Hadi Al Kanani, government and trade relations manager, P&G Arabian Peninsula, gives his views on the problems caused by counterfeiting
RNME: Which countries in the Middle East and North Africa are worst affected by FMCG counterfeiting?
Hadi Al Kanani
: Almost all countries in the Middle East and North Africa are affected with counterfeits from Morocco all the way to Oman and Yemen.
RNME: How much is it costing the company? What percentage of sales might be counterfeit items?
: A recent market survey in Saudi Arabia shows that counterfeits of personal care products represent around 10% of the market. This is down from 20% three years ago but still very high given the dangers and the social and economic impact that comes with counterfeiting.
RNME: Where are the goods coming from?
: Historically China, Thailand and Indonesia were the key sources, but in recent years other countries have become major suppliers like Syria, which represents a major source of shampoo and skin cream counterfeits in the region.
RNME: What channels are the items sold through?
: Most FMCG counterfeits are sold through the small groceries and the perfumery outlets found in traditional markets where consumers buy products by the dozens. These outlets, which represent 50% of the trade structure in the GCC, don’t care much about their reputation and are willing to do anything for bigger profit.
RNME: What is being done to tackle the problem?
: Awareness and enforcement are the two pillars of fighting counterfeits. Both require strong collaboration between the industry, the government and the trade. Fortunately all these elements are in place in the GCC region and are slowly but surely developing fast enough to face the growing complexity of fighting counterfeits. Here are some examples of key actions taken: stronger screening measures at the borders; Periodic trade sweeps to confiscate counterfeits worth millions of dollars; the creation of anti-counterfeiting industry alliances in Saudi Arabia and the UAE to lobby for legislation reforms and improvement in trademark protection; the availability of brand protection agencies specialised and officially authorised to help in the search and raid of counterfeit outlets.
RNME: Do you think the problem is getting worse?
: No, but it is becoming more complex. The quality of counterfeits is getting better which makes them more difficult to track and more appealing to consumers. Unfortunately these products lack the proper health and safety standard, which makes them very dangerous. On the other hand consumer awareness is much better and the consumer is becoming a more active player in fighting counterfeits. Also government attention and efforts are improving, making it more difficult for counterfeiters to smuggle and sell the products. And as the economies and global reputation of the traditional sourcing countries becomes bigger they are putting much more effort towards caring about brands and intellectual property protection. However the issue will continue to be a threat to business and human safety for some time and so all efforts need to stay united in order to keep the threat contained.
RNME: How does the problem in the Middle East and North Africa compare with the problem that exists globally?
: The Middle East and North African market remains a consuming region for counterfeit products. There is some counterfeit manufacturing in the region but very little. The region has been a target because of weak regulations and low consumer awareness and also an absence of consumer protection groups. But that is now changing and the region is becoming more and more difficult for counterfeiters to really penetrate. Obviously the economical growth is still keeping this region a hot market for counterfeiters to actually target.