterfeiting completely is concerned, it’ll never be gone and brands need to view counterfeit products just like any other competition. Indeed “Counterfeiting will always exist. It’s the subculture of the business industry in the 21st century.”
Gaurav Bahirvani
Brand Development & PR Strategist.
England, UK.
* Special thanks to Hindu Business Line.
