At a Glance:
- The unrelenting search for top-quality products at the lowest possible price has opened a back door for counterfeiters to infiltrate the supply chain and digital marketplaces with their fake goods, causing major global concern.
- For the lubricants industry, counterfeiting is a growing issue and the complexity of inspecting and verifying products once packaged can make it extremely susceptible to imitation.
- Gurdip Singh, CEO at Kallik, and Brahmpreet Gulati, CEO at BrandCares, discuss the detrimental effects of counterfeit lubricants, including to the global supply chain—and the leading protective strategies for defending against fraudulent goods.
The health and safety risks associated with counterfeit lubricants are widespread. While for some businesses they may be a slight nuisance, they could be far more serious and even life-threatening for others—as well as causing untold damage to machinery and brand image alike.
Despite the harsh reality of these threats, the number of customs seizures of counterfeiting continues to grow, and has done so for over a decade; within the past 10 years, the number of confiscated counterfeit and intellectual property-infringing goods worldwide has consistently surpassed 100,000 each year. OECD data estimates counterfeit goods as 3.3% of all global trade. These products routinely fail to meet the quality and safety regulations set out by their respective industries.
A Fundamental Piece to the Machinery Puzzle
Lubricants are typically used in highly specified roles, tailored to individual pieces of machinery and their functions. They are an essential product that play a key part in supporting the continuous operation of machinery, with their most common applications spanning manufacturing, refrigeration, automotive and HVAC.
Each product must possess specific properties to ensure operation in the intended manner, which means the substitution of genuine products for unapproved, non-specialist alternatives can have a significant detrimental impact on operations. Counterfeit lubricants routinely cause more than material damage to machinery and equipment—destroying brand reputations, severely affecting consumer faith and disrupting the entire supply chain, to name a few.
An International Concern—Counterfeit Goods are Seized Worldwide
Digital marketplaces operating on a global scale are all prime targets for counterfeiters and their goods, demonstrated through a swift analysis of China-based marketplace Alibaba, which indicates consumers searching for motor oil lubricants from as far afield as Europe, Asia, North America and Africa.
Consumers are exposed to discount counterfeit goods now more than ever—U.S. Customs and Border Protection (CBP) data shows more than $1.5 billion of counterfeit goods were seized in the 2019 financial year alone. CBP data also indicates a substantial proportion of counterfeit products are produced outside of the Western markets many are destined for, with China and Hong Kong being the source of 83% of all seized counterfeits.
The Truth in One Location—the Label
If counterfeit products attempt to imitate authentic brands through packaging replication, clear and consistent labeling that provides full product and manufacturer details can be the differentiator—so having simple yet comprehensive identification is important.
Counterfeit lubricants pose a variety of issues to manufacturers and distributors, as counterfeiters commonly use a selection of tactics such as the use of unapproved base oils or formulas, altering additives that fall short of performance requirements, and reusing old, dirty oils and lubricants.
Through the printing of counterfeit branded packaging, these are then falsely presented as genuine products. The inability to directly inspect and test the contents of each product makes identifying counterfeits before they infiltrate the supply chain a major challenge.
Automated Labeling Technology can Make a Difference
Using third-party printing companies to produce consumer-facing labels is common practice among many lubricant companies but can leave these organizations particularly vulnerable to asset leaks or theft, which could then fall into counterfeiters’ hands.
With automated label and artwork solutions, the approved label is stored in an in-house asset manager and third-party printers are granted case-by-case access, eliminating the risk of leaked emailed variants as only the most recent, approved version can be printed. Automated labeling solutions which incorporate this centralized management can also ensure all relevant safety and regulatory compliance symbols are accurate and legible, and capable of being updated at short notice.
Alongside tackling counterfeiting, automatic labeling offers further logistical benefits, freeing employees from the burden of manual labeling to focus on other important tasks. Automated labeling can reduce the often-huge financial outlay of artwork creation and management by bringing the processes in-house and ensures consistent, high-quality label placement in the correct proprietary font to eliminate human error. This is a key differentiator from counterfeit products that often feature poorly placed, low-quality and inconsistent labeling in generic fonts.
Eliminate the Threat in a Single, Clean, Streamlined Sweep
The last thing manufacturers want is for their product information to reach those intending to produce cheap and harmful imitations. Securing product information through automated labeling is key to preventing counterfeit products that could ruin a brand.
These systems secure integrity and traceability across all forms of print, packaging and electronic labeling; ensure complete regulatory compliance; and support integrated e-labeling of products. End-to-end management also streamlines the approval process and provides greater control throughout the supply chain, providing the agility to quicky deploy any specific counterfeiting countermeasures across all labeling and artwork in the supply chain.
Easily Replicated Labels and Trusted Brands are Most Exposed
Trusted brands are often taken at face value by consumers and their products consumed, resold or shared with little afterthought. Consumers routinely lack detailed product knowledge when it comes to chemical composition or industry regulations—they simply locate and purchase the recommended product for their needs.
But brands with easily mimicked labels and packaging are also an easy target, and counterfeiters will attempt to pass their illegitimate products off as genuine—often infiltrating the supply chain through routes such as online storefronts or unfamiliar sellers unlikely to recognize fake products.
The distributed global nature of many supply chains also poses a threat as weaker copyright laws, regulations and enforcement mechanisms overseas make it difficult to identify and shut down counterfeit production and sales.
Spotting the Fakes: Exposing Those that Escape Unnoticed
BrandCares conducted research into lubricants available across multiple online marketplaces and identified several common mistakes made by counterfeiters that are useful in uncovering fake goods.
Inconsistent placement and quality of packaging is common and the first giveaway of a counterfeit product. Many of these feature incorrect language and grammar while omitting key product information. These counterfeits are then sold at significantly lower prices to undercut genuine sellers; the research team identified multiple counterfeit lubricants undervalued by up to 50% by private, small businesses.
Brands must routinely search across various online marketplaces to identify suspicious sellers and publicize counterfeiting operations, once shut down, as a deterrent.
From a marketing perspective, the product, its quality and expected performance are often overstated and supporting imagery is usually unprofessional, failing to meet the photographic standards of the brand on official distributor sites. Implementing consistent, high-quality product labeling and packaging artwork is a key anti-counterfeiting measure.
Counterfeiters and Their Tactics are Evolving
Distinguishing counterfeiters and their products from genuine goods is not an easy task, but it is one that must be taken seriously for both consumer health and safety and brand protection. It is paramount brands play their part in identifying and removing these goods from the market, which includes robustly countering “pop-up” counterfeiting operations in near-real time.
Labeling systems can play a key role in broader anti-counterfeiting efforts, ensuring health and safety regulations are met and avoiding the risk of genuine product assets falling into the hands of counterfeiters. When combined with effective management and consistent brand protection, lubricant brands stand a much higher chance of safeguarding their intellectual property, bottom line and reputation.
Gurdip Singh is CEO at Kallik, a provider of labeling and artwork, and Brahmpreet Gulati is CEO at BrandCares, an international anti-piracy company.
This article appeared in Power & Motion.