An article recently appeared in the Tanzania Daily News concerning counterfeit ink and toner cartridges, which is a growing problem in Africa. An emerging trend is the use of Africa as a transit route for fake goods, which also poses an indirect threat to European and American markets, according to Fabrice Campoy, HP’s Printing and Personal Systems Africa Director.
To help educate and empower organizations across the continent against the negative effects of counterfeit trade, Hewlett-Packard (HP) hosted the 2014 Anti-Counterfeiting Africa Conference to bring together those most affected by counterfeits in the region, including policy makers and brands like Unilever and Nike, to work together to tackle this criminal activity.
Through its Anti-counterfeiting Program, HP has actively educated its customers and partners to be vigilant against fake printing supplies. The firm also cooperates closely with local and global law enforcement authorities to detect and dismantle illegal operations that produce counterfeit HP printing components.
Across the Europe, Middle East and Africa (EMEA) region, from 2009 through 2013, HP has conducted around 1,600 investigations, resulting in about 1,300 enforcement actions (raids and seizures by authorities) and the seizure of around 11 million units of counterfeit products and components, thus preventing them from being sold in the EMEA marketplace and beyond.
In addition, HP has overseen around 4,000 unannounced inspections of HP products at the warehouses of HP Channel Partners across EMEA in the past five years to verify that they are not selling counterfeit products to their customers.
It might seem harmless to buy a knock-off item; prices for the originals, after all, are out of reach for most who are longing for a real designer label. The consumer side, however, is only the most visible effect of the illicit trade in fake goods.
Trade Barrier
The increase in counterfeit goods in a market represents a major threat to business and is also a key barrier to trade. The distribution of cheap and poor quality pirated goods in a market creates an obstruction to the distribution of genuine products.
A report published by the Confederation of Tanzania Industries (CTI) called, “Effects of Counterfeit and Substandard Goods in Tanzania,” reveals that business people dealing in counterfeit products are able to sell more products at a lower cost, thus reaping huge profits compared to those dealing in genuine products, who face stiff competition from counterfeit dealers. The CTI report notes that unemployment caused by large imports of fake goods is also a big issue. In addition, counterfeit products deny domestic industries the opportunity to expand production and scare off investors who want to establish legitimate industries in Tanzania.
Although, CTI has recently called for the enactment of a comprehensive law and formation of an agency to spearhead the fight against the manufacture and importation of counterfeit goods, existing laws and policies relating to fake goods do not address the problem fully.
In one of the stakeholders’ meetings that was held in Dar es Salaam recently to discuss laws and regulations relating to counterfeit and sub-standard goods in Tanzania, CTI Chairman Dr. Samwel Nyantahe warned that the situation is deteriorating because some factories have been constructed mainly to manufacture fake goods for certain countries, including Tanzania.
Lost Revenue
Counterfeiting continues to be a serious issue for the printer supplies industry. The largest business opportunity is shifting to emerging markets where the price of hardware and supplies is an overriding concern for buyers, so customers gravitate to the cheapest products.
The CTI report estimates that Tanzania could be losing between 15 to 25 percent of total domestic revenue due to counterfeit products. So if estimated total government domestic revenue was 6.7 trillion/- in 2011/2012, subsequent loss in government revenue due to counterfeit products stands at well over 1 trillion/-.
OEMs and legitimate third-party supplies manufacturers also lose revenue. Non-OEM players lose out because buyers mistakenly believe they are getting real OEM products at a price lower than quality third-party products. OEMs lose revenue on the supplies sale and perhaps further business if difficulties with poorly constructed counterfeit cartridges result in the consumer buying another printer brand due to lack of confidence in the “OEM” cartridges.
Further, how much does it cost OEMs to track down these counterfeit cartridges? Over the course of five years, HP conducted 4,000 partner inspections, 1,600 investigations, and 1,300 seizures. Other printer companies may not have been that active, but they still have programs for tracking down counterfeits. All of these issues go to the bottom line, adding to the cost of genuine OEM supplies.
How Big Is the Problem?
Generally, the estimates range from 5 to 15 percent of the market in emerging markets, varying widely by areas depending upon the laws and the number of businesses engaged in manufacturing and selling these counterfeits. The Imaging Supplies coalition pegs the damage to the imaging industry by counterfeit supplies at $3 billion annually worldwide.
Compounding the problem is that these lower-cost cartridges bought on line may not be counterfeit but real OEM cartridges that are moving through the gray market, which is when resellers move excess inventory through alternative channels to keep their volume discounts on supplies.
In developed countries, laws are more stringent, resellers are more careful, and consumers aren’t quite as price conscious – yes, they want the lowest prices they can get but understand that they will “get what they paid for.” As a result, counterfeits show up, but in much smaller numbers, often stopped on the docks by government inspectors.
Still, moving product in other parts of the world can be easier, and as more factories are set up in Eastern Europe, Africa, Latin America, and other emerging areas to produce counterfeit supplies, major OEMs are stepping up their efforts. Moving products shorter distances across less guarded borders makes it easier to get counterfeit products into more countries, increasing the problem even in places like Western Europe.
Consumer education is one of the most important aspects. “Caveat Emptor” becomes the mantra.
©2014 Photizo Group