The International Authentication Association (IAA) has urged manufacturers of branded goods to continue and even increase their investment in anti-counterfeiting strategies and technologies, and not to cut back their efforts in an attempt to save costs during the current economic downturn. According to IAA chairman David Howard, whereas companies will inevitably be taking a hard look at their all their costs, one area that is critical to maintaining turnover and market share is to prevent the loss of any of this to counterfeit products.

 

The temptation to cut back is obvious, said Howard. With consumer spending falling, sales are suffering - particularly for producers of high value, luxury or non-essential items. Such manufacturers are already under pressure from higher energy, labor, materials and financing costs and for some an  automatic reaction will be to compensate by cutting expenditure wherever possible – with investment in authentication technologies that help prevent counterfeits and maintain brand integrity a likely candidate.

However, the economic slowdown is also likely to lead to an  increase in illegal activity including counterfeiting – economic hardship being a recipe for increased criminality.  Counterfeiters need little excuse at the best of times to ply their trade – but in the current economic scenario they are likely to find a more willing audience among consumers that cut costs by cutting corners on the quality and provenance of what they purchase.  And if companies do cut back on their anti-counterfeiting efforts, then the environment for counterfeits will be even more conducive.  

 

With manufacturers cutting back on the one hand, and a more attractive environment for counterfeits on the other, it goes without saying that any let-up in investment is absolutely the wrong action for such manufacturers to take, said Howard.  ‘Logically, they should be increasing their efforts so as not to compound falling sales as a result of a slump in spending with the loss of even further sales to counterfeiting.’

 

‘The first action to take,’ he added, ‘in order to ride out the coming storm is to hold on to the sales and markets that you already have. Counterfeits will undoubtedly start eroding these, unless companies protect themselves and their consumers. Continuing investment in features and systems that prevent losses will help companies through the hard times ahead.’

 

Estimates of the losses due to counterfeiting vary – from $200 billion per year (OECD) to $600 billion per year (the Progressive Policy Institute). According to the international Chamber of Commerce (ICC), counterfeiting is responsible for 5-7% of world trade and affects every sector of manufacturing. More details of the impact of counterfeiting on different industries and sectors can be found on the IAA website – see below.