Calls for counterfeit controls

As construction counterfeit becomes rife across the region, risk consultants are calling for companies to take greater care over product monitoring and control. Angela Giuffrida reports.

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By  Angela Giuffrida Published  December 24, 2005

COMPANIES must implement stringent procedures to monitor how their product is made and how it reaches the market, in order to fight piracy. Forming contractual agreements with manufacturers, giving brand owners the authority to carry out spot-checks on the processes being used in factories, could be one way of detecting and deterring counterfeit, according to Dan Mead, head of intellectual property at Kroll Risk Consulting. “But the system needs to be tightly monitored from product inception to distribution. “Companies need a supply chain integrity programme in place — they need to know exactly what is happening throughout the whole production process, from the manufacturer right the way through to the vendor.” Mead says that once a company has been affected by counterfeit, finding an effective way of dealing with it is challenging. If a company exposes the problem through the press, it risks losing customers to competitors. Yet investing thousands of dollars on protective measures such as embedded coding and holograms are also failing to fend off counterfeiters. “The counterfeit industry is so advanced that once you adopt a protective system, within a matter of weeks the counterfeiter has it figured out. You need to take a sensitive approach,” he says. “Open markets like Dubai are big business for counterfeiters. We’re now beginning to see the same happening in vulnerable places like Afghanistan and Iraq — the lack of infrastructure and regulation make these very lucrative black markets.” In a world so exposed to litigation, Mead says that companies need to take a moral responsibility and enforce a solid policy to ensure that their products are what they say they are. “People tend to try to cut costs. But if anything goes wrong, particularly on a safety-conscious building site, the onus will fall on the brand owners unless they start taking action. “Companies should also be lobbying governments to push forward legislative changes,” he adds. “Governments are an effective, if slow, vehicle for change. But companies need to get more involved in legislative changes and push the government to adopt new laws and sentencing guidelines to protect their businesses. “They also need to be working together. Lots of industries have set up consolidations to share information on their problems and exposing counterfeiters.” Companies shifting production to cheaper markets are particularly vulnerable to counterfeit, but with mounting pressure from the World Trade Organisation (WTO) for members to conform to uniform regulations, the problem could eventually be eased. “Based on volume, there is a strong argument that China is the largest market for counterfeit, but it is not the only one. You have cases of it from the EU to Kuwait, Pakistan, Lebanon,” says Mead. “But the WTO pressure on countries that want to be part of it to have stringent laws in place, is fairly intense right now.”

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