An ever-growing issue worldwide, counterfeits or “fake” goods by their very nature are difficult to quantify, but believed to comprise 10-15% of all trade globally. The profitability being undeniable, however, since fakes capitalize upon the goodwill and reputation of the copied brand name and quite commonly, on the sunk R&D costs of the genuine manufacturer, the genuine manufacturer’s marketing efforts, and the genuine manufacturer’s other intellectual property such as trademarks, design rights and know-how. Forsaking these efforts of their own, and the accompanying expense, the counterfeiter has an unfair cost advantage, seeking to enhance their own bottom line at the expense of sales of the genuine article.
The role of the consumer. The consumer usually is an unwitting victim, but may often willfully aid and abet the counterfeiter. Purchasing counterfeit goods can be most attractive when comparing costs, making the genuine article look unreasonably overpriced. Another factor in the decision to purchase a counterfeit article may be the need to reduce cost within the supply chain, particularly where the counterfeit article is but one component in a larger product.
Online commerce and direct shipment of goods purchased online by foreign sellers combine to enable counterfeiting. A consumer or B to B customer has limited or no ability to distinguish the genuine article from the fake. If the customer is a buyer in a corporate environment, the buyer may never see the article, which goes directly to the manufacturing facility to be incorporated into a finished good. Only later, perhaps much later in the life of the product, do regulators or the public become aware of the problem.
And once aware, the manufacturer usually faces costs far outsized in comparison to the supply chain savings.