The multi-billion counterfeit Industry

In an investigative report, the Standard details how wheeler-dealers in the counterfeit industry go about their “business”. From mobile phones to spirits, the counterfeit barons are able to imitate any “commodity.” All they require is a sample or even a photograph of the genuine item and they will have a fake one manufactured in China at a fraction of the retail price in Kenya.

The barons are also defrauding the Kenya Revenue Authority of billions of shilling by making fake revenue stamps that are mainly used by manufacturers of wines and spirits. For example, one Chinese baron was found with 25,000 pieces of revenue stamps each retailing at Ksh 5. The stamps are then sold to unregistered manufacturers to sell unlicensed wines and spirits. KRA is worried that the fake stamps are perfectly made to look real and a layman will not notice the difference.

Mark of quality may make goods disappear from market

According to Business Daily some consumer goods not bearing the East African Standardisation mark may be removed from supermarket shelves from tomorrow. This is in line with the requirement for all locally manufactured goods to bear the quality mark as agreed by the by the EAC members states.

According to the report, Nakumatt Supermarket has issued a notice of its intention to remove all non conforming goods from its shelves as the deadline for compliance takes effect in all the EAC countries from 1st July 2008.

As previously posted here, Kenya Bureau of Standards has consistently alerted Kenyan manufacturers of the requirement for their manufactured goods to carry its standard seal indicating that their quality has been certified. However IP Kenya is sceptical of the extent to which adhering to the standard will advance the stated objective of eradicating the menace of counterfeiting and substandard products in the region.

To beat the deadline the counterfeiters may have moved ahead and put their act together to “comply” with the requirement by branding their products with the quality mark. As a recent case in Uganda demonstrates, at least some counterfeiters are ahead of the deadline and have branded their products with the diamond quality mark.

As reported here and here the case concerned importation into Uganda of counterfeits BIC pens by a Ugandan company Wenbara Trading Company Ltd. The pens were imported from China described as writing plastic materials but on verification by Ugandan Revenue Authority the cargo was found to contain pens marked as “BIC” and “made in Kenya”. The boxes containing the pens were also branded with the diamond mark of Kenya Bureau of Standards and falsely indicating that the pens were made by Haco Industries in Kenya.

Fake products flood the Kenyan Market

Daily Nation reports that the Kenyan market is flooded by fake products, and the situation is being made worse by the current economic hardship in which the purchasing power has gone down.

Some of the imported counterfeits are marked as “made in Kenya” and with fake Kenya Bureau of Standard diamond mark. The situation is worse where even anti malaria drugs have not been spared, with 1 in every 5 drugs suspected to be harmful.

The report indicates whereas most of the products are imported the trade is expanding locally especially in Nairobi where fake cooking oil, maize flour and alcoholic drinks are manufactured and the goods are then sold in neighbouring countries.

The practice is affecting not only the economy but many local manufacturing companies who have to endure the unfair business practices. Haco Industries, a local manufacturing company is reported to be losing Ksh 100 Million every year as a result of counterfeiting of one of its brands, BIC biro pens. Sometimes the counterfeit is so similar to the genuine product that even the brand owners may not tell the difference.

It is reported that Kenya Bureau of standards has directed that from July this year all manufactured goods in Kenya will be required to carry standard seals indicating that their quality has been certified. It is debatable whether this new directive will help. The mark can easily be applied on counterfeit products as a recent case in Uganda demonstrates.

The case concerned importation into Uganda of counterfeits BIC pens by a Ugandan company Wenbara Trading Company Ltd. The pens were imported from China described as writing plastic materials. However on verification by Ugandan Revenue Authority the cargo was found to contain pens marked as “BIC” and “made in Kenya”.

Tellingly the 852 boxes containing the pens had a diamond quality mark of Kenya Bureau of Standards. And even though the cargo was imported from china, the boxes containing the pens also indicated that they were made by Haco Industries in Kenya.

To address the counterfeit menace, the anti counterfeit bill (reported here) which proposes establishment of an anti counterfeit agency will be tabled in parliament this year. It will be recalled that this bill has been pending for a number of years now.

However the war on counterfeit activities will not be won by creating layers and layers of laws. In addition to enacting new laws and regulations it also important that they be enforced.

More on anti counterfeiting measures in neighbouring Tanzania here and here

Countefeit horror here.