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Sat 17 Mar 2007 03:13 PM

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Fighting off the fakers

The power tools sector is driven by a reliance on quality and durability. But like any other sector, it has suffered at the hands of counterfeiters. Construction Week hears how those firms flying the flag of quality are keeping the fakers at bay.

Counterfeiting has become a major growth industry across the world with a global market valued at US $512 billion, according to figures from the World Customs Organisation.

And one of the biggest hotbeds for fakes is the global construction market. The market for counterfeit goods within the sector accounts for 5% of the economic crime committed against building product manufacturers, according to a report by PriceWaterhouse Coopers.

While alliances have been formed between manufacturers, the police and government departments around the world to try and combat counterfeit, and awareness has been raised among the public, much of the onus is on the companies themselves to protect their own brand and reputation.

And it's not just the profit margins that are taking a hit, millions are being spent on stepping up product security and brand protection as well as on legal action when pursuing known fraudsters.

The counterfeiters, on the other hand, are having a ball: not only are their manufacturing costs far cheaper, but they have no research and development, marketing or advertising costs to pay. One area of construction that has become increasingly sensitive to counterfeit, yet is one of the most safety-critical, is the power tools sector.

And because of its open market conditions, Dubai has become an attractive distribution hub for counterfeit goods to the rest of the region.

Although local power tool traders have taken measures to raise awareness of fake products among end-users, fraudsters have become so sophisticated in their approach that only subtle differences distinguish a fake product from a genuine one.

But one advantage genuine manufacturers have over the counterfeiter traders is the ability to provide product warranties.

"We know that there are counterfeits available for all brands in this region," says Reji George, general manager of the tools division, Naser Al Sayer.

"But in our case, we are able to control it to a certain level with some good publicity, stating the importance of using the right dealers and service centres. We also encourage customers to make counterfeit purchases known. We ask them to bring us the product, with evidence of where it was purchased, and we replace it with a new product for free. We give this kind of publicity.

"But the most important part is the warranty card, which is provided by authorised dealers. The counterfeit dealer cannot provide one. And most people know that if the dealer or wholesaler is unable to provide the warranty card, then the quality will be questionable, and they will back out of the deal."

Naser Al Sayer has taken steps to crackdown on rogue traders as well as on those who export counterfeit goods to other markets.

"We lodged a complaint about them with Dubai Municipality's Economic Department, who then raided their stores, seized counterfeit stocks and fined them," adds George.

"They also gave them a warning that if they repeated it then further action would be taken. So people are aware that they are being watched, meaning that these tools are not being sold openly in this market. This has been happening to other manufacturers as well - all of the well-known brands have been affected."

George adds that counterfeit products are potentially more damaging to a company's reputation than profit.

"Financially, it won't affect you in a big way but in some cases it may affect the name of the product - in another market, for example, the user may not realise that the tool is fake, but they may not buy that brand of tool again. In the customer's mind the name is spoilt."

With the escalating price of building materials having an impact on a project's budget, contractors have come under increasing pressure to cut costs, which has resulted in a tendency among some to intentionally seeking out sub-standard products.

"The problem is that the products don't work," adds George.

"A contractor will always have a limited time to finish a job. If the machine fails, he will have to send it for servicing. And when he finds out that the parts aren't available or don't match, then he will have wasted his money. Then, maybe, he will be very careful about getting the right product in the future.

"It is not just the price factor; a contractor needs a machine to do a specific job, and he needs to do it on time, especially in this market."

One of the problems holding back the effective crackdown on counterfeiters in the region is the inherent weakness of intellectual property law.

"The Arabian Anti-Piracy Alliance is one of two organisations that is allowed to investigate this kind of thing," says Robert Vos, vice president and managing director, A&M (Middle East).

"But the problem is that local law on intellectual property rights and counterfeit is not that well established. I used to work in the architectural hardware industry, in which counterfeit was a big problem; much bigger than in the tools sector. We started looking into forming an association that said ‘if you want to sell in Dubai, you have to be part of this group and adhere to certain standards'. But the Dubai government said ‘no'. We lobbied the Dubai Chamber of Commerce but they considered it to be a cartel, which is not allowed."

Vos adds: "Counterfeit products are the worst because it's very difficult to tell the difference. Then there are the knock-off products where leading brand names are spelt incorrectly, such as Bosch without the ‘S' or Black and Decker without the ‘K', which are the most obvious."

Standards governing the power tools sector vary from country to country in the Middle East.

"In Saudi Arabia and Kuwait power tools need to be additionally certified by the manufacturer; this is an additional measure of customer protection by the government," says Paul Chaumon, marketing manager (Gulf), power tools division, Robert Bosch Middle East.

"But the above regulation does not apply in the UAE. However, all Bosch tools sold in the region are manufactured in our own factories and certified to the ISO 9001/9002 standard.

"Innovation from Bosch is what always keeps this brand a step ahead. Technical advancement has clear objectives: to consistently develop new products in order to make work easier for the professional and to increase efficiency."

Chaumon adds: "But it's important to invest in good quality tools for the user to get the job done, and re-done, and on time. Counterfeits are transiting in the region; some are sold in the UAE, the rest are re-exported. The principle country of origin is China.

"The supply of fakes not only concerns tools, but also accessories and spare parts. Although the harm is more towards those employed in the abusive conditions to manufacture such fakes, but also to the users exposing themselves to body injuries that could be fatal, and finally the brand, which supports the life of thousands of families."

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