Front End | Electronic Components Supply Network Proud to be counterfeit free
Electronic components industry associations around the world have for many, many years highlighted the risks that counterfeit electronic components pose to national commerce and the global economy. Any purchases made outside the authorised channel (the manufacturer or one of its authorised distributors) significantly increases the risk of sub-standard components finding their way into their end product, probably causing early field failures, expensive warranty claims and loss of brand reputation. In this article for CIE readers, Adam Fletcher, chairman of the Electronic Components Supply Network (ecsn) ponders on why some buyers consider buying on the grey market and advises on what the industry should do to mitigate the threat posed by counterfeit electronic components
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or the past two years or so there has been an imbalance in the electronic components supply network as the global semiconductor and passive components markets went into and then out of COVID-19 lockdowns and struggled with the knock-on problems with logistics etc., that ensued. Electronic components manufacturers and their authorised distributor partners worked tirelessly to meet the wide and varied demands of their customers and generally speaking, thanks to the good faith maintained by all parties, achieved satisfactory results. Inevitably though, despite difficult and protracted negotiations not all supply demands could be fully met, presenting customers’ procurement teams with a number of options: Delay production, possibly by months, harass existing suppliers to expedite earlier deliveries, place orders with multiple suppliers or source on the grey market. The evidence suggests that many turned to the latter option. Grey market brokers were able to “find” the products required in Asia, albeit at highly inflated prices, which strongly suggests that OEM/CEM organisations in China were either profiteering by selling off inventory or that the country’s counterfeiting industry had stepped up to meet the additional demand.
Endemic
Counterfeit products are today endemic in daily life, spanning products such as expensive branded running shoes, ‘labelled’ clothing, fragrances, medicines, watches, booze and cigarettes. Whilst these goods may have the outward appearance of the real branded product, it generally becomes quickly apparent
12 February 2023
that the quality of the product is not what is expected, and the product for one reason or another, is quickly discarded. Most high- end consumer brands have a price-tag that reflects their exclusivity and the high profit margin needed by the manufacturer and the local supplier. The primary reasons for the proliferation of counterfeit consumer goods is simply that they can be made available at significantly lower prices than their ‘real’ counterparts. Counterfeit watches for example often sell for less than 5 per cent of the retail price of the legitimate product.
Components in Electronics
Intellectual property theft China enterprise has been the manufacturing source of most counterfeit products over the past few hundred years. Not that there was originally a general intent to defraud as the Chinese populace then had little understanding of the concept of intellectual property (IP) ownership. Rather they just set out to manufacture copies of Japanese plates and bowls etc., to ‘help’ fulfil demand in an existing market. But things have progressed, and manufacturers, the populace and legislators in China are today apparently
proud of their ability to pirate IP and produce counterfeit product. But that all counterfeiting is IP theft is today widely recognised, at least in Western economies. For many years Western governments have written IP protection into their economic legislation in order to protect the endeavours of the inventor or designer and protect the interests of individual and corporate investor(s).
Chinese enterprise
Unlike counterfeit consumer products that are sold primarily on low price, counterfeit
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