FEATURESTORY
$100 billion to $200 billion
–The rough annual cost of counter-
feiting in the electronic industry, rep-
resenting nearly 10% of all electronic
equipment sold worldwide
$18.2 billion
– The estimated amount the world-
wide motion picture industry loses
annually because of piracy
1000 % - The markup
of a DVD made in Malaysia for 70
cents and sold on the streets of
London for $9. The profit margin is
3 times higher than the mark-up for
Iranian heroin, representing a strong
draw for organized crime into the
trade.
#1– The spot China took in ten
out of the top 15 supply-chain risk
Fake DVD’s, CD’s, games and software are for sale on high streets and back
categories in a recent AMR Research
alley’s across China
quarterly supply-chain survey, mak- a DVD presentation on has incurred,” says Holger Clasing, General Manager of Barkawi
ing it by far the riskiest geography IPR protection. management consultancy in Shanghai. “And if the counterfeit
to operate in. “China is still plagued The QBPC Automo- manufacturer does get closed down, it can just set up operations
by product quality failures and safety tive IWG said the coop- somewhere else.”
issues, “ writes AMR analyst Noha To- erative project aimed to Two companies that recently resorted to the law courts are
hamy in their recent survey on global “increase public aware- Nike and Louis Vuitton. Nike sued two Chinese companies for il-
supply chain risk. ness of the potential legally copying one of its logos and using a copied silhouette of
serious risks and dam- former basketball star Michael Jordan. The attorney for the de-
1 in 3
age caused by coun- fendants called the case “a misunderstanding,” and claimed that
– The number of con- terfeited auto parts, the companies “didn’t know the Nike logo is similar to that on our
sumers aged between 18 and 45 who promote cooperation products.”
are fully prepared to buy fake luxury between companies, Louis Vuitton’s case is even more bizarre – with the lawsuit
goods and accessories (based on a and adopt effective dragging in the name of Canadian singer Celine Dion. LV is su-
PricewaterhouseCoopers survey). measures to actively ing a Taiwanese trader for selling fake merchandise in Shanghai,
assist the Chinese gov- with his clients allegedly including the Canadian chanteuse during
ernment in eradicating her 2008 visit to Shanghai. Official records show the trader had
counterfeiting from all been previously cautioned for similar counterfeit goods offences
areas of the industry, including production, storage, distribution in 2002 and 2004.
and export.” Another vulnerability of companies in China is collusion from
their own staff in procuring counterfeit or sub-standard goods.
Inadequate government support Bruno Lhopiteau, General Manager of maintenance consultancy
Despite a raft of new IPR legislation in recent years, China’s Siveco China, says that while purchasing systems for components
legal system still struggles to enforce anti-counterfeiting laws. Al- used in production processes are usually in place, “this is almost
though large companies work closely with Chinese Customs and never the case for maintenance parts.” Often, “a strong discon-
administrative agencies to identify illegal production plants, the nect exists between the administrative (such as purchasing and
majority of cases simply result in an administrative fine and de- stock) and technical aspects (including specifications, needs fore-
struction of the infringing products. “Even if you win compensation casting, and the reliability of parts and vendors), which leaves
in court, it rarely bears any relation to the damages your company companies vulnerable to staff buying parts from non-authorised
36 MAY/JUNE 2009 www.chainaonline.com
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