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Friday, November 16, 2012

Your expensive brand could be a fake Scamtrepreneurs Have A Field Time, Peddling Goods Ranging From Electronics To Food

 It's a video that could sink the spirits of a certain Scotch company, which probably explains why it hasn't yet gone viral. The recording captures a crackdown in what is later learnt to be a shanty in Borivali, where plainclothes policemen raid the 'workshop' of a middle-aged man. The room is packed with empty cartons and labelled bottles of top-flight foreign liquor brands and full bottles of inferior grade Indian Made Foreign Liquor. Following the general disorder that attends such crackdowns is a priceless howto class, where the con artist somewhat grudgingly demonstrates how in under a minute, he is able to crack open the bottle's 'tamperproof' seal using nothing more than a 1.5-ft wooden box and an adapted wrench, empty an inferior liquor into the superior bottle and reseal it. Voila—the perfect body double. 
    The liquor company in the Highlands didn't drink to the con of course. They could scarcely believe that their millions worth of R&D could be so easily outclassed by a Mumbai-based bilker. The man belongs to that flourishing school for scoundrels of the kind who specialize in double-dealing, that is, slipping counterfeits into the retail market—a deception that is reportedly on the rise. 
    It's a known fact that virtually every product in plain view can be duplicated. From fashion brands to automobile parts, electronics, software, medicines, biscuits, cosmetics, and power tools, everything can be skilfully duplicated. Himanshu Roy, additional commissioner of police (crime), who won't commit to whether or not the black market in Mumbai has expanded, imputes its ineradicable nature to the simple demand-and-supply logic that drives business. "With a greater demand for cheaper goods, there's reason enough for people to put out fakes," 
he says. What has changed, he reveals, is the depth of penetration of these goods. "Earlier black markets in Mumbai were clearly defined; now fakes are mixed with genuine products and sold in shops in malls and so on," he says, referring to a raid the crime branch conducted last month at Orchid City Centre Mall at Nagpada. About 1,000 fake Samsung notebooks worth over Rs 1 crore were seized, Roy says. 
    If earlier fakes were sold at telltale discounts and largely in known black markets, now some of the high-quality fakes are palmed off in the organised market at a marginal markdown from the genuine product's maximum retail price so as to lend them an aspect of authenticity, says Zaheer Khan, CEO of EIPR (Enforcers of Intellectual Property Rights), a corporate security agency that specialises in anti-counterfeiting solutions. 
    "What's troubling is that it's no longer traditional black market bastions like Heera Panna or D 
N Road or Musafir Khana that stock the stuff—even authorised dealers sometimes mix fakes with original goods to earn a higher margin," Khan says. Earlier, knockoffs manufactured in Bangkok or China were smuggled in, now Indian 'scamtrepreneurs' have twigged the craft and don't only put out perfect facsimiles but often, ironically, also improve on the product's features. 
    This is why local businesses and MNCs are increasingly turning to outfits like Khan's to help preserve their brand equity and plug the loss of potential revenue. It's virtually impossible to estimate the projected losses that knockoffs cause mainstream industry, because for every one item seized, there are uncountable more that are successfully traded; it's something like Whac-
A-Mole, the arcade game. 
According to EIPR, which has a clientele spanning top brands across various sectors, a pointer to the prolificacy of the counterfeit business in India is the number of raids the company has conducted-—from 600 last year, to 1,000 in 10 months this year 

across the country. Last month, EIPR alerted the police to a counterfeit racket in Bhuleshwar, where duplicates of brands like Canon, HP, Samsung and Brother were seized from a shop in Moti Bhavan. While the (under)value of the seized good was Rs 12,19,290, the projected losses to the brands was upward of Rs 1 crore. 
    HR Shetty, president of Planet Power Tools, an Indian company with an annual turnover of Rs 80 crore, is on the lookout for an IPR agency to help plug an estimated leak of Rs 30 to 40 crore via counterfeit losses. "Fakes not only deprive owners of intellectual 
property rights their dues, they also rob the government of sales tax and excise duty," Shetty points out. 
It's not only about financial losses but also potential health hazards, as counterfeit food and food supplements, drugs and body care products brazenly circulate in the market. Industry sources claim that nearly half the inventory of 'wholesale beauty centres' in the city consists of counterfeits. (Your Boots shampoo has probably bubbled in a village vat and your Johnson & Johnson baby shampoo may have acquired its golden disposition in a Thane workshop). It's impossible to draw hard maps of the manufacturing hubs because their locations are changeable. 
Across the counter there are two types of customers—those who knowingly buy fakes and the suckers. In the case of the latter, it's often foolproof packaging—right down to a credible-looking barcode, hologram and other gobbledygook on the box—that does them in. Zaheer Khan says if firms were to publicly put out 'safety' instructions to customers to help them tell the real from the rogues, counterfeiters could just as well use that information. "This is why only security agencies are briefed about tips and tricks they ought to look out for," he says. 
Aspokesperson with a liquor brand says that stricter penalties and lower taxation may bring the beast to heel. "As for customers, they can destroy the packaging of products or make it difficult for counterfeiters (who often buy used bottles and cartons from recycling units and raddiwallahs) to acquire them intact," she says. Here's toasting to better vigilance then—watch out for that Scotch, though!


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