Industry news

The industry and counterfeits

Counterfeit products cost brands millions a year in lost sales and incalculable amounts in damage to the brand name, since counterfeit products are not made according to the high standards and specifications of the original brand.

This not only means that the product could last for a shorter period of time, but it can also cause injury due to breakage or not providing the protection one would expect from the legitimate product, for example.

Counterfeit products also result in huge losses for retailers stocking legitimate branded goods who have to compete against vendors selling so-called brands for a fraction of the price — sometimes right outside their doors!

This is a worldwide problem. It is estimated, for example, that the US economy loses about $250-bn per year due to counterfeit activities. Many brands fear that because of lax protection of intellectual property rights in countries like China, where most of the branded goods are manufactured, this is a growing problem.

Although there are laws against intellectual property theft in China, the World Federation of Sporting Goods Industries (WFSGI) Intellectual Property Rights Committee reported after a survey amongst brands that few court cases result from counterfeit reports.

But in all countries especially clothing brands are vulnerable to sweatshop owners with a few embroidery and sewing machines who can churn out thousands of fake products.

What are local brands doing?

Sadly, although the international press regularly report on the successful prosecution of counterfeiters in Europe and the US, SA newspapers carry very few reports of local counterfeit court cases.

Yet, many of the top international brands in SA, if not all, have appointed people within their organisations to monitor and act on counterfeit reports. These people work closely with the police, the brand’s lawyers and customs officials to try and identify counterfeit products. They also assist these officials during raids.

Once the counterfeit goods have been identified — it can sometimes take a long time to build a case — the task force will raid warehouses, containers that have not yet been unpacked, street stalls or retail stores suspected of selling counterfeit products.

Retailers stocking counterfeit

Are you stocking counterfeit? Over and above this being a crime, brands do not look kindly on retailers who knowingly stock counterfeits.

Robyn Frick of PUMA says that in the past they have closed the accounts of retailers that knowingly stocked and sold counterfeit products. The brand has also successfully sued these retailers.

Is the product legit?

Have you as a retailer been approached by someone saying they represent a brand, but they are not the person you normally deal with? Or perhaps you have not yet dealt with a brand, but you have a funny feeling about the person now approaching you to stock a brand. How do you know for sure that the person in question does legitimately represent a brand?

Simply contact the brand’s local distributing company directly. They will be able to tell you whether the person does work for them or not — perhaps it is just a new agent who has taken over a new area. However, if the person does not work for the company, you can give the brand valuable information about someone who might be selling counterfeit products.

Grey imports

On the other hand, the person might be distributing grey import products. A grey import is a product that is a legitimate product of a brand (that is, not counterfeit), but it is brought into the country by someone other than the official distributer.

In SA this is not illegal. However, bear in mind that you as a retailer do not have any back-up if you need to return stock that have manufacturing faults, for example.

The official local distributing company pays a lot to the international parent company to hold the license to distribute a brand.

The local company puts in a lot of hard work, time and money into creating a strong footing for the brand that they distribute, which can be harmed by grey importers as they cannot offer the same after-sale-service to the retailer, and in turn the retailer’s customers, that the legal distributor can.