Protecting Consumers against Counterfeiting

Executive Vice Chairman of NCC, Prof. Umar Danbatta

As shopping experience ahead of the yuletide period continues, Raheem Akingbolu reviews efforts by stakeholders in the manufacturing sector to protect consumers and how to avoid theft and other crimes in desperation to buy gifts, home appliances.

It’s that time of the year again! The Christmas season, the period for gift and giving. But its alluring attraction notwithstanding, the holiday season is also a time when people can become careless and vulnerable to theft and other holiday crimes. Experience over the years have revealed that as consumers rush to buy gifts or decoration items for homes, counterfeit purchases also tend to boom during Christmas at designated sales periods, such as Black Friday and during the January sales. Studies have shown that there is a higher chance of counterfeit purchases in the run-up to the holiday period as well as in the January sales that traditionally follow Christmas’s excess.

Research recently carried out by MarkMonitor, an American software company, suggests that 45 per cent of shoppers are concerned that they might accidentally purchase fake goods during the Christmas season. Additionally, almost one third have been tricked into buying a counterfeit product, despite 91 per cent saying they wouldn’t intentionally purchase one as a Christmas gift.

The Threat
Clearly, the state of the counterfeiting industry as it stands is becoming almost impossible to predict and even more difficult to control.
According to the 2018 Global Counterfeiting & Trademark Infringement Report, the amount of global counterfeiting reached $1.2 trillion in 2017 and it’s estimated that it could reach an overwhelming $2.3 trillion by 2022.
Clothing brands are among the worst affected by the sale of fakes. In 2017, the EU’s external border detained over 31 million counterfeit products with a street value of over €580 million and clothes were in the top five detained categories. The sport shoes category continues to be the most counterfeited item.

Nigeria as target
In Nigeria, clothing, household items, foods/drinks, beddings and mattresses are the worst it by counterfeiters. For instance, in the mattress market, high quality brand like Mouka Foam, Vita Foam, Sara Foam and other brands have been targets of counterfeiters to confuse the buyers. But despite the abnormal trend, promoters of Mouka, a leading mattress and other bedding products manufacturer has restated its commitment to quality products in order to maintain its market share leadership.
While allaying the fear of consumers against falling for counterfeiting mattress product from his company’s stable, the Managing Director of Mouka, Mr. Raymond Murphy explained that the future of the company is couched in “quality brands, product renovation/innovation laced with investments in infrastructure and increased investments in the development of the Mouka people.”

“At 60, we are the market share leader in the foam and beddings sector. Recent research, according to some marketing professionals whom I met on my last trip to Dubai also attest to the fact that Mouka is not only the leader in Nigeria, but also in Africa and the Middle East,” he was quoted to have said during the 60th anniversary of the brand in the country.

He made reference to how the company’s product was recently endorsed by the Nigeria Association of Orthopaedic Manual Therapists (NAOMT), as being known for quality products and standards.
On the endorsement he quoted the National President of the association, Dr. Onigbinde Ayodele, as stating that it came on the back of consistency in quality delivery and innovative mattress production, which have characterised the brand’s market path in Nigeria.

Counterfeiting and crime
Buying counterfeit products this Christmas could fund a slew of criminal activities. According to KPMG , professional service company and one of the Big Four auditors, 39 cases involving more than £116 million worth of counterfeit goods have been prosecuted in Britain over the past two years.
The company has warned UK consumers to be watchful of counterfeits during the Christmas period as buying them could result in them funding organized criminals in human trafficking, drug smuggling, or even terrorism

The fact that these fake products could not only be harmful to the customers that purchase them, but the sellers behind these products could even be involved in heinous criminal activities, makes preventing and eliminating counterfeits all the more necessary in the coming years.
Counterfeiting has become so much more sophisticated in recent years and, these days, many consumers are also being tricked into buying products at close to recommended retail price believing them to be the real deal.

For instance, in February, the Importers Association of Nigeria (IMAN) Special Task Force on Illegal Importation, (South West Zone) sealed five Chinese warehouses over trade infractions. The group also disclosed that a total of ten containers of 6 by 20ft and 4 by 40ft with various infractions ranging from concealments, smuggled goods were intercepted from various parts of Lagos State.
Chief Operating Officer (COO) of IMAN Special Taskforce, Prosper Okolo, said some of the affected warehouses were found to have contravened import laws and duty underpayment.

Okolo noted that some of the warehouses visited by the team involved in the illicit trade are owned by foreigners, mostly Chinese, adding that five suspects have been arrested in the last two months.
While highlighting some of the companies allegedly involved in some of the nefarious activities, the COO fingered Megachem Nigeria Limited, Kevolinks Digital Limited, Kwikfit Nigeria Limited, Inomek Nigeria Limited and Bosac Nigeria Limited as some of the perpetrators.

Okolo noted that “Aside from the concealments, some of them short paid the government to the tune of billions of Naira.

“Between January and February, the Taskforce also received credible intelligence of some warehouses involved in production and importations of fake and sub-standard products without approval from the Standards Organisation of Nigeria (SON) and National Agency for Food, Drugs Administration and Control (NAFDAC) regulations.

“The task force has so far sealed 5 warehouses which were found to deal in importation of tyres, used clothing, unwholesome products among others without the required regulations and permits.”

Despite the efforts of the Task Force and other government agencies, the Chinese perfidy seems to be extending its tentacles, to other sensitive national economic interest and national security.
In fact, Mckinsey, a global consulting firm, says out of the 930 Chinese companies operating in Nigeria, only 317 are documented by the Chinese ministry of commerce.

According to a new research report titled ‘Lions on the move II: Realising the potential of Africa’s economies’, there are over 10,000 operational Chinese firms spread across the manufacturing, construction, trade, services and real estate sectors in Africa.

The unwholesome practices of another company which borders on counterfeiting, economy sabotage and security breach, was recently reported by a national daily
The company, Zhe Long, owned by two Chinese: Wang Fuzeng and Chen Yuping, has as its main objective: “to carry on business as manufacturer, buyers, sellers, traders, importers, exporters and merchant exporters.”

In the areas of import and shipping documentations, the paper revealed that Zhe has been falsely declaring a chemical known as Polyol as Polyacetals. Polyols are a group of low-digestible carbohydrates derived from the hydrogenation of their sugar or syrup

But according to the President, China Chambers of Commerce in Nigeria, Mr Ye Shuijin, the quantum of investment in the Nigerian economy by Chinese companies has hit $20 billion U.S dollars. This humongous figure oozes out of 160 Chinese firms operating in the country which also employed over 200,000 Nigerians.

To many Nigerians, Shuiji’s sermon above is far from the gospel truth. Like a virus, the Nigerian Labour Congress argued that these Chinese enter a sector of the economy, suck the vitality through all manners of infraction and castrate the sector. After ‘death’, they emerge as a monopoly in the sector. The dead textile sector, Labour maintained, is a huge pointer to the Chinese economic mass destruction in Nigeria.

A report by the International Monetary Fund, IMF published in 2017 also noted that high levels of Chinese investments/aids to African States have had a “harmful effects” on human rights and economic development across Africa.

Despite this umbrage, Jonathan Coker, Nigeria’s former ambassador to Beijing, says western warnings about Chinese investments are hypocritical.

According to him, “the assertion that Africa will become slave of China is the propaganda of the west. Instead, he adds, Nigeria has much to learn. “China is 10 times the size of Nigeria’s population but they have developed a system that can take care of their people. These are the examples we want to adapt.”

Effects of counterfeiting
The potential for physical harm to consumers, accidental or intentional, of counterfeit goods is clear. The results can be devastating, heartbreaking and even fatal. Similarly, the damage counterfeiting causes to legitimate brands is unquestionable.

Levels of Counterfeiting in Nigeria are extremely high especially, but not refrained to, pharmaceutical drugs. In 2020 the World Health Association reported that 70% of all drugs present in Nigeria were second generation goods.

A key reason society suffers from the presence of counterfeiting is the lost potential tax revenue. The amount of sales tax that nations lose out on globally each year is estimated to be from $70bn to $89bn, with an additional loss of $8bn to $22bn from other taxes.

The effects of counterfeiting are not just seen from annual financial reports and through tax estimates. Direct negative effects are experienced by a huge amount of people, and loss of employment is one of the most disruptive things that can happen to an individual.

According to recent studies, the loss of global employment caused by counterfeiting was estimated at 2.5 million jobs, with 300,000 jobs being lost each year in Europe alone. As the counterfeiting industry continues to grow steadily, a further 5 million jobs are predicted to have been displaced by 2022.
Staying Safe against Counterfeiting

Counterfeit goods are big business. Copycat goods can be such good replicas that it might be difficult to tell what’s real and what’s fake.

In 2017, a report from Frontier Economics – based on a previous report of 2016 by OECD – and later disclosed by the International Chamber of Commerce (ICC) estimated that in 2022 the total international trade in counterfeit and pirated goods will be as high as 991 Billion, almost doubling the number reported in 2013 of 461 Billion.

The impacts of counterfeiting are clearly negative, and strong actions against the industry need to be taken sooner rather than later. As this illegal production continues, the consequences will only become more compounded and affect more people in a more tangible way.

Although there is no specific legal framework for the enforcing of measures against counterfeiting that covers every economic sector in the country however, there are several Acts and regulations that address the issue directly.

Nigeria, unfortunately but not surprisingly, is indicated as one of the countries at jeopardy, since its market has become a huge target for second generation goods, with a major focus on pharmaceutical drugs.
Nigeria has no specific anti-counterfeiting law – at least, not a broad one that covers all types of goods and all species of anti-counterfeiting. Hence, the fight against counterfeits involves the creative application of the various laws that affect rights holders in one way or another.

Brand Protection is also believed to be important to ensure the legitimate brands that sell their products. But now counterfeiters are becoming increasingly innovative with their techniques and skills.

Marketing experts also advise companies to liaise with local agents and involve local police and authorities where counterfeits are produced overseas.