Wednesday, May 09, 2007

Getting into the Popular Psyche

In the last few years, the number of articles on counterfeiting in the popular press has seemed to be increasing dramatically (although I haven't measured it). Whether this reflects an increase in counterfeiting activity, or simply an increased awareness of the problem is debatable... but here's a short summary of recent newsworthy items getting air time in widely read media:

  • Harpers Bazaar has launched a website to highlight and engage luxury goods buyers in the fight against fakes. They've even launched a competition to design a T-Shirt to vent your concern - click here to enter!
  • The New York Times ran a chlling front page article (and 2 page inside spread) on the trail of counterfeit glycerine that's responsible for hundreds of deaths in Panama.
  • The UK's New Scientist magazine ran an article (sorry - it's subscription only) on the wide ranging problem of fakes, and some (very scientific) technological solutions. As we have often observed in this blog, several of these required sophisticated lab equipment to authenticate.
  • The UK's Independent newspaper ran a scathing article on counterfeit drugs, accusing major drug companies of "turning a blind eye" to the problem in Africa. The WHO held a conference recently in Prague to begin to address the problem and search for solutions. The conference was attended by representatives from several drug manufacturers and Ministries of Health from a range of countries. The WHO estimates that 200,000 of the one million malaria deaths every year would be prevented if all the drugs taken were genuine.
  • May's IndustryWeek ran a front page article on the scourge of counterfeits. It included some interesting new data points (always hard to find): Bendix estimated violations of IPR cost an estimated $10 million to $20 million per year in its valves portfolio alone. Worse than the direct revenue loss of course is the potential brand damage and liability from the risks associated with inferior-quality counterfeit parts range from premature wear all the way to catastrophic brake failure.
  • In this April article in Forbes, Zippo estimated it had lost a whopping one third of its business to counterfeits, and was having to downsize its US operations as a direct result. Even worse, Eastman Machine, in Buffalo, New York, saw its production moved to China without ever leaving home. A manufacturer branding itself "Westman" reverse-engineered Eastman's $2,000 fabric-cutting machines, even using the same model numbers and paint colors. Eastman has lost more than half its sales and laid off nearly two-thirds of its workforce.
  • And just this week, the US Senate voted to preserve current restrictions on importing prescription drugs ... in part because of fears of a flood of counterfeits.

... so, are consumers starting to ask themselves "is this product fake? how can I tell?".