Counterfeiting in Asia – You Make It, They Fake It

Counterfeiting in Asia – Exploring and challenging Asia’s growing counterfeiting trade.

The counterfeit goods trade is quite frankly, rife throughout Asia. Stand on any street corner in any city and you’re bound to be offered knock-off brand name goods – sunglasses, clothes, bags, watches. You name it, Asia’s got it. Rest assured, if your business produces a successful product, chances are someone in Asia can copy it. China and Southeast Asia in particular are notorious: cheap, knock off clothing and fashion items are sold openly at markets with discount prices. The practice of counterfeiting is so wide that it has been accepted as the norm.

The clothing industry is not the only industry to be targeted by fraudsters however, and the growing range of counterfeit products is both startling and worrying. In some cases, the risks to the consumer are dangerous and potentially life-threatening. To you, those same risks could be extremely damaging, both in terms of damage to your business and your brand.

China – the Grandfather of the Counterfeiting Trade

China has been a dominant manufacturing force in the global economy for decades, this unfortunately extends to the manufacture and trade of counterfeit goods.  A remarkable 70 percent of counterfeit merchandise seized globally came from China.  Although industry is booming, a high percentage of the country’s people are still relatively poor, they often can’t afford to pay ‘western’ prices for goods. Therein lies the problem:  successful brands are introduced into the region, they become popular among those who can afford them while the rest make do with the knock off version.  Investors must be wary, supply chains can be hijacked if not monitored effectively and the ramifications can be dangerous both for businesses and consumers.

The New Guard – the growing trade of Counterfeit Goods in South East Asia

The counterfeiting industry isn’t just limited to China; it’s symptomatic of the region as a whole. Where there is a boom in an honest industry, an equally dishonest fake industry may follow suit. The economies of nearby Vietnam, Thailand, Indonesia, Cambodia and Myanmar are on the up and, so is counterfeiting.

This plague doesn’t just affect the latest Nike trainers or Ray-Bans, however. The Vietnam Association for Anti-Counterfeiting and Trademark Protection has recently said fake commodities are being sold in 30 different product categories; ranging from cosmetics, electronic goods, motorbikes, petrol, pharmaceuticals and even food and beverages. In the case of the latter three products a moral line is crossed between a potential financial setback for companies and a downright life-threatening risk for consumers. Furthermore, the production of contraband has become much more sophisticated in recent years.

Asia Urged to Act

The countries involved have been urged into action to deal with the counterfeiting problem. Vietnam has had some success on this front, while Hong Kong recently seized almost $500,000 USD worth of fake goods, the largest single seizure in a decade, China’s government has carried out year long enforcement drives, shutting down illegal factories and carrying out multiple raids. While these successful busts are encouraging marks of progress, the reality is that they are still only a marginal disruption to the thriving counterfeit trade. Raids are sporadic and when the dust settles, the trade often reverts back to form. For those responsible, the counterfeiters, this enterprise is seen as low-risk and high reward: the chances of getting caught are low and if caught the offenders rarely face jail.

This isn’t for a lack of effort by authorities, however. While enforcement can be carried out to a certain extent in the main cities, regional areas are challenging. Distance, isolation and corruption are all factors. The unfortunate truth is that many countries simply lack the resources to tackle the massive enterprise that counterfeiting has become.

Prevention by Proactive Enforcement

Thankfully, there is light to be found in the darkness. Counterfeiting can be tackled if companies take responsible steps. Prevention, as opposed to reaction, is the key to avoid being affected by the risks for investors and operators in Asia.

SMCS Risk has an established track record, evidenced by our seizures of illegal and counterfeited medicines in conjunction with the Ministry of Economic Police and Ministry of Health in Cambodia. These seizures are comparable to the volumes of illegal product delivered in multi-jurisdictional operations by Interpol. We mean business: talk to SMCS Risk for how we can assist to protect your assets from counterfeiting.