Watching Out for Counterfeit Goods

In the global sourcing world, we all need to be on the lookout for suppliers who run a "third shift" to produce a similar product to what they're already supplying us. As New Balance and others have learned, this is not exactly an uncommon spectacle. Indeed, the problem of counterfeit products is on the rise. A recent article in Deutsche Welle (hat-tip World Trade Magazine) provides additional ammunition for those companies to ramp up counterfeit, grey and black market enforcement strategies and plans. After all, if a counterfeit product has your name on it, not only can the contraband reduce your sales, it can also damage your brand in the process -- potentially in irreparable ways (especially in the case of potentially deadly health and pharmaceutical products).

According to the article, a recent report issued by the European Union "says EU customs authorities [recently] discovered a 51 percent increase in fake medicines in 2007. Seizures of counterfeit toys were at double 2006 levels, and cosmetic and personal care items were up by 264 percent. Overall, the report says, the EU registered 43,000 cases of fake goods seized at the bloc's borders, up by 17 percent ... China continues to head that list, and is responsible for some 60 percent of pirated products overall. The key source of faked foods and drinks is Turkey, while most pirated cosmetics and personal-care products are from Georgia ... Most fake medicines have their origins in India, the United Arab Emirates and Switzerland." In my view, hopefully this latest study will provide the wake-up pill (real, not counterfeit ;-)) that companies need to consider IP piracy and counterfeiting as one of the most damaging types of supply risk there is.

- Jason Busch

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