Countering counterfeit hardware

Recently I was speaking to a Dubai-based distributor, who raised an interesting point—while good progress has been made in combating software piracy in the region, he says there is still a major problem with pirated hardware—either inferior products that are rebadged and passed off as a superior brand, or deliberate copies of an established brand.

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By  Mark Sutton Published  May 8, 2002

Recently I was speaking to a Dubai-based distributor, who raised an interesting point—while good progress has been made in combating software piracy in the region, he says there is still a major problem with pirated hardware—either inferior products that are rebadged and passed off as a superior brand, or deliberate copies of an established brand.

These products simply take advantage of a brand that is already in existence, and of the ignorance of buyers who think they are getting a high quality product at a reduced price. Far too often, the resellers know full well that what they are selling is not the real deal, but when it costs them so much less, and the margin is that bit more, they are willing to turn a blind eye.

The problem is of course that with all of practically all fakes, and it is a problem for a number of vendors, the products are just not up to scratch. This means hardware failures, which not damage the hard work put in by the vendors and the channel to build the brand, and damage to the reputation of the resellers that pass the product to their customers.

Of course, resellers cannot always spot that the products are fake. Recently in the US, one of the biggest distributors in the country was conned into buying a highly realistic consignment of faked Microsoft products—even the biggest players get fooled sometimes. But what can be done about the problem?

Unlike software piracy, there is hardly any production of fakes in the Middle East. There may be some rebranding going on here, but generally the products are made in the Far East and imported. This means it requires a much more co-ordinated international effort to shut down illegal manufacturers. It also requires quite considerable legal backing to tackle the problem.

Often the first time that vendors become aware of the problem is when they start getting complaints. Once product has been found, it then becomes a problem for the distributor, and the relevant authorities in the country. While some countries have been quite responsive in setting up anti-counterfeit laws to allow them to prosecute those selling products, the cases are infrequent, and there has rarely been much fuss made about court cases, unlike the well-publicised work carried out by the Business Software Alliance.

Often it falls just to the vendor and his distributor in the country to take action in the civil courts.

So how can the channel fight the problem? First of all, nothing helps build the brand for the vendor as having a strong regional presence. A well-informed partner or local office will have a much better chance of spotting counterfeit products more quickly. Proper investment in marketing and brand building can also be used to educate the partners and the end users about the value of a genuine product over a fake.

Local authorities also need to be encouraged to legislate against counterfeiting, and to make sure that those laws are visibly enforced—the law needs to be seen to being upheld.

There are other things that could be done. With many products coming through a few logistics centres in the Middle East, a regional customs effort could screen shipments coming in through ports and airports. It would be expensive, but it would help combat the problem in those countries where the vendor doesn’t have a strong presence and the local laws are not in place.

Overall, it does seem that more co-ordination is needed between the vendors and the channel. The BSA has made good headway in combating software piracy—there is no reason why hardware vendors cannot do the same.

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