What you buy often isn't what you paid for

Consumers are unknowingly forking out for fake goods at genuine-product prices,

Published: 12/06/2010
Newspaper section: News
Bangkok Post

Buying counterfeit products is often thought by people as not really being that big a deal as long as you know what you are paying for is not the real thing.

But consumers in Thailand and neighbouring countries are increasingly being dragged into uncharted territory. They unknowingly pay for counterfeit goods at the market price for the real product, but then are landed with lower-than-expected standards and quality.

Worse still, it can be a matter of life and death when such products are, for example, medicines, engine spare parts, electronic appliances and food - which have successfully made their way through crossing-border distribution chains.

This trend is hardly a new thing in the region. But with the creation of the economic corridor in 1992 under the Greater Mekong Sub-region (GMS) project, cross-border illegal trade has escalated and become more organised, a recent seminar was told.

The GMS is home to about 250 million people, covering Cambodia, Laos, Burma, Thailand, Vietnam, and Yunan province of China. The project has increased transnational legal trade exponentially thanks to transport development and the opening of borders to trade.

But on the dark side, organised networks of producers and distributors of counterfeit products have taken advantage of good road networks which are no longer controlled so strictly by authorities at borders, says Anne-lise Sauterey, a Bangkok-based researcher at French think-tank, the Research Institute on Contemporary Asia.

"Counterfeiting is a phenomenon that is developing. It affects economies and public health," she says.

The regional extension of legal trade means the same is happening with illicit trade too.

This brings about a convergence of legal and illegal production sites as counterfeiters use the same labour to generate pure profits, she says.

"Diversification of products, distribution relocation and the networks of counterfeiters have become more complex," she notes. "Products are unrecognisable using low production costs, while clients buy at market prices."

Thailand's advanced road network continues to be a vital link in the supply line for commodities needed by illegal traders. Corruption among local authorities and lax controls at remote border points in the GMS countries are also key factors, she says.

This reflects a revolution in counterfeiting, she says, and special attention needs to be paid to China and Laos.

Yunan province has been a hub for both the production and storage of counterfeit products in which producers normally change their distribution routes to regional and international markets to evade controls, she says.

Laos has emerged as a production base and counterfeit producers from other countries, especially China, have been relocating there.

"The relocation matches increased demand in Vietnam and Cambodia for goods such as alcohol, food, engine spare parts, cars and toys," she says.

"At the same time, Vietnam and Cambodia can export the goods to the international markets."

It is difficult to estimate the counterfeit trade value in the region, she says.

But it forms a significant part of the US$250 billion (8.25 trillion baht) annual figure for the illicit trade globally.

Beyond the illegality is the impact on end-users.

Among products on the market, fake medicines are a major public health concern. People have fallen victim to "death merchants" who produce and sell counterfeit drugs, Ms Sauterey says.

Mass production of fake medicines takes place in northern Laos. In Vietnam, slightly different labelling of products tricks consumers into buying them.

These drugs contain wrong or insufficient active ingredients, which harm the health of users, she says.

Expired medicines are also repackaged for sale in the region and can easily slip through border controls because the packaging is genuine, she says.

"In Cambodia and Vietnam, 50% of the drugs are counterfeit," she says.

In Thailand, over-the-counter sales of medicines where some pharmacists sell assorted medicines in separate bags has also made it easier for counterfeiters.

Apart from drugs, Franck Fougere, managing director of Vidon & Partners, a law firm specialising in intellectual property, warns that the impact of the use of other counterfeit products is also far more harmful that one might expect.

For example, counterfeit engine spare parts can result in malfunctioning vehicles like a number of cases where planes have crashed, he says.

Packaged food products and toys have also fallen victim to the illegal trade and the majority of them are from China, he says. "Counterfeit toys may contain hazardous substances such as lead."

Ms Sauterey said sharing information at the regional level can help fight the illicit trade of counterfeit goods.

In 2008, 48 border liaison offices were established among the GMS countries to curb illegal border activities.

But there has been limited cooperation so far, while authorities lack the capability to do their jobs.

Each country also uses it as a tool to strengthen its border security controls instead, she says.