Friday, February 15, 2008

The Rip-Off Economy

According to a study as published by the Department of Trade and Industry, South Africa suffered a loss of revenue owing to fake goods which ran in excess of R2-billion between 2003 and 2005. The same study also revealed that R540-million was lost for the period between 1 April 2005 and 31 March 2006 alone.

The global picture is no rosier. The Geneva-based World Intellectual Property Organisation published a report in early 2007 which stated that counterfeiting and piracy costs the global economy at least $100bn each year.

China and Russia, two of the fastest developing countries in the world in terms of economy, are reportedly the worst culprits. The European Commission identified China as accounting for two-thirds of all counterfeit goods seized in the EU in 2007.

The global counterfeit market economy is probably far larger then the figures as published in these reports as online goods were not taken into account.

A German organisation called Aktion Plagiarius has been trying to combat the surge in counterfeiting. Since 1977, the organisation has been handing out the “Plagiarius Award”, a dubious honour bestowed on makers and distributors of the "best" product knockoffs with the aim to publicly shame those involved in product piracy and to inform designers, consumers, politicians, and others of its harmful effects.

Although the Aktion Plagiarius’ cause is no doubt a worthy one, with a different approach to standard counterfeiting measures, one questions whether they are winning this battle, given the continued rise of counterfeit products globally.

The counterfeiting business is likely to grow and in effect worsen the situation for brands across all sectors as other developing countries begin to participate in the knockoff trend. It seems then that the best way for a brand to retain its strength in the market place ultimately comes down to their own brand-building efforts.