how to combat auto counterfeiting in india

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How to combat auto counterfeiting in India?

How to combat auto counterfeiting in India ?

By C S Jeena

Disclaimer: Presentations are intended for educational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Hologram Manufacturers Association of India (HOMAI). HOMAI does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented. The data used here are from various published and electronically available primary and secondary sources. Despite due diligence the source data may contain occasional errors. In such instances, HoMAI would not be responsible for such errors.



• Hologram Manufacturers Association of India

• Formed in 1998

• Has a strength of 27 Manufacturing, 7 Associate and 5

• Honorary members

• Hologram Roster started in Aug 1999: in 2009 was merged with the IHMA’s HIR in the larger interests of the hologram industry

HoMAI



Agenda

Counterfeiting of auto parts

Current Indian Scenario Most commonly counterfeited parts & accessories

Reason for increase in auto counterfeiting

Impact of auto counterfeiting

Steps to fight auto components counterfeiting

Changes in behavior towards brand protection Formation of team focuses on anti-counterfeiting strategy Selection of right anti-counterfeiting technology Track supply chain at distribution end Monitoring and developing IP strategy Consumer awareness

Conclusion



Auto counterfeiting - scenario in India

*Sources: FICCI Cascade study 2012 (Invisible enemy) / ACMA White Paper “legislative improvement to combat counterfeit auto components 2011)

GAP29.6%

INR 15,446 crore

Consumption of auto components parts in India

Supply of auto components in India

The grey market percentage for automobile segment

INR 21,949 crore

Auto component

consumption

supply GAP 2010



Most commonly counterfeited parts and accessories

• Oil filter • Air filter • Fuel Filters • Oil and Water pump • Distribution caps• Coolant • Transmission fluids• Bearings • Piston and piston

rings • Spark plugs• Lubricants • Sealing rings

Suspension & Braking

• Sheet metals • Bumpers• Windshields

• Alternators spares

• Head lamps • Tail lamps • Wipers • Starter motor

spares

Engine & Exhaust

• Steering arms • Tie rods • Brakes • Brake Linings

Body & structural Electrical Components



Reasons for increase in automotive counterfeiting

Factors such as:

Illegal Manufacturing is growing due to shortcoming of existing legislation and easy availability ofmaterial from China to produce counterfeit auto component

Inadequate surveillance efforts by brand owner to identify counterfeit products

Tampering/Re-packaging: Counterfeit automotive components entering supply chain through localmanufacturing, importing from China in form of fake packaging or in original packaging sourcedfrom mechanics or service stations

Higher margins: In comparison to genuine auto component makers, a counterfeiter earns 35%-75%

Lack of consumer education to identify authentic parts/about the ill effects of counterfeit parts

Supply constraints: Lack of easy availability of genuine parts for older variants of vehicles, andsometimes even for new models, leads to counterfeit sales. This may either be a supply constraint atthe manufacturer’s end or a strategy at the distributor level to achieve high margins.

Lack of tools for law enforcement



Impact of auto counterfeitingEf

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• Loss of tax revenue : According to FICCI Cascade survey Indian Government loses approx. INR 22 billion (US $ 496 million) due to counterfeit auto products in FY 2010.

• Funding of criminal enterprises : The people that benefit most from counterfeiting are criminals who then use their proceeds to fund other criminal activity of to further their own enterprises.

Indicative figure – calculated by assuming an average tax rate and profit margin on these automotive components

Source: ACMA and Ernst & Young Research / (source ACMA)



Impact of counterfeitingEf

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• Loss of Life : The use of counterfeits products result in around 25,400 deaths and more than 93,000 injuries during 2009. 20% of total road accidents in India can be either directly or indirectly attributed to the use of counterfeit automotive parts.

• Loss of Jobs: Around 1.5 million jobs lost

• Loss of money: According to estimates, the end-users are paying for an additional 109 million litres of petrol and 8 million litres of diesel per annum which can be attributed to use of counterfeit parts.



Impact of CounterfeitingEf

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• Lost revenue: Lost revenue worth US $ 2 billion annually

• Lost Market Share: at-least 29-35% market lost due to grey market

• Liability: Manufacturer can face potentially crippling law suits as incidents of counterfeiting, tampering, and diversion leading to accidents and death.

• Product recall due to counterfeit parts – loss of brand equity: In the last few years major automotive manufacturers were forced to recall their vehicle due to counterfeit auto parts.

Source: Product recall http://en.wikipedia.org/wiki/Product_recall



Steps to curb auto counterfeiting

Step 1: Change in approach towards product protection

Step 2: Formation of team focuses on anti-counterfeiting strategy

Step 3: Selection of right anti-counterfeiting technology

Step 4: Monitoring and developing IP strategy

Step 5: ISO Standards




Step 1: Change in approach towards product protection

As a first step, every CEO or Brand owner should take the responsibility of brand attack and make Brand Risk Management (BRM) an intrinsic part of his business plan, review and report




Step 2: Formation of team focuses on anti-

counterfeiting strategy

Team to be formed for Brand risk management

May comprise of CEO/Brand owner; Brand Managers; Head of Marketing, Product Development, Sales, Logistic, Packaging, Manufacturing or outside consultant accountable for the brand.

Periodically review the BRM by analyzing various issues like:

i) Product categories & markets

ii) Buyer profiles

iii) Supply chain management and SWOT analysis of the counterfeiters

Make a customized & integrated solution: This can be done by increasing the participation of co-opting consumer or channel partner and by conducting verification, raids or ensuring strong law enforcement




Security Technologies

Authentication

Logical

Cryptographic

Structure analysis

Physical

Printed

Inks/Taggants

OVD / Hologram

Serialization

Identification

Track & Trace

Step 3: Selection of anti-counterfeiting technology (see chart overview of security technologies)

*Use at-least one level of overt authentication *Focus on ethical vendor who provide multi layered security solution instead just one technology *To select technology take help of published standards such as ISO 12931 and NASPO




Step 4: Monitoring and developing an

Intellectual property strategy

Constant monitoring at distribution channel with the help of anti-counterfeiting technology.

Planned surveillance program

If any infringement is found, take legal action




Step 5: Adopt Standards and best practices

ISO has published new Standards 12931 to fight against the counterfeit.

Study the best practices adopted by others and constantly review and refine your strategy.

Source: http://www.iso.org/iso/catalogue_detail?csnumber=52210 .

http://www.iso.org/iso/catalogue_detail?csnumber=52210



Conclusion

While the trade of counterfeit parts has dramatically increased, tackling counterfeits is not impossible. Counterfeiting is a problem that needs to be addressed quickly and decisively. Ideally, as a first move, more effective partnerships should be built between law enforcement agencies and the private sector with focus on intelligence sharing, awareness and product identification training.



Thank YouFor more information, please contact C S JeenaHologram Manufacturers Association of India21-Ground Floor, Devika Tower 6, Nehru Place, New Delhi 110019, IndiaEmail: [email protected]: www.homai.org

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how to combat auto counterfeiting in india

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