World Cup 2010: Red-carding counterfeit goods
16/08/2010

In the wake of the 2010 World Cup South Africans stand proud and filled with patriotism at the success achieved. What started as a dream became a possibility and, ultimately, a reality. The spectacular event resulted in a unified, purpose-driven spirit among all South Africans and together we accomplished much more than the rest of the world expected or thought we could attain. The energy and enthusiasm infected even the least sport-loving spectators.

As we know, many resources were spent on improving and developing infrastructure, roads and services for the event. This historic event furthermore generated employment, created opportunities, sparked creativity and ignited a fire of entrepreneurship across the country. However, it also incited the flare-up of a different kind of business – a scourge to our economy which is hopelessly underestimated and trivialised - the business of counterfeit goods.

Over the last few decades, there has been an explosion in the levels of counterfeiting and piracy. Sporting events such as the World Cup regrettably lead to an escalation in these illicit activities due to increased demand and an influx of possible customers. It would be interesting to know how many students across South Africa purchased BAFANA BAFANA replica jerseys, scarves, beanies and other branded items from the guy on the side of the street just because they were cheaper, or downloaded Shakira’s Waka Waka song onto their ipods from an unauthorized site. Talking of sites, the internet has made the sale of counterfeit goods more widespread than ever as consumers using this retail channel usually cannot verify the authenticity of the product they are buying. It would, therefore, be even more interesting to learn how many students purchased branded items from a seemingly legitimate website, or even a store, believing they had just bought a bargain but, in reality, were confused or misled into buying good quality real fakes.

The FBI has labeled counterfeiting as “The Crime of the 21st Century”. The Organisation for Economic Co-operation and Development (“OECD”) has stated that trade in counterfeit goods accounts for between 7% and 9% of global trade. According to the Department of Trade and Industry (“DTI”), trade in counterfeit goods is costing South Africa an estimated loss of more than R2 billion annually in lost revenue. A research report commissioned by the DTI and conducted by Unisa’s Bureau for Market Research in 2006 showed counterfeit goods confiscated at South African ports of entry were worth over R54 billion. The statistics in respect of the counterfeit goods seized over the period of the World Cup are not yet available. However, indications are that the figure runs into many tens of millions of Rands over a period of just a few months.

But why should South Africans not be entitled to purchase the cheaper article, particularly when there may in some instances not even be such a visible difference in quality, you may ask. The answer is simple. It supports crime and kills our economy. Enforcement agencies around the world will confirm that acts of counterfeiting and piracy are linked to organized crime such as drug and people trafficking, prostitution, arms dealing, money laundering, terrorism and other forms of serious and violent crime.

Acts of counterfeiting and piracy cause grave economic harm to our economy. In a country filled with so much creativity, potential and possibility, counterfeiting and piracy are like a cancer, smothering growth and intellectual property, which protects the value of creative ideas. In addition, as a direct result of the increase in the manufacture, distribution and sale of counterfeited or pirated goods, the South African government is losing millions of Rands in tax revenue, not to mention thousands of jobs lost. This results in fewer government services, including schools, hospitals, police services, road maintenance, public services, etc. Furthermore, such acts defraud consumers, constitute unfair competition to legitimate businesses, diminish the reputation and goodwill in brands and can pose a danger to public health and safety. Counterfeiting and piracy also discourage innovation, impede economic growth and cause decreased investment levels.

One aspect that consumers of these goods seldom consider is that counterfeit products are often produced in sweatshops in violation of child labour laws and basic human rights.

Also, not only luxury goods, clothing and footwear are copied. There has, in recent years, been a noticeable increase in the production of pharmaceutical products, car parts, cigarettes, alcoholic beverages, foodstuffs and hair irons. These goods are generally produced in unsanitary conditions and consist of dangerous, inferior or ineffective ingredients or material, thereby posing a serious risk of harm to the public.

Over the past few months, our enforcement agencies, including the Department of Customs and Excise of the South African Revenue Service, the South African Police Service, the Organized Crime Unit, the Asset Forfeiture Unit and DTI officials, have done a sterling job insofar as the detection, detention and seizure of counterfeit goods is concerned. The buck, however, stops with each one of us – prospective consumers who have the power to support criminals – or to grow and develop this beautiful country into a nation of unsurpassed inventiveness, resourcefulness and prosperity. What do you choose?
Lucy Signorelli
Partner
lucy-s@adamsadams.co.za