Counterfeit goods: how harmful are they to you?
If you live in Malaysia, you’ve surely heard about this famous shop in Jalan Bukit Bintang, one of Kuala Lumpur’s famous hubs, that was raided by anti-counterfeit authorities. On January 11th, representatives of the Ministry of Domestic Trade and Consumer Affairs (aka KPDNHEP) irrupted in a popular store and confiscated Chanel knockoffs, including clothing, handbags, and accessories. World of Buzz states that the estimated value of the seized counterfeit goods goes as high as RM10,253 (USD2,500) when their real value only reaches RM300 (USD72).
Even if this story, in particular, has caused a big fuss, it is not an isolated fact. The counterfeit industry keeps on growing and has already become a serious problem for governments, companies and customers alike.
How does counterfeiting affect governments?
Counterfeiting impacts negatively governments and economic growth. As an illicit trade, it implies no tax on goods which leads to tax revenue loss for the country. Instead, that money goes to organized crime groups and foster security issues and social injustice.
Asia is often designated as a favorable place for counterfeit trade. It can be explained by its high level of manufacturing activity and its easy-to-access maritime transportation. As a peninsula, Malaysia’s coastlines are hard to keep a close eye on for the authorities. The Edge Markets reports that South East Asia, including Malaysia, have reached an alarming level regarding counterfeiting.
How can counterfeiting harm companies?
Companies are the first victims of counterfeiting. Indeed, they see their products copied and sold at a lower price. Not only does it lead to revenue and sales loss but it also damages their brand image. Moreover, the fake goods trade involves over production costs for the brand and might even go as far as fraudulent product warranty claims. Plus, it undermines innovation as employees see the good they’ve created, put efforts in and spent time on, easily copied and sold for less than its value.
Overall, counterfeiting is harmful to any business for monetary reasons as well as brand perception.
The impact of counterfeiting on society
Most of the time, customers don’t know the item they’re buying is a knockoff. These fake goods can be a threat to the health of customers as counterfeiting implies no norms or regulations. This is particularly true in the medical industry and it poses both quality and safety issues. So, it damages the trust customers have in manufacturers but it also encourages unemployment that devastates financial situations for many families.
In the end, counterfeit trade is pretty much harmful to a lot of entities. That’s why it’s an issue that needs to be tackled; and the sooner, the better. However, it’s easier said than done. Counterfeiting can reach industries as diverse as fashion, pharmaceuticals and intellectuals assets such as diplomas. That’s why it is complicated to overcome it as different entities need to cooperate to do so.
Is there an efficient way to put a stop to counterfeiting?
With time comes new technology innovations and blockchain, in particular, could represent a solution to this issue. Blockchain is becoming more and more useful when it comes to fighting illicit trades. With its track & trace alternative, it is easy to make sure of the origin of the products. You can learn more about the advantages of blockchain here.
Hence, blockchain can empower consumers with more transparency, awareness, and choice. Three elements that can eventually put counterfeiting to an end.