Counterfeits vs Everyone: The Damage to Legal Business and the National Economy
15 February 2019
Tackling counterfeit helps businesses develop
Our main task is to work together to clear the market of illicit products and to do everything possible in various sectors so that those who comply with the law, those who run a legitimate business, those who develop their production, can have all the necessary competitive advantages provided by the government in order for them to conduct a transparent, responsible, bona fide business — Viktor Evtukhov, State Secretary and Deputy Minister of Industry and Trade of the Russian Federation.
A pilot project on the introduction of incoming documentation control in the field of cable products reduced the proportion of counterfeit goods from 32% to 11% – that is from 40 to 27 billion roubles in monetary terms. As a result of various enforcement actions, it was possible to reduce the share of illicit businesses in other markets. For instance, the share of the shadow sector in the cement market was reduced by 48% or 11 billion roubles, which is now in transition to the legal segment of this market. The growth of production in the legal sector in the aluminium wheel market, as a result of tackling counterfeit goods, was 9%. In the fuel market, it became possible to reduce the share of fake products from 20% to 9%; in terms of rouble value, we managed make nearly 300 billion roubles available for legitimate businesses. That means taxes and legal jobs — Alexey Kuleshov, Deputy Head, The Federal Agency on Technical Regulating and Metrology (Rosstandart).
Educating consumers is an essential part of anti-counterfeiting
There are two basic conditions for a civilized market to shape up. The first one is clear and equal rules for all participants. The second one is consumer awareness. Work in these two areas is carried out by quality control organizations in many countries. In particular, they perform comprehensive monitoring of consumer goods, which stir concern among consumers. They identify the systemic problems in that kind of goods. They take the identified problems to the relevant agencies in their countries and influence the producers through consumer demand by telling about products openly and scrupulously. The effectiveness of combating counterfeit products in the market is ensured by instant reaction to the problem, not only from business, but from government agencies as well — Maxim Protasov, Head of the Russian Quality System (Roskaschestvo).
Unscrupulous manufacturers use Internet platforms
Any consumer would prefer to get quality products, not doubting their safety; the kind of products which would ensure their long-term use. Introducing the practice of notification could be another key to regulating the market for certification agencies today. There is a lot of talk about digitalization, about making an industrial breakthrough, so that industrial breakthrough ensures solid economic development. The analysis carried out by our specialists showed that the fraudsters who work through internet platforms almost completely eliminate the effect of digitization. So, we need to start working in this area as well — Natalya Kozhina, Acting Chairman of the Executive Board, Union of Cement Producers (Soyuzcement).
Minor penalties for counterfeit trade
One of the problems is a very low level of responsibility for selling counterfeit products. Our Association managed to make the market more transparent and civilized for legal players through tighter interaction with government, regulatory bodies and local authorities — Vladimir Kashkin, Deputy Director, Electrocabel International Association of Cable Product Manufacturers.
Reducing the share of counterfeit in the supervised markets to 5% by 2025 is realistic, provided that additional measures to tackle counterfeiting are adopted. To do this, it is necessary that the decisions made in regard to turnover fines are scaled up to other markets. We need to adopt informatization of control and supervisory activity, and to introduce information systems, using the example of the fuel traceability system – from refineries to gas tanks. It is necessary, following the instructions of the Government, to revise outdated requirements of control and supervisory activity, and to inform the market participants about existing standards and requirements as part of preventive work. And it is necessary to introduce the possibility of test purchases in the supervised markets — Alexey Kuleshov, Deputy Head, The Federal Agency on Technical Regulating and Metrology (Rosstandart).
Introducing products labelling and elements of public control
The functioning tools have already been created in the market. First of all, it is the State Commission for Countering the Illicit Trafficking of Industrial Products with the appropriate expert councils. That has significantly accelerated the work. Particularly, it has only been seven months since the decision to perform labelling in fur industry until the actual launch of the experiment. In the shortest possible time, a unique transactional system was created, which not only made it possible to see labelling of a product, but also to fully trace the course of its sale on the market. Including the Russian Quality System into this chain had a positive influence on how this process was perceived by consumers. A set of multidirectional measures taken ensured a positive result — Vugar Isaev, Chairman of the Board of Directors, SK Treyd; Member of the Presidium, The Retail Companies Association (ACORT).
We expect that public control will be one of the key tools for undertaking anti-counterfeit action in any of the markets — Dmitry Alkhazov, Executive Director, Advanced Technologies Development Center (ATDC).
The material was prepared by the Russian news agency TASS