By Mike Santora
2016 saw sustained strength within the counterfeit bearings market. While global initiatives by companies like SKF and groups like the World Bearing Association have helped slow the bleeding, experts say there is still much to be done. Here is part one of a two part story on what fighting counterfeit bearings will look like in 2017.
Early last year, the Organisation for Economic Co-operation and Development reported that the import of pirated or counterfeit goods was nearing half a trillion dollars for 2016. That represents 2.5% of global imports. The OECD reports that much of that sizable economic drain comes in the form of luxury consumer goods. And while knock off purses and fake footwear are bad for businesses, they rarely endanger a consumer’s safety. Counterfeit bearings on the other hand, usher in a much more complex threat. The elevated risks involved with fake bearings increases the stakes for getting counterfeit products off the street as soon as possible.
SKF alone participates in over 100 raids per year so we spoke with the company’s Director, Group Brand Protection, Tina Astrom to learn more about the current state of counterfeit bearings. Here is what she had to say about how industry professionals can protect themselves.
Our conversation, edited for space and clarity, follows:
The basics of fake
Bearing Tips: What are some common tactics counterfeiters use to fool consumers?
Astrom: Well, to start I think I have to explain the channel to the market when it comes to counterfeit bearings. For example, bearings that are not produced from scratch. Bearings are standardized so counterfeiters take the cheapest that are available on the market. Then those are branded in small sweatshops and put into packaging looking identical to SKF, or any other brand for that matter. These bearings are then sold to the market.
Typically, what happens is you have companies in China that spam the market. They create nice websites and then wait for customers to buy from them. When they have an order, it’s handed over to a middle-man, who is then ordering from one of those branding workshops. And so it goes.
Of course, China is dominating. But if you look into the flow of things, I would put quite a bit of blame on companies outside China as well. The retailers and traders in general are the people buying this merchandise. It’s generally known in the bearing market that if you buy certain items there is a very high chance that you’re getting counterfeit goods. It’s the retailers, those that are selling to customers, that are really cheating people. That’s where the lion’s share of the money ends up also.
BT: Outside of China, what other countries are particularly vulnerable? How does the US stack up?
Astrom: It varies considerably. The worst affected areas are Africa and The Middle East. It’s reached double digits in terms of percentage share of counterfeits being available in the market. China, India, Southeast Asia and central America are heavily affected also. They’re in double digits as well. Countries like US and Germany also have many cases too. I would say once a month we have a case where we detect that the customer has accidentally been delivered counterfeit goods.
BT: What is law enforcement support like from country to country?
Astrom: Kenya is a good example. The basic problem is, as in the US and some other western countries, perception is too heavily connected to counterfeit luxury goods. It’s easy to presume that customers buying luxury counterfeit goods don’t really do any harm. It’s not a priority for the police; this idea has not yet landed with law enforcement in the western world.
This is not only a matter of intellectual property infringement, it’s also a matter of substandard products that could potentially have very big risks. Bearings go into electrical power plants, airplanes, elevators, hospital equipment, et cetera. We have had cases in all four of these areas. In the US for instance, there was a case with the New York Metropolitan Transit Authority accidentally buying counterfeit bearings. We also had a case in involving helicopters in the US, where the producer of the helicopter accidentally bought counterfeit bearings.
We have had cases, not in US, but in the western world where a company’s accidentally bought counterfeit bearings that were placed in equipment that was to be used in hospitals. We have a number of issues with power plants as well. To be clear, I’m not saying that US law enforcement is bad, there are many countries that are worse, but counterfeit bearings could receive more attention. I should point out that the US customs authorities are excellent. Top 10 in the world, from my perspective. It’s the local US police enforcement agencies that are less attentive on these issues.