Counterfeit goods: Are the risks worth the savings? Counterfeit goods: Are the risks worth the savings?
“Counterfeit electronics can be downright dangerous", says the EU, but there's more to it than just that. Counterfeit goods: Are the risks worth the savings?

Buying counterfeit goods is not a good idea. That’s because the short-term cost savings are dramatically outweighed by the long-term risks of why those goods were cheap in the first place.

For starters, there’s the old adage of “you get what you pay for”. Counterfeit goods of all kinds, be they IT products, gadgets, clothing, cosmetics, or jewellery, objectively aren’t the same quality as their legitimate counterparts. This has serious repercussions for anyone buying them.

Ensuring safety & compliance

To say so isn’t marketing-speak, either: it’s 100% true. This is because companies that sell legitimate goods don’t just blast them onto the market willy-nilly; all commercial products are tested by organisations that are responsible for maintaining and enforcing safety and compliance standards before they’re allowed to go on store shelves.

In South Africa, the body responsible for doing this is the SABS – the South African Bureau of Standards – and while the process may be slow because SABS is backlogged, the fact remains that there is indeed a vetting process in place for legitimate products.

And this is important, because companies want their products to be safe and suitable for human use and/or consumption, as not being so can lead to them being sued, or their products recalled.

In the context of this particular conversation, counterfeit electronics are especially problematic. Not only are they not built to the same standards as brand-name electronics, they can be a genuine hazard. Lower-quality, untested components can be prone to overheating and/or catching fire because they were never designed or assembled with safety in mind, they may not last as long before they fail, and they won’t necessarily deliver the same performance as their brand-name counterparts.

No Vetting

Counterfeit goods tend to make their way into countries in less-than-legal ways, and as such aren’t subject to any such vetting. Moreover, their manufacturers don’t – or won’t – offer any sort of warranty. This is why they’re so much cheaper – whoever peddles them saves a lot of money not having them evaluated by the proper authorities or supporting them after they’re sold.

Of course, this leaves end-users at risk of something going terribly wrong, and then having no recourse. So, while they might save on their up-front purchase, they stand to lose in the long run.

The European Union’s law enforcement agency had this to say about the situation:

“Counterfeit electronics can be downright dangerous. But the people who make these fake electrical products don’t really care about your safety. The products are made with sub-standard insulation, undersize wire, and other parts which are inadequate from a safety perspective. They often have counterfeit safety seals to make them look legit – the manufacturers of the fakes want you to think the products have been safety tested when they haven’t. The products can shock you or overheat and catch fire. And you have no idea until that emergency happens, the product doesn’t break, doesn’t shut off and you end up with a fire on your hands.”

Definitely not worth the cost-savings.

Innovation, copied

The rise of the Chinese manufacturing sector over the past 20 years has contributed significantly to the problem of counterfeit goods, not only electronics.

Several factors contribute to this. The first is innovation: as innovative products gain commercial success, so too does the desire for others to copy them, regardless of the legality of doing so.

The second is the ability of Chinese manufacturers to copy just about anything, since China’s manufacturing sector is known for its culture of knowledge-sharing. This is the opposite of the West’s approach, which is to rigorously protect intellectual property and to take legal action against anyone who attempts to make use of it without paying licensing fees to do so.

A great example of IP being copied is the large number of knock-off cell phone brands coming out of the East, like Nokla, Nokiya, Landvo, FeiTeng, HDC, and others that offer cheap clones of phones from the big brands. FeiTeng, for instance, offered lower-specced phones modelled off Samsung’s Galaxy S range, while HDC offered imitations of HTC’s various phone designs.

There are obvious trade-offs when buying these phones, of course, as product quality and performance don’t compare favourably to the real thing. In addition, some of them run fake versions of Google’s Android operating system (and are thus incompatible with apps from Android’s Play Store), and their cameras are of notably-lower quality as well.

End-user appeal

The end-user appeal here is that consumers get products that are similar to the real thing but at a fraction of the cost, regardless of the risks. As a result, fake phones are hugely popular in the East and other markets where people aspire to owning the real thing but who can’t necessarily afford it.

In fact, counterfeit goods are so popular everywhere that the Organisation for Economic Co-operation and Development estimates that the market for them makes up 3.3% of global trade.

The main reason for the West’s aggressive protection of intellectual property makes good business sense: successful commercial products are the result of costly research and development, stringent manufacturing standards, and marketing efforts. It’s also a lot of hard work by a large number of highly-skilled people, and parties who didn’t pay for any of it shouldn’t make money from it.

Good reasons

And while this means that end-users are expected to pay a premium for products based on all of this hard work and innovation, there’s plenty of good reason for it.

Genuine goods are made to a high standard, they offer advanced and often innovative functionality, they work as advertised, and they’re backed by warranties and after-sales support. And at the end of the pipelines that are in place to make the above possible, the companies that create them do need to make a profit.

 Yes, while you can get knock-off products at a fraction of the price, it’s hard to argue that what you lose in the process is worth the cash saved.

[Image: CC-BY-2.0][Credit: hellosputnik]

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