Counterfeit industry grows, tops R360bn

Johannesburg  - The South African counterfeit industry is estimated at approximately R362bn and is viewed as one of the world's fastest growing industries, with seizures of fake goods up 46% annually according to a counterfeiting expert at attorneys Adams & Adams.

In August this year, a few weeks prior to the 2011 Rugby World Cup, the South African Revenue Service (Sars) confiscated 66 000 counterfeit rugby jerseys, with an estimated street value of R43m.

Despite this, vendors continued to stand on street corners, traffic islands, and outside pubs and restaurants, and sell fake rugby jerseys and other items to fans.

"Because of its unique modus operandi, it is almost impossible to obtain accurate statistics on the counterfeiting industry.

"In South Africa, it's estimated to total an astounding R362bn," said Nishan Singh, senior associate and counterfeiting expert at attorneys Adams & Adams.

Singh said that globally, seizures of counterfeit goods were reportedly increasing by 46% annually, making the manufacturing of counterfeit goods one of the fastest growing industries worldwide.

According to Singh, the global market was initially targeted by counterfeiters producing copies of well-known international trade marks and products such as clothing, shoes, watches and sunglasses.

He said this had diversified to unlikely marketing such as household detergents, cigarettes and automotive parts, as well as pharmaceutical products.

"Counterfeit goods have both economic and social implications. Naturally, the proprietors of the genuine goods suffer huge economic losses, while the consumer is now on the receiving end of inferior quality goods which expose them to both safety and health - which is particularly disturbing - dangers," the legal expert said.

Sophisticated

Adams & Adams pointed out that counterfeiting was also generally related to other criminal activities such as drugs and money laundering.

The growth of counterfeiting has been so exponential that certain industries could themselves in direct competition with the counterfeiters.

"Advances in technology, increased international trade and emerging markets are factors that have contributed to the rapid increase in the prevalence of counterfeiting," Singh said.

Ideally, these goods should be prevented from entering the South African borders in the first place, however, due to the large volume of containers that were being imported into South Africa, only around 5% were searched by customs officials.

As a result, counterfeit goods slipped into the country under the radar, the legal firm said.

"In order to file such an application," explains Singh, "the proprietor must furnish the commissioner with a specimen of the original goods and details of its intellectual property rights - which include copyright and registered and internationally recognised trademarks. 

"Once the counterfeit goods are seized, criminal and civil prosecution against the importer may commence."

The apparent quality of counterfeit goods had also improved and it had become increasing difficult for the police and customs officials to identify these goods.
Furthermore, counterfeiters approach the market with increasing sophistication which made the industry more difficult to counteract.

"Ultimately though, the responsibility lies with the end consumer. The litmus test is - if the cost of an item seems too good to be true or the source a trifle dodgy, then generally it is not the real thing," concluded Singh.
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