UK: Cheat The Cheats

Last Updated: 25 January 1999
CHEAT THE CHEATS:

Stuart Adams, a member of the BBG's counterfeiting Sub-Committee, reports on the economic (and sometimes human) damage caused by counterfeiters-and worse, by consumers who knowingly and happily buy second rate fakes.

Many readers of BBG Calling will be aware of the advertising industry's slogan "No advertising; No choice." This is only two-thirds of the story, however. Why? Because advertisers the necessarily require goods to advertise, and those goods are "branded" products - "branded" because the manufacturer need a unique identity to differentiate his product from those of his competitors. So "No brand; No advertising; No choice' would be a more complete slogan.

This article looks at the threat posed to brands by counterfeit goods, and in particular the public perception of such goods. The problem will never be solved until consumers stop knowingly purchasing counterfeit goods. Doing so provides the demand that counterfeiters are all too willing to supply.

Two recent surveys give an insight into the psyche of the purchasing public, and illustrate the enormity of the problem.

The first survey to determine the attitudes of consumers to counterfeit goods, was commissioned from the MORI polling organisation by the UK based Anti-Counterfeit Group. Here are some of the findings:

  • 45 percent of men said they would knowingly purchase counterfeit goods.
  • 38 percent of women said they would knowingly purchase counterfeit goods.
  • Of those who would knowingly buy counterfeit goods, 28 percent were earning less than £9,500 a year, whereas 52 percent were earning more than £30,000
  • Of those who would knowingly buy counterfeit goods, 75 percent would buy clothing, 45 percent would buy watches, and 38 percent would buy perfume. Perhaps most worryingly, 14 percent would knowingly buy counterfeit car parts, 12 percent would buy counterfeit children's toys, and 5 percent would buy fake pharmaceuticals.

The second survey was a quick "straw poll" taken by myself during a presentation on counterfeiting at a meeting of the Dubai Business Women's Group. Asked whether they would knowingly purchase counterfeit goods, virtually all of the 60 or so members present raised their hands.

So, what are counterfeit goods? Counterfeit goods are products which are labelled, and usually packaged, in such away as to make them appear to be well to be well known products emanating from a well known producer, when in fact they are inferior, unauthorised copies. In all but the most exceptional cases, these goods will be of such a significantly inferior quality to the "original" good, that consumers are most certainly not getting a "bargain."

The whole World has a market for counterfeits, and Dubai is no exception. In Karma, for example, stores are full of counterfeit apparel, bearing famous designer brands. More worrying examples are car parts, electrical switch gear, and pharmaceuticals. It seems that no brand owner is safe from the counterfeits unscrupulous manufacturers and traders seeking to make a quick profit by imitating the product names, but rarely the product quality, of others.

Counterfeiters take no responsibility for their products, provide no warranties, and are rarely accountable to their customers. There are plenty of horror stories associated with counterfeit good, such as:

  • More than 100 children dying after a fake pharmaceutical product which contained a mixture of paracetamol and industrial solvent.
  • Counterfeit brake shoes being made of compressed grass which burst into flames when used.
  • An entire coffee crop being wiped out by counterfeit pesticide.
  • Counterfeit transistors being found in equipment used I the US space Shuttle programme.
  • Counterfeit screws being used to hold wings together.

Thankfully, none of these occurred in Dubai. Nevertheless, such activities should be outlawed and rigorously policed; and indeed they are. In virtually every country, remedies are available through the civil courts, the criminal courts, and here in Dubai, through administrative bodies such as the department of Economic Development.

Most countries' laws treat counterfeiting as seriously as theft and provide for the possibility of significant terms of imprisonment. This is as it should be. Counterfeiting is theft - theft of a brand name and reputation that a company has built up, perhaps over many years through investment in product development and marketing, to create a unique quality product that people desire.

Unfortunately, it is consumers' attitudes to the "non-dangerous" counterfeits which does most to fuel the fire. The desire to own and be seen in designer-label clothes and accessories all too often leads people to purchase fakes. They know they are fake, but are prepared to take the risk that the quality will probably be poor. Their short term view is that if that designer label T shirt shrinks to nothing, or fades away, after a few washes well they'll just go out and buy another!

Furthermore, they think that the manufacturers of these designer label goods deserve to be cheated. They tell themselves that the genuine branded goods are too expensive and the manufacturers can afford to be cheated.

The arguments against counterfeiters, even in circumstances where consumers are not going to be mislead are compelling.

For example:

If a brand owner chooses to charge a high price for his goods, that is his choice. The choice for consumers is to refuse to buy.

The high price charged by any given company for its products does not give anyone else the right to steal the brand name for their own benefit. Nor should consumers think it gives them the right to condone this theft by purchasing the counterfeits - in effect, handling "stolen goods."

Maybe a brand owner can afford the sales lost to counterfeit goods, but that doesn't make the theft any more justifiable. The argument is strengthened when the thief profits considerably from his activities.

Counterfeiters make no contribution to the economy. They are primarily opportunists who are not interested in building businesses to provide secure employment and invest in employee skills. Because they are operating illegally, in a black economy, they will not be contributing (where relevant) to the tax pool, either through corporation tax or personal taxation of their employees.

By contrast, the brand owner will contribute to the economy through employment and contributions to the country's revenue through direct and indirect taxation.

If the legitimate economy suffers at the expense of the black economy there os less employment, and less money in the hands of central government to pay for capital projects such as hospitals, schools and roads.

There is clear evidence that in many cases, organised criminals, and even terrorists are behind counterfeit goods. For them it has become an easy way to produce revenue to fund their other illicit activities and to launder their ill gotten-gains. Do we really want to support their core activities by purchasing their products?

It is obvious that purchasing counterfeit goods harms everyone. If we do not protect brands, they become less and less useful as a means to differentiate one manufacturers goods from those of his competitors. Ultimately, this must lead to less brands and, therefore, less choice.

As if this ultimate loss of consumer choice is not enough, there is another consequence to consider, which refers to the first paragraph of this article, and the slogan "No brands; No advertising; No choice". If there is less advertising (because there are fewer brands), then what happens to the cost of our newspapers, magazines, satellite TV subscriptions, and trips to the cinema, all of which are hugely subsidised by advertising revenue?

How many sporting events would suffer without the sponsors' and advertisers' contributions? The list of casualties are endless.

Responsibility for protecting brands rests as much with the brand owners and the enforcement authorities. Consumers have a very simple choice: to buy or not to buy counterfeit goods. They have a vital role to play.

Leaving the problem of counterfeiting unchecked will have far reaching consequences, which will seriously affect normal daily lives. Or are so many people so vain that they have to be seen in possession of top-name goods even if they are shoddy copies produced by parasites?

You can vote on this issue with your wallets and purses. Keep them firmly shut when venturing into counterfeit territory. Stop knowingly buying fake goods, and stop encouraging the bad guys before it is too late.

For further information please contact:

Stuart Adams
Rouse & Co.
The Isis Building
Thames Quay
193 Marsh Wall
London E14 9SG

Tel No: +44 (0) 171 345 8888

Fax No: +44 (0) 171 345 4555

E mail Click Contact Link

Visit our website at Click Contact Link

The content of this article is to provide only a general information on the subject. Legal advice should be sought for any specific circumstances.

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