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Brands ‘lose billions’ to fakers in Saudi Arabia

The boss of a Saudi Arabia-based company dedicated to beating counterfeit goods has warned that brands are losing billions of dollars of sales to fakers.

The boss of a Saudi Arabia-based company dedicated to beating counterfeit goods has warned that brands are losing billions of dollars of sales to fakers.

Hemaya Universal, based in Jeddah, was set up by former Panasonic boss Ahmed Al-Zubeidi at the beginning of this year to help marketing directors fight back.

Al-Zubeidi, the company’s president and CEO, said: “In the Saudi market 54% of all goods sold are estimated to be counterfeit or pirated.” This compares to a worldwide average of around 10%.

He says that the counterfeit market across the GCC is worth US$7 billion, with US$4 billion of that in Saudi Arabia alone.
In most occasions consumers have no idea that the product they have purchased is a fake because the packaging and production looks so realistic — although the quality is generally much lower than the original. The source of most of the fake goods is the Far East.

The consequence for advertisers is that, although they spend heavily on building their brand, they fail to receive the return on investment they should be entitled to. And the public lose trust in the brand.

He said: “The victim is the consumer. They pay the original price and get the counterfeit goods.

“Then suddenly after three months the product isn’t working and the consumers says they’re not using Panasonic or Sony again. They can also sometimes be dangerous.”

In one case a woman was badly burnt by a faulty iron because the safety features it was advertised with did not exist in the fake.

Hemaya, which means “protection” in Arabic, now has 72 staff and 15 clients, all of them multinationals, including Bosch, Toyota, P&G and Nestle. The firm is also currently in talks with Unilever and it has recently opened a Dubai office.

As well as doing detective work to discover the counterfeiters, it works with the Saudi Arabian government to stage raids. Fake goods with a street value of 39 million riyals (US$10 million) were discovered in one raid alone.

“The government take care of their counterfeits after they are caught. Small quantities are simply destroyed, with bigger quantities they sue. One million riyals is the biggest fine so far. All the cities in Saudi Arabia, at all the borders, at all parts, we are going to be there,” added Al-Zubeidi.

He said that after fake Daimler Chrysler spare parts were taken out of the chain, there was a 40% sales improvement. He said: “Sometimes marketing managers are missing their target, but the sales are actually there and the counterfeiters are taking their market.”

But he warned: “You cannot eliminate counterfeiting entirely. It’s kingdom wide.”

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