*NEWS*50% OF MIDDLE EAST INK CTGS…FAKES

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*NEWS*50% OF MIDDLE EAST INK CTGS…FAKES

 user 2006-04-13 at 10:21:00 am Views: 74
  • #15014

    Not Worth the Paper it Prints on
    Counterfeit
    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
    replacements.

    In
    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.
    “We
    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.”
    To
    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.
    The
    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%.
    “We
    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.
    He
    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
    Midan
    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
    capital.
    “ They are selling fakes very near to our price so that the
    customer is not going to suspect the products they are selling are
    fakes.
    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.
    “They
    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.”
    Ideally,
    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%.
    “If I
    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.
    “So the
    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
    industry.”
    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
    cartridges.
    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.
    Hassan
    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.
    Ultimately,
    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
    Egypt alone.
    “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
    average customer.
    “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
    While
    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
    three years.
    “ 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. ”
    Customs
    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
    are authentic.
    “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.”
    But
    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.”