Counterfeiting, duty evasion and various other forms of illicit trade across all market sectors is a developing issue, which is making highly secure product and brand authentication programmes from specialist industrial technology companies like Tracerco ever more important to businesses.
Counterfeiting issues such as those involving banknotes and consumer goods are likely to be already known by many businesses. However, the problem now goes far wider and can cause issues in markets ranging from perfumery and cosmetics to those which involve aircraft parts, agricultural chemicals, fuels and pharmaceuticals.
The problem is so widespread now, in fact, that unlawful trade is likely to be an issue wherever valuable brands and products are being moved through unprotected supply chains. It should be stressed that the estimates of the global value of counterfeit and illicit product sales do vary widely.
As this type of trade is illegal, official records of sales are not published and so cannot be analysed. However, current estimates range from US$700 billion according to Havoscope figures to US£1.7 trillion based on ICC research. What is clear then is that totally unregulated trade impacts everyone, whether that be a brand owner, a consumer or a country’s government. This is because of the following:
- Brand owners will lose sales, face the prospect of significant false liability claims which are hard to fight, as well as suffer considerable and sustained damage to brand equity unless it is categorically proven that a product is indeed a fake.
- Consumers can be harmed by counterfeit products — especially those which filter into the pharmaceuticals market — while livelihoods can be destroyed when important supplies like crop protection products fail to function.
- Governments stand to lose billions of dollars through issues with duty evasion in trade such as alcohol, tobacco and fuels. The effects of duty evasion can also be felt by legitimate taxpayers.
When discussing counterfeit products and illicit product sales, it is also important to highlight that counterfeiters are often able to afford to make substantial investments in equipment that has been created to produce fake products. Add to this the fact that licensed users of patented materials could be tempted to substitute cheap illegal generics, especially when they are living in a tough and uncertain economic era, and the issue becomes even more clear to see.
Businesses do have a number of options available to them to deter and combat counterfeiting, duty evasion and other forms of illicit trade — even when the problem is difficult to either prove or detect in the first place.
To start with, employers should see highly secure brand and product authentication programmes as invaluable tools when looking for a solution for this problem. This is because of their ability to detect and deter counterfeiting, counter duty evasion, manage liability issues, detect product adulteration or dilution and manage licensed use.
When it comes to prosecuting perpetrators, there are forensic solutions which can prove very effective for winning a case too. Wide-scale publicity for an authentication programme within the supply chain should not be underestimated either, as such action can provide a strong deterrence without the need for the issue to revert to the point where court action is required.
Factor in the cost of the technology that is often being recovered quickly once calculations of sustained brand equity, increased sales and reduced liabilities have been made and businesses will also see that the return on investment available for introducing these types of investment is high. There’s the added benefit that all of these factors can result in improved shareholder value for the business concerned as well.