Counterfeiting – Building a brand is a Herculean task. Besides the germination of an idea, research and innovation behind it and the years of painstaking effort that is put in the creation of brands is akin to seeing one’s baby grow from a toddler into a youngster. Each stage of evolution is put through an immense number of challenges and thus, when a brand carves a niche, it stands as a testament to the hard work and assiduity of the people who have been associated with it.
Creating a successful brand might be an elephantine task but retaining that brand authenticity, and its value is a bigger challenge. Although there are a number of elements that can negatively impact a brand, one of the biggest threats in modern times is the presence of an illegal counterfeited industry. Counterfeiting has been around for a long time, especially since big brands started selling licenses of their products. However, with the escalation in the e-commerce business, and with people preferring online shopping over brick-and-mortar stores, the situation has only aggravated.
Did you know that illicit goods ranging from designer handbags to luxury watches accounted for 3.3% of the total international trade in 2016, up from 2.55% in 2013? This is according to a 2016 report by the OECD & EUIPO. According to Frontier Economics, 2.5 million jobs are lost globally due to counterfeiting, and this is only the tip of the iceberg. The roots of the illegal counterfeited industry go deeper and spread wider than we can imagine. Counterfeiting creates serious problems for authentic brands. While people sometimes voluntarily choose counterfeited items because of the affordability in price in comparison with the original product, the more alarming issue is the fact that most times, people are not even aware of the fact that they are purchasing the counterfeit instead of the original.
Counterfeiting can have Multiple Impacts on Brands:
– Fake products steal sales by undercutting the price of the original product
– Reputation damage
– Breach the trust built with business partners
– Leave companies to deal with the fallouts of counterfeits
– Brands incurring losses due to the substantial amount of time and money used to fight the counterfeits
Sadly, without our knowledge, counterfeiting is gradually seeping into our lives. It would not be wrong to say that counterfeiting, similar to piracy is a form of theft that is steadily growing and becoming a part of our lives. According to the International Chamber of Commerce, counterfeiting and piracy are reaching an estimated value of up to US$917 billion a year. The success of the of the fake products market does not pose a threat to brands alone, it also comes as a big problem for human health and safety.
Understanding Lifecycle of Counterfeiting:
The lifecycle of counterfeiting can be divided into 4 stages, Entry, Growth, Critical and Fatal
Entry- This is a stage where counterfeiting is done at a small scale as counterfeiters first test the fake products market at a small scale. The volume of production is less, which prevents detection and thus provides the criminals an entry point to scale up their activities.
Growth- At this stage, the counterfeited products start getting manufactured at a large scale, becoming more economically viable for counterfeiters to escalate the production further. The increase in production of counterfeited products increases substitution, and begins to affect the sales volume of the original products.
Critical- The production of counterfeited products amplifies to reach a stage where the volume of fake products begin to significantly replace the genuine products, resulting in a decline in the latter’s profit and market share. This is a critical stage because consumers are now aware of the existence of counterfeited products and may refrain from purchasing genuine products altogether.
Fatal- This is the stage where the genuine product loses sales and profits so significantly that they start becoming unprofitable. The reputation of the genuine brand is marred and its trust badly breached.
Counterfeiting has Detrimental Effect on the Society too
The presence of counterfeit market is a real global threat – Consumers who purchase counterfeited products at their own free will are unlikely to have purchased genuine products, and they often do so because the counterfeited versions are cheaper. This results in genuine companies facing competitors that steal their intellectual property without paying royalties or fees or complying with the regulations and quality standards that the former does. Counterfeiting also hurts foreign direct investment to a country, and its prospect to attract and develop into valuable innovation hubs. Although counterfeiting is a criminal activity in itself, such activities also support wider criminality by providing funds for other illegal ends. Towering all of these is the fact that counterfeited goods are not subject to the regulatory standard and production norms that govern legitimate products. Hence, the use of such items can pose serious health risks.
Can Counterfeiting be Prevented?
The teeth of this illegal industry might be dug deep, but every problem comes with its set of solutions. Yes, stringent laws can be put into place to curb such illegal activities. Awareness drives can be run to make people conversant of the detrimental effects that emanate from using counterfeited products. However, one of the easiest and fastest ways to deal with this is resorting to the use of modern technology.
Over the last few years, Cypheme has successfully been able to bring down illegal activities of counterfeiters and embarked on a revolutionary journey with the use of advanced technologies. Driven by the mission of developing the best technical solutions to significantly put a dent in the global counterfeiting industry, the company has been using Artificial Intelligence (AI) technology to develop anti-counterfeiting solutions that are full proof and act as a permanent solution to the teething counterfeiting problem. Our flagship solution, Noise Print, is a propriety fingerprint anti-counterfeit label that protects every product that it is affixed on.
It is high time that companies confronted with the counterfeiting menace, start resorting to permanent solutions like the ones who provide at Cypheme to not only protect their products, but also serve the larger interest of protecting the planet.