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Combating brands counterfeiting at Christmas

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SON issues certificates, tasks coys on standardsBy Moses Nosike

Counterfeit purchases also tend to boom before holidays such as Christmas and during designated sales periods, such as Black Friday and 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.

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Research recently carried out by MarkMonitor, an American software company, suggests that 45% 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% 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 high quality brand like Mouka Foam, Vita Foam, Sara Foam and other brands have been targets of counterfeiters to confuse the buyers. But Mouka, the nation’s leading mattress and other bedding products manufacturer who recently marked its 60th anniversary of business operations in Nigeria has restated its commitment to quality products in order to maintain its market share leadership.

Mr. Raymond Murphy. Managing Director/Chief Executive Officer, CEO of the company 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.

The company whose product was recently endorsed by the Nigeria Association of Orthopaedic Manual Therapists (NAOMT), is known for quality products and standards.

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The endorsement according to the National President of the association, Dr. Onigbinde Ayodele, comes 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

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 Taskforce 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 that 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.

“The Taskforce 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 Taskforce and other government agencies, the Chinese perfidy seems to be extending its tentacles, to other sensitive national economic interest and national security.

The unwholesome practices of another company which borders on counterfeiting, economy sabotage and security breach, was recently exposed by a national daily.

The company, owned by two Chinese, has  its main objectives, “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 the company 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

Polyols react with isocyanates to make polyurethanes, which find use to make mattresses, foam insulation for refrigerators and freezers, home and automotive seats, elastomeric shoe soles, fibers (e.g. Spandex), and adhesives.

On the other hand, polyacetal is an engineering thermoplastic used in precision parts requiring high stiffness, low friction, and excellent dimensional stability. It is among plastic materials, with the most crystalline structure.

Similar to the above, the company is also accused of declaring a chemical called TDI as Toluene. Global pricing of Toluene is US$6, 000 as against TDI’s US$2,300.

The consequence of this false declaration according to experts, is duty under-payment and the consequent defrauding of the government of necessary duty and VAT on these transactions.

Aside the loss of revenue accruing to the government, there is major security implication for the false declaration of TDI.  Apart from a chemical used in the production of polyurethanes, primarily for flexible foam applications including furniture, bedding and carpet underlay, as well as packaging applications, TDI is also used in the manufacture of coatings, sealants, adhesives and elastomers.

But due to TDI’s potential explosive properties, the material is a controlled substance that requires an End User Certificate, EUC issued by the office of the National Security Adviser, NSA for its importation to Nigeria.

The paper, with headquarters in Apapa, also quoted sources close to the company that presently there is no evidence to support that Zhe Long has EUC for its TDI’s importation, which according to security experts, constitute a serious national security breach.

Meanwhile, it appears the Chinese malfeasance is receiving global attention. Last December, John Bolton, President Donald Trump’s national security adviser, has accused China of using “bribes, opaque agreements and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands”

Chinese counter reaction has also been blunt:  “Nigeria has the most thieves in the world,” says Thomas Liu, who runs the medicine company, using the sort of uncompromising language that grates from Accra to Kinshasa. “You have to avoid being tricked.”

Chinese businessmen also claimed they have to negotiate past Nigeria’s bureaucratic gatekeepers for permits and licences. “To visit a government official here, you best have around $6,000 to $10,000 with you,” says Mr Ban, a miner. “Otherwise, forget about getting an appointment.”

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According to Mr Ye Shuijin, President, China Chambers of Commerce in Nigeria, the quantum of investment in the Nigerian economy by Chinese companies has hit $20 billion U.S dollars. This humongous figures 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.”

Also, Jonathan Aremu, a Professor of International Economic Relations at Covenant University, Ota, Ogun State also blamed the influx of substandard good on our porous border.

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.

This is money that could be going into hospitals, roads and schools in order to keep citizens healthy, to facilitate economic growth in a country and to promote education and future innovation, but which instead finds itself in the hands of criminal organisations.

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.

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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.

The way out

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 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.

They are also to educate their consumers and prospective consumers on the risks posed to them by threats, and see if you can join forces with like-minded companies to share data and even the costs of enforcement action.

Buying the right gift is always tricky but, perhaps worse than forgetting to buy a present, would be getting something which wasn’t as it first appeared. So how can we avoid being fooled, and make sure counterfeit goods don’t appear under our Christmas tree?

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Olumide Jenyo, a brand and marketing analysts in Lagos concluded last week that since the various reports about counterfeiting and Chinese malfeasance have not received the required dose of attention from the concerned authorities, the best gift for the yuletide is for buyers and shoppers to beware of what they buy.

Vanguard

 

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