Solutions to a counterfeit culture

(First of two parts)

Shanghai, China – Everything can be copied in China, from simple branded T-shirts and the latest athletic footwear to elaborately packaged counterfeit Nintendo Game Boy cartridges. China has gained a reputation for generating hundreds of millions of dollars worth of cheaply priced copies of premium items in demand around the world.

Here in Shanghai, fake Rolex watches and Mont Blanc fountain pens are peddled in abundance a few meters from most hotels, and PC software and DVD video piracy is rampant. An obsession with expensive and branded consumer and technology products has generated an unparalleled counterfeit culture.

During its 2004 Asia Expo here, Canon announced stricter counter-measures against imitators profiting from the company’s name and reputation. Of Canon’s 636 anti-counterfeiting raids around the world last year, 243 took place in China. The rest of Asia had 55 raids, and the Americas and Europe combined, 65.

An Uphill Battle

Canon, like most technology-oriented multinational manufacturers, invests large sums of its revenues in research and development to stay ahead of the competition. It sets aside approximately 10 percent of its yearly revenue for R&D to sustain its product development and innovation. Most successful technology and manufacturing companies need to continue doing this in order to ensure the success of upcoming products.

When counterfeiters illegally copy their technologies and proprietary designs, this puts a squeeze on a company’s R&D investment and eats into its earnings.

What is worse is when counterfeiters charge full price for fake products bearing the company’s name and logo. Substandard counterfeit products like printer ink or toners can damage devices when they do not work properly; this becomes a bigger problem when the company is deemed responsible for the damage done. This adversely affects a company’s reputation and quality claims on its products and, at the same time, creates problems for customers who, by buying counterfeit items, indirectly fuel illegal business and put their devices at risk.

Nobuyoshi Tanaka, Canon managing director for corporate intellectual property and legal affairs, told Asian journalists about the difficulties experienced by the company.

"At Canon we create our original technologies and then apply intellectual property for the protection of our creations. We would like to eliminate counterfeit (products) in order to improve our reliability for Canon products. Counterfeit (products) in Asia has been a problem for consumers and (has been) damaging to the business of dealers," Tanaka said.

Canon, like many of its major competitors in the computer printer and office machine business, derives a large part of its income not just from the sales of printers but of consumables such as ink cartridges, toner cartridges and paper products, to name a few.

Counterfeit versions of these consuma-bles, complete with almost identical packaging and branding, have been infiltrating the market and are sometimes passed as original even by reputable stores.

"Customers purchase our products because they believe in our brand. As a company we are taking this opportunity to eliminate counterfeit (products) in Asia," Tanaka said.

(To be concluded)