Organised crime, not cost, drives counterfeiting

Organised crime is to blame for counterfeiting, not the high price of consumables, one of HP’s top executives said today.

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By  Peter Branton Published  April 21, 2004

Organised crime is to blame for counterfeiting, not the high price of consumables, one of HP’s top executives said today. The company said it is working with authorities in the region to help them spot fake products. “These activities are coming from organised crime,” said Herbert Kock, general manager of HP’s Imaging and Printing Group for International Sales Europe (the region which includes the Middle East). Criminals were not only stealing from HP, they were stealing from governments in the region by avoiding paying duty on products, he said. This was leading HP to work with tax authorities in the region to help them identify counterfeit products, Kock claimed. “We have brought tax authorities from Saudi Arabia and moved them out to our facility in Ireland and given them intensive training in what is an original product,” he said. “Half the problem is the difficulty in spotting the counterfeit products” Amr Hassan, general manager for HP Middle East IPG, said the company was working with authorities in other countries on similar initiatives. “The Saudi authorities took the initiative on this and we responded. We’ve seen similar initiatives from other governments here,” he said. The person that ultimately loses out from counterfeiting however is not a government losing tax income or the vendor losing revenue but the consumer, Kock claimed: “Customers are coming back to HP and complaining they have been betrayed,” he said. “They pay money for the best product and they don’t get what was paid for.” Faked consumable products can cause damage to the printer, and can prove very costly in the long term Kock said. While printer companies, including HP, have faced criticism for charging high prices for consumables and so making them attractive products for counterfeiters to target, Kock said this was misleading. “It’s not the cost of the consumables that is the issue, the real question is what value do they give you,” he said. As an example he pointed out that a HP ink cartridge from 1987 would last for around 35 pages and cost around $35, its modern-day equivalent would last for more like 350 pages, at higher quality and would today cost closer to $30. “The reality is supply prices have dropped by about 75% in the last 10 years or so,” he said. The real cost of consumables is in the research and development needed to improve them, Kock said. “Just to produce one new ink cartridge can cost up to half a billion dollars in research,” he said. “We want to get our money back on that one.”

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