Make It, Don’t Fake It: Trade in Counterfeit Goods on the Rise
Yvan Sprünglin, General Manager of SICPA China, explains how companies can successfully fight against counterfeit goods and how to avoid fraud and revenue losses.
This article is featured in The Bridge Magazine - The official bilingual magazine of SwissCham China, German Chamber Ticker - The business journal of the German Chamber of Commerce in China, Connexions - The only publication in French about economy and finance in China by the French Chamber and EURObiz - The magazine of the European Union Chamber of Commerce in China.
How Companies are Fighting Fraud & Revenue Loss
Trade in counterfeit goods and products continues to rise and is a truly global plague, standing at 3.3% of worldwide trade according to OECD (OECD, 2019). Counterfeit goods originate from every corner of the world. China, as the biggest developing country and the largest world factory, has been a target itself of counterfeiting and fraud for 20 years, today ranking 23rd in terms of economies most impacted by global counterfeiting and piracy (OECD, 2019). Counterfeiting and fraud in China also negatively impact prospective companies looking to do business there who must weigh the risks and determine if they’re better off bypassing the domestic market altogether (Connell, 2012).
In recent years, the Chinese government has focused more on anti-counterfeiting and cracking down on fraud. For example, the Chinese Ministry of Industry and Information Technology established the China Luxury Authentication Centre, whose goal is to train government-licensed authenticators to battle the increasingly high-quality fakes being manufactured and sold (Hall, 2018).
It is no wonder that counterfeiting continues to rise as those doing it are becoming increasingly sophisticated in their quality and tactics. Today, with access to excellent quality packaging material and printing processes, some goods are so skillfully copied that it is difficult to differentiate fakes from genuine products simply by sight. As this has occurred, the worldwide landscape has transformed into a complex, globalized economy, brought about even more so with the coronavirus pandemic. Speedy product lifecycles, complex, multi-national supply chains, and the rise of e-commerce have all increased the risk of fraud such as counterfeiting and diversion.
These issues have necessitated the crucial need to authenticate genuine products through dedicated security features to avoid:
- Revenue losses due to increased presence of counterfeits in key markets
- Goods and foods compromising public health and safety
- Brand identity erosion due to loss of trust from customers and distributors complaining of:
- The presence of copies on the market
- Lack of possibilities/tools/education to differentiate genuine from original
- Difficulty distinguishing genuine from fake in a speedy and efficient manner
- Uncontrolled production or diversion outside the authorized distribution
SICPA is the premier security technology provider in product and brand protection worldwide. We work with large international corporations as well as medium-size, high-value, niche companies. Over the past 90 years, we have built our expertise working directly with Industries, Central Banks and Governments to deliver true, effective solutions to combat product fraud. We are constantly evolving through continuous R&D led by more than 300 scientists and engineers with nearly 2,000 patents already granted.
SICPA has been active in the Chinese market for more than 30 years, providing state of the art security solutions and services to the government for banknotes and to multinational companies for product and brand protection. Within the Chinese brand protection market, SICPA has:
- Protected key pharma brands successfully for 15 years without counterfeits,
- Secured major food & beverage brands for 15 years using overt and covert solutions with in-field inspection devices,
- Provided security for electronics spare parts for major multi-national corporations, and
- Solved fraud issues for key cosmetic brands within 1-year after implementation
SICPA works with brands as partners, developing solutions to solve your unique problems and needs. We provide the most robust and unique brand protection overt security features available on the market for simple authentication by any stakeholder and combine with covert and forensic features to create multi-layered security solutions. SICPA services include: security design based on customer perception analysis, digital communications and media/educational tools, court level forensic analysis and reports of fakes.
As governments and enterprises are now moving more and more into the digital space, SICPA is pairing our best-in-class material security with next generation technologies that securely connects goods to the digital space, while protecting product integrity. This adds a new defensive line in the brand protection battle and enables brands to build direct links with customers. QR codes and data matrices are increasingly used in the world of packaging. Copy-protected by SICPA’s proprietary graphical security technology, they can be authenticated in real-time with a simple smartphone scan. They empower consumers to rise as actors in the fight against counterfeits and provide a means to attach trusted digital information, such as proof of origin, quality attributes, traceability information and other pertinent product information, secured and immutable with blockchain technology.
SICPA continues to lead the product authentication market because our approach to security technology is different from alternative technology providers. Our proprietary technologies are unique, based on internal knowhow and 90 plus years of continuous state-of-the-art technology development. Experience has led to the development of rules and criteria to manage security in a way that extends beyond simply providing technology into a holistic risk-based approach. At the heart of our commitment is the guarantee that our security solutions are kept safe from duplication and reverse engineering through secure sourcing and a closed loop supply chain and operations. Relying on our discretion, commitment and expertise, companies have put their trust in SICPA long-term to protect their most valuable products, with some clients working with us for more than 90 years.