Anti-counterfeit / Parallel import / Price dumping

Anti-counterfeit

Counterfeit activities largely affect businesses and revenue growth. The purpose of anti-counterfeit features is primarily to enable the authentication of a product while delivery confidence and assurance to consumers. If counterfeit is a current threat to your business, there are steps to help you resolve your problem;

STEP 1: BUILDING THE BUSINESS CASE

Counterfeit products used to be easily recognisable to prospective buyers due to the poor quality of the product –a design flaw here, a typo in the brand name there – its low price or the trading location (eg, a dodgy market stall). But, counterfeiting has become so sophisticated and improved in recent years and, these days, many consumers are being tricked into buying products at close to recommended retail price believing them to be the real thing.

Specific sectors that are highly targeted by counterfeiters are mostly: beauty & cosmetics, food & beverages, healthcare and supplements, electronic parts, luxury goods, pharmaceuticals, alcohol & tobacco products, toys and vehicle parts.

STEP 2: MEASURING THE THREAT TO YOUR BUSINESS

Even by searching the web or social media for a short time, you will be able to get an idea of how many fake versions of your products are in the market. The next step is to start investigating their supply chain. Ask- where likely are the counterfeit products being sold at (on- and offline)? What are the types and volume of products affected? Who is manufacturing them – and where? How are they being transported? What is the estimated damage to your business and income?

STEP 3: TARGETING AND COSTING ACTION

Concentrate on identifying the biggest threats and the most common channels, for example, manufacturing sites and their distribution routes such as websites and social media.

To tackle the manufacturers themselves, you will have to find the factories before you can coordinate enforcement action. This can be harder in some countries than others, but a good start would be to look at those factories where you are manufacturing your products officially, as often these can be a source of fakes too.

STEP 4: MEASURING ROI

There is, of course, a cost involved with legal actions and raids. Similarly, different countries have different procedures and requirements when it comes to seizing counterfeit products, so it’s important to check in advance which costs or actions are required.

Other techniques can be brought into play. Invest in security solutions such as better packaging may help to ward off or catch counterfeiters. Otherwise, routinely modify the design or packaging of your products so the counterfeiter will find it hard to keep up. (This also makes fakes easier for customs authorities and consumers to spot.)

STEP 5: THE RIGHT SUPPORT

Finally, it’s important to work with a partner that understands the challenges that brand owners face in their battle to hunt down and act against counterfeit products. The right solutions provider will know, from experience, where you should start and end your anti-counterfeiting efforts, and to guide you when taking your first – or next – step towards building an effective and measurable strategy for action.

Parallel import

Parallel imports are goods manufactured overseas but imported and sold by unauthorised distributors. Parallel imported goods are non-counterfeit products and are often referred to as grey market goods. So how does parallel imports threaten local authorised dealers? Parallel imported goods are often bought from another country at a lower price and then sold locally at a relatively lower price point than the authorised licensee holder due to factors such as fluctuations in currencies, different market strategy, presence of tax and duties, distribution costs and trade policy.

Parallel importation of goods may benefit the consumers are they are able to enjoy genuine goods at a cheaper price or have more choices different than what can be obtained from the local market. The business owner/ manufacturer also benefit from selling its products to the parallel importers and consumers. While the business owner, parallel importer and consumers benefit from the situation, the local authorised distributors are losing out as the authorized distributor is the one who has been contributing substantial costs on providing after-sales services, advertising, marketing, and introducing this brand into the local market, especially when the consumers are not yet aware of this new brand. Meanwhile, parallel importers’ job is just simply import the goods and sell them in the local market at a relatively lower price and thereby undercutting and snatching sales from the authorized distributor.

Price dumping

Selling a product lower than the standard retail price are labelled as price dumping amongst the domestic market. This situation often happens to businesses that sells or distributes its products through multi-layered agents or resellers. Continually, agents and resellers rather sell the products at a lower price than the standard retail price to reduce its stocks or to gain higher commission and power within the pool of sellers.

Price dumping is likely to give advantage to consumers as the same product is made available at a lower price by different sellers. Agents or resellers that dump the prices are surely making huge amount of sales while the rest of the sellers that are playing by the book will eventually lose out. The biggest threat now hits the manufacturer or business owner as their product’s prices vary on the market which will affect their product and brand’s trustworthiness and reputation.

Subsequently, agents playing by the book will tend to leave and the business owner itself will get affected by having lesser agents or resellers to sell its products, but most importantly, the product and brand’s image will be largely affected.

Imagine this as a consumer; the baby formula for your children are priced at RM79.90 on your local supermarket shelf but the exact product appears to be sold at RM49.90 on the e-commerce website. What do you think of the product? Should I buy it online since it is cheaper!? But, could it be fake? Now, what do you think of the brand? There are some other brands that offer the same thing…

What if price dumping happens to your products?