Combating counterfeits: Trade bodies become proactive

Each and every product from a pencil to aircraft has a trade association formed with an aim to facilitate the business environment for its member companies.Today in India more than 300 State level industry-trade association exist representing more than 7,00,000 companies.While they are playing an important role in modern and global economies, there are various hindrances which effect their sector growth. Product counterfeiting is one of them. It is affecting all categories of products, but the impact is very high in sectors / product categories like fast moving consumer goods, pharmaceuticals, electronics, automobile, aircraft parts, beverages, etc. To address this issue, various trade associations have come forwarded and playing a proactive role in curbing this menace. This article highlights their activities and role trade associations can play in curbing this menace to a large extent.

Brand counterfeiting in Indian is not a new issue. Brands are under attack in various forms such as counterfeiting, piracy, duplication, pilfering, tampering and adulteration of product. These attempts are nothing but an attack on the brand and hence a major risk to the value of the company.

Brand attack has many ill effects, key ones being;

• Reduces the brand value, customer’s confidence, market share and profitability of a company.
• The brand attacker, who supplies a duplicate or counterfeit product, does not pay any taxes.  It is a loss to the collection of taxes for various governments.
• There are reports in the press mentioning that profits from such illegal activities are going to terrorists and banned organisations.

Risk to the Brand must be taken with all seriousness
Although Government of India is doing its best in developing suitable laws, educating police force and judiciary to deal with litigation arising out of brand attack.  However, legal process takes its own time and hence brand attacks continue. As brands are the most valuable asset of companies, industry association can play a vital role in providing effective information and advising proper anti-counterfeiting strategies to their member companies.

Importance of industry association in curbing counterfeiting
According to Eef de Ferrante, Director at Active and Intelligent Packaging Industry Association, “Well, first off all a trade association is a medium. A way to get in contact with companies in a certain industry. But also trade associations can advise their members, and play a role on behalf of their members towards governments. The ideal situation is when membership to an association is a guarantee to the quality and origin of a product. In that way, associations need to check and verify memberships.

Big trade association such as FICCI, CII and ASSOCHAM has discussed and taken up the fight against menace of counterfeit at various forums highlighting the loss to the brand owner, government, society and to consumers. There have been seminars and meeting with government for law enforcement. These are all useful initiatives, but, it  is now imperative that the work done so far is taken up to a new level, keeping mind the fact, that in this fight there is also  a need to continuously look for new innovative solutions and approach by each Brand owner/ company.

Proactive steps for future
Rather than wait and watch and then a reactionary step in fighting this menace, the associations ought to educate their members that Prevention is better than Cure, and they could consider taking the undernoted proactive steps to help their members protect themselves against the onslaught of counterfeiting.

Educating members about menace
Association website can play vital role in educating its members through their website. For example, National Electrical manufacturers Association (NEMA), USA has taken the menace very seriously and considered anti-counterfeiting as a matter of public policy and classified a special section on anti-counterfeiting at their website. http://www.nema.org /Policy/Anti-Counterfeiting/ Pages/default.aspx. Through this NEMA have started various services for its members such as anti-counterfeiting news, assistance to members, useful links etc. etc.

In India, FICCI one of biggest industry chambers is working on same line and recently formed a forum called Committee Against Smuggling and Counterfeiting Activities Destroying Economy (CASCADE) with an aim to generate awareness on the impact of these menace amongst consumers and citizens. The forum has launched a portal “http://www.ficci-cascade.com” which clarified various issues on counterfeiting. The website educates its member and consumer via industry news, awareness brochure, and discussion forum. The website also updated latest and articles and best practices adopted by companies around the world against counterfeiting.

According to Anil Rajput, Chairman FICCI CASCADE, “Counterfeiting and Smuggling are increasingly becoming a hugely lucrative business causing not only a great loss of revenue to the industry but also posing a serious threat to the security of the nation. As a result huge amount of investments goes in dealing with anti- social elements that is neither good for legitimate industry, for government nor for consumers. Efforts to counter this menace needs highest priority and calls for robust actions from all stakeholders”.

Educating consumers
While educating the member companies lies under the responsibility of trade association, mass consumers can be educated in similar with the help of consumer’s organisation / associations.

Assistance to members in adopting authentication technologies
Today, there are over 100 product security technologies (holograms, digital watermarks, DNA taggants, security inks, serialisation etc.) used by manufacturer to combat counterfeiting. Such solutions can be applied on the primary or secondary packaging. For an individual manufacturing company, it is challenging to understand the scope and efficacy of each of these technologies. The technology has to be understood, the right features have to be identified, the cost of adopting the solution has to be looked as also the logistics affecting the deployment of the solution all across the markets that the brand is present in. Trade association can provide guidelines to their members in order to reduce this burden. For example, Association such as Organisation of Pharmaceutical Producers of India (OPPI) have prepared and uploaded anti-counterfeiting guidelines for their members in order to help their members in establishing requirements that facilitate authentication and discourage counterfeiting.  http://  www.indiaoppi.com/ publication.asp. Similar guidelines are also being provided by National Electrical manufacturers Association (NEMA), in USA. http: //www.nema.org/ Policy /Anti-Counterfeiting/Pages/ default.aspx

Sharing of best practices against counterfeiting
Trade Association can provide and update best practices amongst each other as it is easier for them to collect information in comparison with member individual member companies.

Encourage member to consider brand protection as CSR
They can ask each member to report to them and/ or in their annual reports to share holder, actions taken by them to mitigate risk to their brand that will also protect their consumers. This will be a good corporate governance practice and an excellent CSR. Such reports will strengthen Trade Association’s case for stricter law enforcement, as Trade Association can now first show what their members have done and what they expect in turn from the law enforcement agencies. The excellent example set by GlaxoSmithKline can be seen at http://www.gsk.com/responsibility/.

Seminar / exhibitions
The Trade association can arrange seminar on counterfeiting and corporate responsibility. The target audience for this seminar should be CEOs, Heads of the companies, Brand owners. Along-with the conference there can be exhibition of anti-counterfeiting / anti-piracy technologies. Trade association can take help of authentication technologies association in this regard.

ISO Standards
The International Standards Organisation has recently introduced a new standard, ISO 12931 titled ‘Performance criteria for authentication solutions used to combat counterfeiting of material goods’. This standard sets out the overall strategy a brand owner should adopt to fight the menace of counterfeiting. These days ISO 9001 and ISO 14000 implementation are widely adopted. Associations of Industries that are prone to counterfeiting should take a lead in helping their members understand this standard and also implement this for the overall benefit of the industry.

As a further initiative, the industry associations should also build an environment that respects intellectual property. Members should be encouraged to Patent their innovations so that they are able to reap the benefits of their research and development.

In conclusion it would be apt to say that an industry association is formed to serve the cause of its members at large and one of the greatest threats today to any successful products is the counterfeits and lookalike products. An industry association should look within and decide whether it is doing all that it can to protect its members. In case any industry association feels that it needs some additional information and advice, the Hologram Manufacturers Association of India will be more than happy to help in their endeavours to fight counterfeiting. Please feel free to write to us at info@homai.org.

(The author is Secretaryof  HoMAI. Hologram Manufacturers’ Association of India  is an industry body of manufacturers and suppliers of holographic OVD’s and its allied products in India. It is the only association in India which is working on advancement of holography technology.  Since its inception, it has been encouraging its members to adopt best practices, standards and usage of advance technology in providing cost effective solution against counterfeiting.)