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Counterfeiting

Counterfeiting

Non-authorised copies and counterfeits are a major problem across all product sectors, but have really got out of control in recent months within the electronic cigarette industry. As a fairly young industry, with many unique brands entering the market each week it’s a very difficult problem to solve, although we have already begun to hear stories of original manufacturers fighting back hard, getting shipments seized and destroyed at the border and getting the PayPal accounts of the dealers of these illegal goods frozen. We can only hope this will become a more common occurrence.

Counterfeits and clones, what’s the difference?

A counterfeit product has every element of the product copied, including the original maker’s marks and logos, or can be a slightly or entirely differently designed product, featuring a known manufacturer’s logo or marks so as to make it appear as if it is made by the manufacturer who owns the logo. Often, the consumer will not have any idea they are purchasing a counterfeit product, and sometimes, even the retailer will have been duped by their supplier too.

Cloning is where most elements of the product have been copied, but the product is intended to be identified and sold as a copy, and doesn’t feature the logo or marks of the original manufacturer. Although it has very serious effects on the designer/manufacturer of the original product, as well as its entire distribution network, it’s harder to prevent because the process of proving intellectual property of designs is harder and very costly, even when a patent is owned.

Essentially, whether you call them counterfeits, copies or clones, they are all theft of original work and made using the intellectual effort and resources of the original innovators.

A bargain, or is it?

You might not regard buying a counterfeit mod or atomiser as an illegal transaction, but merely a cheaper way to get the latest device everyone’s talking about. Often the temptation for consumers can be too strong to resist, with many not understanding the very real risks and ramifications attached to this illicit industry.

Besides the very obvious quality issues usually found on counterfeit and clone products, which at their very least, often lead to user experience issues because of poor performance or defective operation, or their visual appearance or “finish” being below par, there is a much more worrying safety concern with these fake products. The safety of a product can be impacted by means of dangerous materials finding their way into the finished products (for example, high levels of lead in cheaper metal alloys) or worse, major electrical faults which could lead to very dangerous explosions and fires despite the user ensuring they observe all the normal safety measures.

I can’t afford genuine products, what’s the harm in buying a clone?

Many consumers, particularly in our market, seem very happy to knowingly purchase knock-off goods. Maybe this is because of limited funds, or simply because they can’t justify paying the full price for the equipment they so desperately want to acquire. There is an element that even believes the original product is “so expensive that it deserves to be cloned”.

If you are one of those that think like this, I ask you to stop right there and think a little more deeply about the costs. Imagine for a moment that you spent time and money coming up with a great piece of work, or a product, would you be happy to have invested hours and hours of your time, perhaps time you’d have rather spent with your family, and borrowed or invested thousands of pounds in your idea, only to have someone come along as soon as you release it, and copy it for their own gain and thereby halt any hope of you recouping your original costs?

If you believe you yourself deserve to be rewarded properly for your own talents and effort, and you appreciate the talent and the work of one of the many wonderful and talented manufacturers in our industry, surely you believe they should also be rewarded properly for their work, rather than the efforts and toil being “used” by someone else for material gain?

Consumers also need to be aware that the type of companies engaging in counterfeiting practices will have no concern about the safety of the products, or the safety of their manufacturing processes, and are often engaged in organised crime and/or using child labour to keep their costs as low as possible.

The Impact of Clones and Counterfeits

Counterfeit products lead directly to financial turmoil for businesses such as low turnover, stolen know-how, lost jobs, lawsuits and price hikes, followed by growth halt & innovation slowing. The original manufacturer relies on the sales of their original product to pay them back for all their time and investment in the original design, prototype production, manufacturing costs and testing phases involved in bringing a new product to market, as well as requiring the funds to help toward future research and innovation.

The inevitable drop in sales of the legitimate product means these original manufacturing costs may never be fully recovered, or that limited funds remain for further research, innovation and development.

Authorised retailers of a product which has been cloned or faked may find themselves completely unable to sell the original products they have on hand, or only able to sell them at a loss. Without going into great detail here about stock management or the cash conversion cycle, having funds tied-up in un-saleable stock is a massive drain on a businesses’ resources, both in terms of the funds not being available to pay employees or purchase other stock to maintain profitability, and also in terms of the space and resources used by such product whilst it remains sitting in the warehouse.

Also consider the negative impression a poorly performing counterfeit product leads to in the mind of the consumer, who may have no idea it’s not a genuine product. As the saying goes, “mud sticks” and the negative experience will forever be associated with that of the original manufacturer in the mind of the consumer.

The ramifications of counterfeiting aren’t just limited to those involved in the trade – it actually affects everyone in an economy affected by the activity, with Governments, businesses and society being robbed of tax revenue, business income and jobs. The flood of counterfeit products leads to more public spending through the requirements for increased border efforts to spot, and seize the fakes as they are imported, increased Trading Standards’ resources and other enforcement work to counter the illicit trade. It also increases the burden on the government caused by unemployment and low pay (analysis has been performed which indicates 300,000 jobs have been lost in the EU wholly as a result of counterfeiting activity); and it increases the price of legitimate products as companies seek to recoup their losses.

The effort of dealing with the problem, both in financial terms and also in the emotional toll it takes on original manufacturers and their authorised retailers, could mean that they simply lose hope for the industry they love being a part of, and give up and go and do something else instead.

Consumer power

There is a great need, particularly within our industry, to build more awareness of the scale and effects of the problem. Border controls, Trading Standards, merchant payment processors, sales sites (such as eBay and Amazon), Official Trade Bodies and forum owners all need to take a much tougher stand against counterfeiters, and although the responsibility falls on everyone, the greatest change can be brought about by consumers themselves who can to exert their influence with their purchasing choices.

While consumers often cannot identify counterfeit goods, the more obvious routes of supply should be shunned and companies engaging in this trade should be named and shamed. You can avoid contributing to this problem by only going to well-known and respected authorised dealers, and if you are in any doubt, try to contact the original manufacturer and ask them if the supplier you’re about to purchase from is an authorised one. It’s understood that you may find fakes at your local market, but also be aware that they are often sold on professional looking websites.

Stay alert to warning signs. If the product is being sold by someone other than an authorised retailer, steer clear. If the price is too good to be true, then it probably is.

Conclusion

The bottom line is that counterfeiting costs everyone, and those too concerned with paying the cheapest price for their vaping kit, when they should be focused on the harmful effects that these cheaply made counterfeits could have, are the primary drivers for the rampant counterfeiting within our industry. If people refuse to purchase knock-off products, these rogue industries will suffer economically and ultimately disappear.

 

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