Fight Against Counterfeiting : World fastest growing industry

7/31/2019 Fight Against Counterfeiting : World fastest growing industry

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The Holography Times

Vol. 6, Issue 18

Fight againstcounterfeiting;World fastest growing industryBy C S Jeena

Table I: Alphabetical Index of Black Market Products

Counterfeit Sector Value in USD

Aircraft parts 2 billion

Alcohol 1 billion

Auto parts 45 billion

Batteries 23 million

Clothing 12 billion

Cosmetics 3 billion

Drugs 200 billion

Electronics 169 billion

Foods 49 billion

Fake Diplomas and Degrees 1 billion

IDs and Passports 100 million

Lighters 42 million

Money 182 million

Pesticides 735 million

Purses 70 million

Shoes 12 billion

Sporting Goods 6.5 billion

Tobacco 4 billion

Toys 34 billion

Watches 1 billion

Weapons 1.8 billion

Source: www.havocscope.com/products/

Counterfeiting is emerging as the world fastest growing industry and

represent up to 10 percent of world trade. Termed as crime of 21st

century, it is affecting almost all economies and sectors. As per sources,

alone in pharma, the illicit sales is increasing with more than 12 percent

annually worldwide, nearly twice the pace of legitimate pharma. The

conditions is almost similar in other segment / sectors. The article also

highlights the solution / strategy which can be the first preventive step to

fight against this global emerging problem.

Growth, proit, loss, capital,infrastructure, changing trendsthese terms may sound genericbut form the very basis of allindustries, across the globe.

While these inherent attributesco-exist from the very genesis ofany commercial venture, anotheraspect that has emerged as one ofthe most common components ofthe industrial DNA is Counterfeit.

Have you come across brandslike Colget or Sunsleek or Fair &Lonely or a Godreg refrigerator?If you thought them to be typingerrors, it is time for a reality check.These brands do exist. They lookthe same, feel the same, taste orwork the samethe differentiatingfactor from the original is quality.They are Counterfeits!

Be it FMCG, Pharma, Currency,Electronics, Cosmetics or Auto;name the industry or the productcategory and one can easily indthe counterfeit/fake versions

(As indicated in Table I). Whathas further pushed this parallelmarket is the opening up of theglobal economy and the challengesposed by the globalization. Theresult is absolute violation ofIPR, loss to nation revenue andstaggering brand value.


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Vol. 6, Issue 18Cover Story

Global PenetrationCounterfeit is a global crime, afraud plaguing all economiesalike with all countries areattempting to ight this growingmenace through their respectiveregulatory matrix. TheInternational Anti-CounterfeitingCoalition (IACC) has claimed itto be problem scoring revenue

losses of almost USD 600 billion,per annum1.

It is crucial to note thatCounterfeiting as a problemdoes not exist in isolation. Overthe years, it has emerged as anorganised crime, as the illegalmoney once again gets circulatedback in the market through illegalvehicles like smuggling, humantraficking, gambling and money

laundering, among others.

The Federal Bureau ofInvestigation has termed it asCounterfeiting Crime Of 21stCentury. According to agency,in comparison to counterfeiting,bank robberies account forless than $100 million per year,globally. Today, counterfeiting hasspread across the globe affectingdeveloped as well as non-developed countries.

After the sectoral snapshot,here is a global mapping of top20 counterfeit markets and theextent of counterfeit that existsin some of the leading economiestoday (As detailed in Table II).While it samples the economicloss, the huge amount of humancapital being lost on account of

spurious drugs and productsremain unaccounted for.

1. International Anti-Counterfeiting Coalition [About Counterfeiting], https://iacc.org/

about-counterfeiting/

Table II: Ranking of top 20 counterfeit markets

Country Name Value in USD

United States 225 billion

Mexico 75 billion

Japan 75 billion

China 60 billion

Germany 32.25 billion

Canada 30 billion

Russia 29 billion

United Kingdom 21.6 billion

Brazil 15 billion

South Korea 14.2 billion

Paraguary 12 billion

Italy 9.3 billion

France 8.5 billion

Turkey 6 billion

India 5.094 billion

Indonesia 4.8 billion

Hungary 4.6 billion

Colombia 4.5 billion

Saudi Arabia 4 billion

Australia 2.896 billion

Source: www.havocscope.com/products/


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The road to

Counterfeits

Going by the numbers andlack of awareness, one caneasily say that counterfeiting isbeing seen as not a crime but alucrative business opportunity.Proliferation of counterfeitsis a compound impact of anumber of socio-economic andlegal patterns. For instance,the tightening of the bankingnorms left black marketers witha lot of unused capital, which

they happily re-invested in thisparallel market, which promisedthem immediate and largergains.The changed priorities of thelegal system in wake of largernational threats like terrorismthat made way for a smoothtrade of the fakes; acceptanceof fakes in the industry as anessential trait; cost-effectiveness;easy availability; closeness tothe original; aspirational valueattached with brands and thegrowing social boom, which hasoffered multitudes of platformsof buying products. Accordingto a study conducted by Gallupsurvey, counterfeiting is viewedas a crime of easy proits and easyproduction with little or no riskto the producers and sellers.

Solutions:

The road ahead

What the Brand owners can do?

The solution to this ever-growingmenace lies at the very core of theproduct i.e. a dire need to createan end-to-end holistic brand

protection strategy (See igure 1).This strategy can be broken intovarious stages.

1. Analysis / Changes inapproach towards Brand

protection: As a irststep, every CEO or Brandowner should take theresponsibility of brandattack and make BrandRisk Management (BRM)an intrinsic part of hisbusiness plan, review and

report. The team maycomprise of CEO/ Brandowner; Brand Managers;Head of Marketing, Productdevelopment, Sales, Logistic,Packaging, Manufacturingor outside consultantaccountable for the brand.The idea is to curb thepenetration of counterfeits,across levels. The team canperiodically review the BRM

by analysing various issueslike:

i) Product categories&markets

ii) Buyer proiles

iii) Supply chain managementand SWOT analysis of thecounterfeiters.

2. Make a customized &

integrated solution: Thiscan be done by increasingthe participation of co-opting consumer orchannel partner and byconducting veriication,raids or ensuring strong lawenforcement.

Adopt new

ISO

Standards

12931

Monitoring &

developing IPstrategy

Protection /

usage oftechnology

Designing /

Formation of

brand riskmanagement

team

Analysis /

change in brand

protection

approach

Figure 1: An end to end holostic brand protection strategy for brand owner.


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3. Emphatic use of

technology: Use a secure,anti-counterfeiting device

comprising overt, covert &forensic security featureslike security hologram sealsand labels, tamper evidentsecurity ilms and light-sensitive ink designs.

While there are number oftechnologies available inthe market, it is advisable tochoose smart and at the righttime while keeping track of

some basic guidelines like:

i. Find a vendor who canprovide you overt as wellas covert technologies asit is important to selecta solution using multipletechnologies.

ii. Seek help from anestablished tradeassociation to select ethicalvendor, best practicesand resources to ightcounterfeiting.

iii. Select the technology interms of the dificulty to copy/ tamper evidence posedby it (preferably patented),uniqueness, availability ofsuppliers, identiiable anduser friendliness.

iv. Solutions should also

have feasibility of beingintegrated with theautomated production /packaging line if required,especially wherever thevolumes are very large.

v. Try to combine low and

high security elements toenhance protections, forexample, by integrating

sequential or uniquenumbers in the solution.

4. Monitoring and

developing an Intellectual

property strategy: Thetechnology solution canbe helpful in identifyingand authenticating theoriginal from counterfeit. Itis however very importantthat a planned surveillance

program be in place toconstantly monitor thatthere is no infringement.Equally important whenan infringement is seen, animmediate action must betaken so that the guilty ispunished and others sittingon the fence are deterred.

5. Adopt New ISO Standards

12931 Performancecriteria for authentication

tools used in anti-

counterfeiting or material

goods: The new ISO12931 will be a veryuseful document for any-one who wants to followglobally accepted standardsand approach to ightingagainst the counterfeit.The ISO document can

be seen on http://www.i so .or g/ i so/ c a t a l ogu e _detail?csnumber=52210. Itis strongly recommendedthat all brands who want tohave a safety net of a globalstandard, should plan tocomply with this standard.

The new ISO 12931 will be

a very useful document for

any-one who wants to follow

globally accepted standards

and approach to fighting

against the counterfeit.


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What the Government

can do (See igure 2)?

1. Amendment in Company

Law: As an initial step,

Government can make itmandatory for every companyto incorporate Brand Riskmanagement as a part of theirannual report forstakeholderwelfare.

Brand Risk Managementshould be treated as partof risk management underthe direct responsibility ofboard of directors/brand

owners. The vision andmission statement shouldbe communicated to all thestakeholders and customers toensure the protection of brandand product and that the samemessage is received by all.This can be done by statingit on the company corporategovernance, annual reportand intranet in text and video.For example. companies likeHP / Microsoft have a sectionon their website that deinestheir steps towards productprotection.

2. Consumer education on ill

effects of counterfeiting:

The Government shouldstart educating consumer onill effects of counterfeiting.Educating consumers can play

off. For example the successof IACC college outreachcampaign in which students atUS universities were educatedabout the issues associatedwith counterfeiting. SimilarlyGovernment can start suchprogram at management

institutes and Universitieseducating the youth, marketingstudents, consumers andBrand manager the ill effects ofcounterfeiting and importanceof Brand Protection.

3. Encourage companies/

Organisation to adopt new

ISO Standards 12931:Further,the Government can encouragebrand owners to adopt andimplement new ISO Standard12931a new weapon termedas Performance criteria forauthentication tools used inanti-counterfeiting or materialgoods. Published on 1 June2012, it has been designedto help the brand owners inidentifying most relevant anti-counterfeiting solution to meetthe company / organisationstrategy.

Conclusion:Negative impact of counterfeitingcan be diminished to a greatlevel if it becomes a part of every

brand strategy - plan and reviewprocess- with the accountabilityof the Brand Owner towards itsmost valuable asset - i.e., Brand.

Fighting counterfeiting is a Brandissue, when managed well, willresult into:

- Consumers getting rightproducts at right prices

- Manufacturers gaining highermarket share, increase inbrand value and proits

- Government receivingincreased revenue, which canbe used for betterment of thesociety

Encourage companies /

Organisation to adopt new

ISO Standards 12931

Consumer education on

ill effects of counterfeiting

Amendment in Company

Law - Brand Risk

Management should be

treated as part of risk

management under

Corporate Social responsibility

Figure 2: An initial anti-counterfeiting strategy for Government

Documents

Fight Against Counterfeiting : World fastest growing industry