*NEWS*50% OF MIDDLE EAST INK CTGS…FAKES
*NEWS*50% OF MIDDLE EAST INK CTGS…FAKES
2006-04-13 at 10:21:00 am #15014
Not Worth the Paper it Prints on
printer cartridges have Egyptian offices awash in sticky, low-quality
toner – and bursting with frustrated purchasing managers. Authorized
dealers are spreading the word that while they remain more expensive,
genuine supplies will save companies thousands in printer repairs and
the span of six months, a puzzled internet department manager at
Al-Ahram watched as 50 of his Canon office printers went down one by
one. Omar Samy had been purchasing ink cartridges bearing the trademark
Canon logos for months and feeding them into his printers.
He had no idea that the cartridges were fakes that were slowly damaging the printer heads.
had Canon printers and we were buying compatible ink for the printers,
not from Canon itself, but from another supplier,” says Samy. “They
sold it to us as a Canon product, but it was fake. The quality of the
printout looked the same as the quality of Canon, but the problem is
that the ink had problems you can’t see with the naked eye.”
replace the printer heads at a cost of LE 1,000 would have been only
marginally cheaper than buying all new printers for about LE 1,200, so
the company decided to buy new ones. The supplier blamed the
wholesaler, the wholesaler blamed somebody else, and the newspaper was
left to pay the bill. Al-Ahram’s losses came to about LE 60,000.
black market in manufacturing, smuggling and selling counterfeit office
supplies is a multi-billion dollar global business, and the Middle East
is one of the counterfeiters’ favorite markets. According to the
Imaging Consumables Coalition of Europe (ICCE), a non-profit
association of industry leaders that monitors the counterfeit supply
business in Europe, Africa and the Middle East, the supplies industry
in those regions is worth 30 billion a year.
According to ICCE, fake
office supplies account for about 5% of sales in Europe. The same
figure for Egypt and the Middle East could stand as high as 50%.
believe in Egypt 50% of the market is counterfeit,” says Jag Gill,
director of ICCE, from his office in England. He mentions Egypt and
Saudi Arabia as the prime regional markets for fakes, saying most of
the counterfeit office supplies are made in China and other
Asia-Pacific countries and make their way to the Middle East and
African markets through Dubai.
Abdel-Hakim Bakry, a product manager
at the Engineering and Trading Company (ETCO), Canon’s distributor in
Egypt, says that if you include official retailers, 80-85% of all ink
cartridges on Egyptian shelves are counterfeits, and 99% of all the ink
cartridges sold in street markets and in computer malls are fakes.
estimates the counterfeit industry is costing Canon in Egypt at least
$1 million in lost printer sales alone, and no less than $3 million for
all products. He says those numbers continue to increase because the
government is not taking adequate measures to fight the problem.
(Officials at the Ministry of Interior’s financial crimes investigation unit were unavailable for comment by press time.)
Secret in the margins
Sphinx in Mohandiseen in Cairo is famous for its computer malls, which
are crammed with computer and office supply stores. According to Bakry,
this is the hub of the counterfeit office supply market in the nation’s
“ They are selling fakes very near to our price so that the
customer is not going to suspect the products they are selling are
While you can find varying prices for the same fake product
in different markets and shops, Nasser Nasser, ETCO’s technical
director, says retailers are making large profit margins by selling
fakes; huge margins are just too tempting for retailers in the nation’s
ubiquitous computer malls to turn down. An authentic ‘BCI 24 Black’
cartridge for example, sells for LE 58 in trusted retail shops like
Carrefour and Radio Shack, according to Bakry. The retailer buys the
cartridge from Canon for between LE 48 and LE 50, making a moderate LE
8 profit. Bakry says retailers buy the fake product for around LE 20
and often sell them at prices close to the original product.
are selling fakes very near to our price so that the customer is not
going to suspect the products they are selling are fakes,” says Bakry.
“If it’s very cheap they will say, ‘Ah, this is very cheap, maybe it’s
not good.’ The biggest profit margins go to the retailers.”
Bakry says consumables like ink cartridges account for 60% of the
profit he makes over the lifetime of a printer. But with many customers
buying fake cartridges from other retailers, his breakdown is closer to
85% profit from the printer itself and only 15% from the consumables.
When he sells a printer on a 6-8% profit margin, Bakry is hoping to
sell three cartridges per year at a profit margin of 10-12%.
sell 20,000 printers per year, I expect to sell 60,000 cartridges.
Instead, I’m selling closer to 20,000,” he says. “Two-thirds or more of
my business went to some other people who are making fake consumables.
This is how big it is. There’s not enough profit from the consumables
so the business cycle is not a healthy cycle.”
Ink and toner
cartridges for printers and copy machines are the products most often
replicated. Bakry says that the ink dye used in the fake cartridges is
not up to industry standards. Experts say fake cartridges produce
inconsistent and poor ink quality and damage parts in the printers,
mainly the sensitive printer head, thus cutting the life span of the
printer in half, usually by clogging sophisticated nozzles.
customer is losing the money he paid in the printer he bought,” says
Bakry. “The effect is very bad on the printer itself and the quality of
the output you are getting from the printer, and very bad on the
Spot the evil twin
When customers bring damaged
printers back to the manufacturer’s workshops for repair, the first
thing the service providers look for is whether the customer was using
original or fake ink. In most cases, says Bakry, they find counterfeit
Canon is then in the difficult position of having to
inform customers that they are using counterfeit goods. Bakry voices
his customers’ frustration, saying, “‘I went to the mall and I asked
for original ink and I paid the original ink price, what can I do? I
can’t differentiate between the original and the fake.’ And he’s right
- he can’t differentiate normally between original and fake ones.”
The problem extends well beyond ink cartridges.
Zakaria, paper business manager at Xerox Egypt, says he posed as a
potential buyer, setting up a meeting with a fake paper supplier with
the help of police. When the man tried to pass off the fake paper as
Xerox paper, the police moved in and arrested him for questioning.
the whole operation proved fruitless, as the man refused to give any
information on his suppliers, which is what Zakaria was really after.
Nabbing one or two small-time sellers and seizing their supplies does
not make even a small dent in the market. Zakaria says the fake paper
business costs Xerox close to $1 million every year in lost business in
“I believe that I need to open a police station for
myself to go after each one selling this paper,” says Zakaria. “I don’t
have the time, I don’t have the resources and I don’t have the
capability. We’re facing a lot of problems with counterfeit paper.
There are a lot of sources for the counterfeit paper and actually it’s
a very easy process to imitate the paper.”
All counterfeiters have
to do is make a box with copied Xerox logos, fill it with cheap paper,
and sell it as the more expensive original. Just like the fake ink
cartridges, it is very difficult for the consumer to tell a real Xerox
box from a fake one, let alone differentiate between the quality of the
paper. Sometimes, though, the process is so amateur that the colors
used on the fake box do not even correspond with Xerox’s colors.
Someone with a trained eye can spot these differences, but not the
“When you use the fake paper for the first time
you will not notice the difference. With time, the maintenance rate of
the machine will get higher because you are using very low quality
paper,” Zakaria says. And like in the fake cartridge business, he says
prices of counterfeit papers are not much cheaper than the original:
the customer just thinks he’s getting a bit of a deal.
Killing two birds with one stone, retailers keep counterfeits harder to detect and increase their profit margins enormously.
Rubbing out counterfeiting
stopping the counterfeit industry altogether is impossible, ICCE
Director Gill says his association is making strides to reduce the
problem in countries including Saudi Arabia and Egypt.
He says his
organization assisted Egyptian authorities in conducting 11 raids over
the last six months and seized 50,000 counterfeit cartridges valued at
over $1 million. He praises the governments of Egypt and Saudi Arabia
for taking measures to protect intellectual property rights in the last
“ When you use the fake paper for the first time, you
will not notice the difference. With time, the maintenance rate of the
machine will get higher because you are using very low quality paper. ”
officers, though, are the first line of defense, and their task is a
mammoth one that involves inspecting thousands of containers every day.
It is impossible to inspect every container that comes into customs;
customs officials’ first worry is always about more serious threats
such as drugs and weapons getting into the country. Still, companies
like Canon and Xerox in Egypt want the government to impose new laws
requiring anyone importing any product to produce a certificate of
origin from the manufacturer to prove that the sources of the product
“We can help the government by giving training to the
customs people,” says Bakry. “We can go to them whenever they ask to
investigate any products. Mainly we need to change some regulations so
that you have to get a certificate of origin from the manufacturer, not
from the retailer or the dealer.”
Bakry says Canon is currently
trying to close sources of fake goods in China and Dubai and wants to
stop the goods from entering the country. Once the products hit the
local market, it is difficult for the police to bring evidence against
people involved in the trade.
“When the customer claims to the
police that he bought this ink from this outlet and it’s fake, the
police go there, investigate the products, get the man arrested and
they start asking why he sells fake products. They confiscate the
products, but this is temporary action, because you stop them for one
week, the next week they start again.”
Bakry emphasizes the need to
stem the flow of counterfeits into the country. “It’s a kind of a joint
action between us and the government and customs to stop this business.”
Xerox’s Zakaria says the government itself is part of the problem: He
alleges that government offices are the biggest purchasers of fake
office supplies in Egypt as they award their supply contracts to the
lowest bidder. Bakry wants government tenders to be reformed to require
authentic certificates of origin.
In the meantime, companies like
Canon are devising new ways to combat the counterfeit business. Canon
is introducing security labels on every cartridge package. The label,
bearing the Canon logo, disappears when rubbed with a finger and
reappears within seconds. The labels are easy for customers to use and
difficult for counterfeiters to replicate. The labels cost Canon Egypt
70-80 piasters each; with 300,000 labels slated for the first run, the
whole operation is costing Canon nearly LE 250,000. Security measures
vary from country to country, and Bakry hopes that it will be easy to
educate the Egyptian public to look for these easy-to-use stickers
through media campaigns.
Another way to tell a fake Canon product
from a real one is to study the holograms on the package. The hologram
when viewed directly appears golden, but when tipped into a horizontal
position, the genuine hologram turns green. Fake holograms do not
change color when tipped. Canon and Xerox in Egypt are also launching
anti-counterfeit campaigns through newspapers and magazines, putting
posters in computer malls and outlets, and distributing fliers. For
now, though, the best advice is to buy from trusted sources. Bakry says
the safest places to buy authentic items are established retailers like
Carrefour, Radio Shack and Canon’s own branches.
As for Omar Samy
from Al-Ahram, he says he now only deals with certified dealers after
his expensive mistake. “From now on, we only work with suppliers who
have certificates from the manufacturer which prove their product is
authentic,” he says. “We learned our lesson.”