Manufacture of Counterfeit Products Predicted to Reach USD2.3 Billion, This is what Businesses Need to Do
Counterfeiting is a problem for many industries on a global scale. No industry and country are free from the threat of counterfeiting. According to a report by the International Trademark Association (INTA) and the International Chamber of Commerce, the global economic value of counterfeiting and piracy is predicted to reach USD 2.3 trillion by 2022.
According to data from the Indonesian Anti-Counterfeit Society (MIAP), the market of counterfeit goods in Indonesia is huge (3.8% drugs, 8.5% food and beverages, 12.6% cosmetics, 33.5% software, 37, 2% of leather goods, 38.9% clothing and 49.4% of printer ink) and it is the main cause for a loss of Rp 65,1 trillion in the national economy in 2014.
The center for counterfeiting and its distribution
UNODC and The World Customs Organization estimates that 75% of counterfeit products entering the world market in 2010 were made in East Asia, generally in China. The cheap labor costs and the abundance of illegal workers make China the perfect choice of counterfeit goods producers.
In the past, we could find these products in retail and traditional market, but in the digital era, many counterfeit products are distributed through e-commerce and other online sales channels. One of the big e-commerce that is notorious in distributing many counterfeit goods is Alibaba.
Last year, the United States put Jack Ma’s giant into ‘goods watch list counterfeit’. Since then, Alibaba claimed his business took steps to combat counterfeiting in its seller network. One way is to create a digital ledger system designed to track genuine food products through the supply chain.
Counterfeiting takes many casualties
A consumer is said to be a victim of counterfeiting when they are unaware that the goods they buy were fake. The loss is not only a nominal matter, if the counterfeit goods that they bought are drugs or liquor, and then it is also a threat to one’s life.
There are also consumers who consciously buy counterfeit products. They are happy to get items that resemble the original ones for a bargain price, but they may not realize that the counterfeit industry supports the violation of human labor and children’s rights. Dana Thomas, in her book Deluxe: How Luxury Lost Its Luster says that she witnessed how a child experiences violence and is forced to work to assemble a fake leather bag.
The list of victims did not stop there. The producers and brands were, of course, also suffered a hit. For them, the distribution of counterfeit goods will not take their market share. However, the problem is the destruction of the value associated with the brand. The circulation of fake branded products undermines the exclusivity and uniqueness of genuine branded products in the eyes of its consumers. No wonder if a worldwide brand like Louis Vuitton is willing to allocate funds for brand protection efforts for up to € 15 million.
Brand protection efforts
The industry of counterfeit products and the black market are almost impossible to be eliminated completely. For manufacturers and brands, designing brand protection programs is the only way to protect them from counterfeiting.
According to Kim Schneider, Avery Dennison’s Senior Director of Technology Solutions, the brand protection is more of a counterfeit prevention effort, involving a multidisciplinary approach including supply chain management and science labelling.
The more elements involved in a brand protection strategy, the more difficult to forged the products. Manufacturers and brands can also work with third parties in implementing brand protection programs in the supply chain, such as inspection and market surveys, trademark investigations, parallel trading investigations, and other related services.
In addition, it is important for manufacturers and brands to find the best way in communicating with their customers about product knowledge and other information related to the authenticity of the brand through its supply chain.