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NIELS BROCK COPENHAGEN BUSINESS COLLEGE

ENGLISH LANGUAGE SKILLS FOR BUSINESS

HUMS 3006

Assignment topic:
A Final Group Report on
COUNTERFEITING

Submitted By: Module Tutor:

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Word Count:
1454
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Terms Of Reference

According to the International Chamber of Commerce, the total global economic value of
counterfeit and pirated products is as much as $650 billion every year. This report analyses
the effects of counterfeiting on various brands and provides recommendations on how
companies can fight against it.
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Table Of Contents
Topics Page no.
1. Introduction to Counterfeiting……………………………………………….5

2. Background……………………………………………………………………6

3. Effects of counterfeiting of food and beverage on consumer health……7

4. Effects of counterfeiting on food and beverage brands……….………….8

4.1 Relationship between brand and consumer……………………………….8

4.2 Reputation of the brand and its importance………………………………..8

4.3 Sale of products………………..……………………………………………..8

4.4 Profit of the brands……………………………………………………………8

5. Conclusion…............................................................................................9

6. Recommendation………………………………………………………….…10

7. Reference List…………………………………..…………………………….11
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Abstract

This report examined the problem of counterfeiting in the modern world, the
quantifiable evidence and makes recommendation to deal with the precaution of the
problem. The report studied the effects of counterfeiting of food and beverages on
various food and beverage companies as well as on consumers.
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1. Introduction to Counterfeiting

Counterfeiting has become a global issue affecting millions of lives all over the world.
Generally, most of the sectors of the economy are found to be affected by the counterfeit
and pirated goods. Counterfeiting is an illegal act which has significant effect on the
customers who purchase such products. According to International Trademark Association
(2015), “Counterfeiting is the practice of manufacturing, importing/exporting, distributing,
selling or otherwise dealing in goods, often of inferior quality, under a trademark that is
identical to or substantially indistinguishable from a registered trademark, without the
approval or oversight of the registered trademark owner.” Counterfeiting affects the image of
the genuine products and the practice of counterfeiting has widely spread mostly in the
developing countries. This report discusses the effects of counterfeiting on various food and
beverages brands and also provides recommendations on how companies can fight against
it.
Counterfeiting has affected various products in market such as; clothing, jewellery, food and
beverages, pharmaceutical cosmetic products, computer accessories, electronic appliances,
CDs, DVDs and so on. Brick-and mortar stores, flea markets, online shopping sites, street
vendors and individual vendors are the examples of various outlets which are used for
selling counterfeits with the help of communal publicity media. Out of all these, online market
places are more prone to selling counterfeit goods as they purchase only through pictures
displayed in such websites.
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2. Background

According to conference held in USA, counterfeiting was a dollar 512 billion market in 2004,
up 100 times over the previous 20 years, which equates to 7-10% of global trade. In 2004,
out of $512 billion market, 7-10% of global trade was estimated to be under counterfeiting by
the WCO (World Customs Organization). Likewise,$ 49 billion of global counterfeit food
trades has been estimated (Spink, 2007).
In addition, as per the news article published in Beijing, the consumption of tainted milk
formula to the babies led to death of 50 Chinese babies. The news article further mentioned
that the first daughter of Zhang Linwei died due to consumption of Haobaobei milk powder
(Jonathan Watt, 2004) .Likewise ,in another news article published in TIME newspaper, fake
chicken eggs were founds in the markets of china at a cheaper price. (Boehlar, 2012).
Moreover, in 2010, eleven cases of 212.5litres of counterfeited alcohol with 20 liters of
alcohol labeled with the Napoleon brand mark. The most counterfeit alcohol brands are:
Stolichnaya, Smirnoff, Finlandia, Bols and Rectified Spirit Polmos. (Kunio Mikuriya, 2010)
Furthermore, Operation Option IV, a joint Interpol and Europol investigation, seized more
than 2,500 tonnes of fake foods and drinks such as mozzarella, strawberries, eggs, cooking
oil and dried fruit from December to January in 2015,which was carried out in 47 countries.
Under this operation,31 tones of sea food in Italy,35tonnes of fake butter in south Sudan,
bottles of fake whisky in Uganda and fake beer in Rwanda were seized (Whitworth, 2015).
According to IPR WCO 2009 report, the following table shows the statistical data of 70
countries among the 176 WCO member countries.
Number of seizures and items by the types of goods:

Type of No. of seizures No. of items

counterfeit
goods 2008 2009 % 2008 2009 %
Increase/Decrease Increase/Decrease

Beverage 51 32 -37% 968464 664288 -31%

Foodstuffs 107 66 -38% 11362223 326523 -97%

[Source: (Kunio Mikuriya, 2010)]

The table above shows the statistical data of 70 countries in the year 2008 and 2009. More
than 12.7 billion pieces of pirated and counterfeit food and beverage goods, including 45
thousand liters of counterfeit alcohol products were seized as a result of customs authorities’
actions, constituting around 0.35% of all seizures. The table shows decrease in the number
of seizures and items in 2009 as compared to 2008.
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3. Effects of Counterfeiting of Food and Beverage on Consumers’ Health

The consumption of the counterfeited food and beverage has hazardous effects on
the human health. Due to Brucine found in counterfeited alcohol, the consumer might
suffer from Nausea, vomiting, muscles pain, fever and kidney failure. Likewise ,a high
level of methanol used in production of fake alcohol, the consumers suffers from
dizziness abdominal pain and even blindness by damaged of optic nerve which might
be fatal (Michal Raz-Chaimovich, 2016). The fake alcohol found in the markets
generally uses low quality materials and a lot of chemicals. Likewise, different food
products are adulterated by using various fake chemicals which deteriorate the
quality of food and may have harmful effects on the heath of people.

4. Effects of counterfeiting on food and beverage brands

The adulteration of food and production of counterfeit beverages in name of fake
brands cause adverse effect on the health of the consumers buying those products.
As a result of the deteriorating effect of counterfeit food and beverages, various
brands related to food and beverages are affected. The following areas are affected
as a result of increase in fake foods and beverages.

4.1 Relationship between brand and customer

A harmonious relationship between the customers and the company is very
important for the prosperity of the company. There is a very strong
relationship between the customers and the food and beverage brand due
to the trust on the product quality. But, as a result of counterfeit products in
the market, the brand customer relationship is also affected. When people
consume adulterated food produced by numerous fake brands, a
tremendous effect on health of the consumers is observed. This might lead
to customer dissatisfaction which ruins the bonding between brands and
customers.

4.2 Reputation of the brand and its importance.

As a result of the deteriorating effects of fake food and beverage, on the
customers’ health, the importance of the brands decreases among the
customer which might even lead to the harm in the reputation of such
brands.
The consumers might even stop using those brands and may look for a
better option as many counterfeit products on the same brand are available
in the market. With this, the importance of the brand in the view of
customers may also degrade and gradually the reputation of the brand is
affected.

4.3 Sales of products

On the basis of aforementioned reasons, such as disturbance in brand-
customer relationship, wreck on brand reputation and insignificance of
brand among customers, a sharp decrease in the sales of counterfeited
brands might occur in the market. The customers might start buying other
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brand products resulting in a sharp declination of the sales of counterfeit

brands.

4.4 Profit of the brands

With an increase in the amount of counterfeit food and beverage, various
food brands as well as beverage brands are affected due to its negative
effect resulting from the consumption of such fake products. Consequently,
due to the decrease in the number of sales in the market, there is a sharp
decrease in the profit of counterfeited brands as the customers do not trust
the genuine products also after being affected from counterfeit goods. An
increase in the counterfeiting of food and beverages is directly proportional
to the profitability of the companies.
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5 Conclusion
This report has shown the various evidence on counterfeiting, all over the world
especially on the counterfeiting of food and beverage. The report has overviewed
effects of adulterated food using fake materials as well as fake alcohol on the
consumers’ health. In addition to this, the report has found various health hazards,
such as convulsions, kidney failure, blindness caused due to fake alcohol as well as
death of many babies caused due to tainted milk powder. Furthermore, the report
has found various effects of counterfeiting of food and beverage on various food and
beverage company such as devastation of brand customer relationship, descending
reputation of the brand and its unimportance, lower sale of products and finally lower
profit of such companies.
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6. RECOMMENDATION:
In order to combat counterfeiting, various measures should be implemented. Firstly, the food
quality control strategy should be made effective. In addition, regular investigation and
monitoring on the counterfeit food and beverage found in market should be done. The efforts
should be made by the government as well as various food and beverage companies in
order to combat counterfeiting. Similarly, effective and strict laws should be enforced by the
government against counterfeiting. Likewise, various awareness raising programed should
be conducted at local and higher levels regarding numerous tainted food products and fake
alcoholic drinks or beverage prevailing in the market. Besides that, the consumer should not
be attracted towards cheap fraudulent products as it results in different health hazards. Also,
parents should be aware about the availability of fake milk powder found in the market and
should purchase only genuine product for the betterment of their babies’ health.
Furthermore, the store and supermarket should be closed by the government in case of
selling counterfeit products.
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References

1. Boehlar, P., 2012. Bad Eggs:Another Fake-Food Scandal Rocks China. 06 November.

2. INTA, 2015. www.inta.org. [Online]

Available at: http://www.inta.org/TrademarkBasic/FactSheets/Pages/Counterfeiting.aspx
[Accessed 21 April 2016].

3. Jonathan Watt, 2004. Chinese baby milk blamed for 50 deaths. 21 04.

4. Kunio Mikuriya, 2010. Counterfeiting,food and beverage fraud,and contraband, s.l.: s.n.

5. Michal Raz-Chaimovich, 2016. Health Ministry warns on counterfeit vodka, brandy. 10 04.

6. Mikuriya, K., 2010. Counterfeiting Food And Beverage Fraud, and contraband: Protecting
consumers.

7. Spink, J., 2007. Global Counterfeit Food & Beverage Packaging; Impacts On Food Safety. San
Antonio, Texas, USA, s.n.

8. Whitworth, J., 2015. Thousands of tonnes of fake food and drink seized. 17 February.