Counterfeiting in Manufacturing: How Big Is the Problem and How to Protect Your Business

Counterfeiting is a problem for a large variety of businesses, with manufacturing being one of the sectors that is most affected by the practice.

Our TYKMA Electrox laser marking systems are an ideal way to help your company combat these counterfeiting threats, which we’ll detail below. But first, let’s take a look at the impact counterfeiting is having on manufacturing globally.

The Increase in Counterfeiting in the Manufacturing Sector

According to the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy, or BASCAP, pirated goods effectively remove $1 trillion from the global economy and cause the loss of what would otherwise be 2.5 million jobs. The BASCAP also states that counterfeit, fraudulent, and suspect items, or CFSI, affect not only businesses but consumers, governments, and societies as a whole.

Let’s examine some key facts about the counterfeiting epidemic:

In recent years, counterfeiting has grown worldwide, with a report by the Organisation for Economic Co-operation and Development (OECD) stating that pirated goods grew from a $250-billion black market industry in 2008 to a more than $461-billion black market industry in 2013, seeing a nearly 80% increase in only five years

Makarand Hastak, a professor at Purdue University who studies engineering trends, found that 83% of companies involved in a study examining the role of counterfeiting reported project delays due to counterfeit and fraudulent products

Phil Beelendorf, the maintenance technology senior manager at manufacturer Roquette, meanwhile, believes the surge in counterfeiting is being driven by increased competition and the perceived need for companies to acquire goods and services at the lowest prices possible

Another likely culprit for the counterfeiting influx is the rise in 3D printing technology across the world, since parts can be quickly and efficiently duplicated, significantly increasing criminals’ profit margins and reducing those of legitimate companies

On this latter point, Beelendorf believes that some less reputable companies may be engaging in such tactics and reverse engineering OEM parts to save money

Another issue that has been seen is counterfeiters working to craft websites that make themselves look as though they are legitimate suppliers of a product, incorporating product images, pics of warehouses and factories, and even phony certifications to make their site and company appear genuine

The Widespread Effects of Counterfeiting

Of course, the increase in counterfeiting brings along with it an increase in its harmful effects. Just consider these damaging outcomes that have been outlined by the IACC:

Dangerous Products – Since counterfeit goods are usually crafted with substandard and inexpensive parts, and can even incorporate toxic substances, injuries or health issues could occur during use of these products

Security Threats – Consumers or other companies who purchase goods from a counterfeit website, whether knowingly or not, put themselves at risk for fraud, identity theft, malware, and more

Tax Losses – Since counterfeit operations do not pay taxes, money that would be going to federal, state, and local agencies for schools, hospitals, government programs, and more is all lost

Furthering Illicit Activities – In many counterfeiting operations, fair wages and benefits are not supplied, working conditions are substandard, and child labor is utilized. These operations also often have connections to organized crime

Damaging Brands – Beyond just the loss of profits outlined above, companies also suffer from counterfeiting by having substandard products presented under their name, hurting their brand long term and reducing consumer trust in their genuine offerings

As you can see, counterfeiting can have far-reaching effects that cause harm across society in numerous ways. Now let’s examine some of the best ways manufacturers can mitigate or remove the threat of counterfeiting to keep their operations protected.

How to Protect Your Business from Counterfeiting

One of the key ways to protect your business from counterfeiting is by utilizing laser marking and engraving to place bar codes, serial codes, 2D codes, and logos on various product parts to help customers know they are working with an official product, and to also help you in your traceability efforts.

As we’ve chronicled in previous posts, lasers have been utilized to fight against counterfeiting for some time, greatly assisting companies in this regard while also supplying a host of other benefits.

Be sure to visit our laser marking systems page to see our wide variety of products so you can find the ideal unit for your company.

Along with laser marking, there are numerous other steps companies can take to help safeguard their products, which include:

Educating distribution partners and customers about the threat of counterfeits, which could include by way of online training, video explanations, email newsletters, and more

Showcasing your list of authorized distributors on your website so that your customers should have no question as to whether or not a product they are receiving is coming from a reputable source

Determining how you will internally approach counterfeits that you do uncover, as quarantining and impounding them once receiving them from a customer can be beneficial both to track their origin and to be used as evidence in any legal proceedings

Working closely with authorities such Customs, the Department of Homeland Security, and the U.S. Patent Office to both prevent any counterfeit goods from entering the market and ensure any counterfeit operations receive the justice they deserve

Reminding customers of the “three ‘Ps’” when it comes to purchasing a product:

- Price – Does it look too good to be true?

- Packaging – Does the packaging appear legitimate, or does it contain errors, low-quality photos, spelling and grammar issues, or quality control problems?

Place – Where are you obtaining the product from and does this source appear credible? If you’re uncertain, it’s best to visit the manufacturer website.

Along with all of these steps, you can additionally utilize the following helpful resources:

Contact Us!

If you’d like to learn more about all that TYKMA Electrox’s efficient laser marking systems can do for your anti-counterfeiting efforts, be sure to contact our team today. We’ll walk you through everything you need to know and help you find the best system for your company!