It is estimated that a collossal US$200 billion per year is lost to the black market trade in fake branded goods. Alex Phillips found out what Dubai is doing to combat this illegal business
He looks much like any other shopper. To anyone watching he is just touring the shops looking for a bargain. He's a discerning shopper - he knows what he's looking for. The store owner pounces on him, offering Levi 501s, Caterpillar boots, Nike and Adidas footwear and clothing - almost anything he wants - and all at that 'special' price. The shopper seems pleased, he's got what he came for and all at the 'right' price.
A short time later the store, usually in the heart of Dubai's Karama district but sometimes even in the super posh shopping malls, an unexpected knock on the door heralds a sudden raid by the trademark experts along with officials from the Economic Department who confiscate his counterfeit brands (which in practice often means most of his stock).
It's only then the owner rues the day he was visited by that seemingly 'innocent' shopper who was really an undercover investigator on a mission to discover and stamp out the booming trade in counterfeit branded goods.
And according to lawyer Stuart Adams, who works for Rouse and Co legal firm in Dubai which vigorously pursues the fakers wherever they may be, counterfeiting well known branded goods means big bucks for the underworld figures behind the trade.
In another part of Dubai a firm of commercial investigators called SSS Research sends its men into the Fikri wholesale market where many counterfeits are sold on to store owners. Their convincing 'Russian bulk buyers' try to bluff their way through the maze of middlemen to try and source the route of the wholseale counterfeit market and stop the literally thousands of fakes flooding into the Emirate.
Operations Director at SSS Research Neil Tunstall says they often work with Rouse and Co as investigators as well as helping track down counterfeits for their own clients. Their avowed aim is to try and trace the original suppliers of the wholesale counterfeiters in Dubai.
"Of course it's very difficult to to do this as there are so many middlemen here and it's a question of our men trying to get beyond these to find out where the warehouses are which supply all the shops and stores with fake goods. Many of these warehouses are situated in industrial areas in Dubai or are in the neighbouring emirates of Sharjah and Ajman."
Counterfeits are not just relatively harmless clothing, footwear or watches - they can be dangerous to life and limb. One of SSS Research's latest projects has been in tracking down manufacturers of counterfeit electrical circuit breakers on behalf of a group of electrical manufacturers. "These were definitely dangerous - they could have caused serious accidents."
Rouse and Co arose from a British law group which began to specialise in helping companies track down counterfeiters. Now the company has offices in London, Oxford, China, Vietnam, Jakarta and here in Dubai because the Emirate is the centre for import and export for the whole region.
The company lawyers work hand in hand in with the Economic Department in Dubai tracking down rogue traders who steal other company's hardearned trademarked brands.
Adams in Dubai, along with other staff in their other offices, work within the laws of each country to try and stamp out the many counterfeiting practices throughout the world. Often they see a shop is selling fake brands, but before rushing in to 'bust' them they try and find out who is supplying the store. Sometimes they are lucky and can trace back goods even further along the illegal chain to where they are acually being produced.
But often a well timed raid on shop in a busy tourist shopping area - like Karama - where most of the goods being sold are counterfeit, can spread ripples of fear through the rest of the stores and for a while the trade takes a nosedive. But the lure of filthy lucre is too strong for it to be killed entirely and soon the fakes are back on sale again.
And the rewards can be fantastic - it's estimated that a staggering 10 per cent of legitimate world trade, worth an amazing $200 billion, is lost to the black market fakers every year. They use cheap labour working in sweatshops which pay no corporate or whose lowly workers pay no income tax either to churn out thousands of sub-standard counterfeits.
These goods usually end up in places like Dubai's thriving Karama shopping centre where scores of shops compete to sell the cheapest brand name to the not so unsuspecting tourist who come in their droves to hunt for that supposedly branded bargain.
High on shopper's lists are jeans of all makes and brands, the most popular being good copies of Levi 501s and Calvin Klein jeans which sell for around 60 dirhams or about sterling 10 - less than a third of the price for the real thing.
Fake Caterpillar boots and clothing are also widely available along with Nike t-shirts and shorts, Reebook sports shoes, adidas sports shoes and all kinds of Nike clothing. Football shirts including England, France and Brazil were available during the World Cup for around Dh 80 or sterling 13 when they cost anything up to sterling 50 in the UK. In fact if a brand's worth wearing it's a fair bet it can be bought in Karama.
But if we buy counterfeit brands like those mentioned above there is a hidden price to pay. According to Adams the black market in brands means we all have to pay more tax as less workers are employed in the real economy, which results in less corporate and income tax being paid and an increase in 'dole' pay-outs for all those workers displaced by the criminal economy.
Ultimately the financial impact seeps through every aspect of our lives affecting even pensions as the true economy feels the backlash from the black marketeers. And counterfeiting is not just a problem here in Dubai it is global and it's growing.
FAKES
Counterfeits don't just mean clothes, they include other items which if used could kill you, such as car spares including brake pads, specific pre-stressed parts for aeroplanes and switched or wrongly labelled pharmaceuticals which, in the past, have killed people including children. Here's a list of the goods most commonly counterfeited in rough order of monetary value.
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Computer software.
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Music CDs/CD-Roms.
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Videos, many of the top Hollywood and Bollywood blockbusters are often available on video disk in Dubai and elsewhere just days after their official release.
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Clothing, including Nike, Levis, Adidas, Reebok and countless other brands.
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Footwear including Caterpillar, Dr Martens, Adidas, Reebok, Nike and many others.
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Car parts, including brake pads and other essential spares which can affect your safety.
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Pharmaceuticals, these can kill and have done in poor countries where unscrupulous criminals have switched basic children's medicines with tragic results.
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Perfumes.
Many counterfeit operations are based in grimy back street sweatshops in poor third world countries. But many counterfeits are made much closer to the homes of the many and varied expatriates living here in the Gulf. They are made in America, in Europe and in Britain - in fact wherever there's easy money to be made you will find counterfeiters cashing in. According to Adams, counterfeits are being produced everywhere: "It's not just in poor countries. They are being produced in the UK, throughout the European Union and eastern Europe too. We know it's going on in America although we don't operate there yet." The real volume production areas are in Asia generally, including India where clothing and pharmaceuticals are made in huge numbers. Footwear often comes from Korea and Vietnam with counterfeit sports footwear production moving from Taiwan to China then to Korea and Vietnam. This is because the counterfeiters follow the cheap labour and they constantly keep on the move as their host countries are persuaded to crackdown on the faking business.
In the UK cheap perfumes sold in many local markets are just that - cheap! They may be branded names but at the low price they are being sold at they are most definitely not the real thing. And by the time the customer has parted with his money and realised the supposedly designer fragrance is just cheap scent the hawker has moved on to another town. Counterfeit clothing and fake branded soft drinks are also popular in the UK market. So next time you're in position to buy a counterfeit brand think before you part with your hard-earned cash. That simple act of buying a 'cheap' pair of jeans or any other fake, could in the long run, mean you deprive your wife, son or daughter or even yourself, out of a much needed job!
According to Adams The European Brand Owners Association estimates that counterfeits in the EEC has caused a loss of 100,000 jobs, while in New York the city's Consumer Affairs Commissioner estimates that counterfeiting has meant a loss of $350 million tax revenues.
Drugs barons often become involved in faking branded goods as a means of laundering their drugs money and making profit which buys even more drugs to infect the streets with.
But in Dubai, where the government has made a big effort to counter all kinds of faking, counterfeit computer software has been reduced to 60 per cent from 90 per cent just three years ago - which compares very favourably with the west, with the rate of reduction being one of the best in the world.
And in Jeddah in Saudi Arabia 14 multi-nationals who have internationally recognised trademarks decided to band together to fight the counterfeiters in the Gulf. They included such big names as Christian Dior, Johnson & Johnson Proctor & Gamble, General Motors and Unilever.
They have formed the Anti-Counterfeit Coalition and will co-operate with existing bodies to fight their corner. The group has received strong backing from the Saudi government which has threatened to cancel the trading licences of any companies involved in counterfeiting.
Closer to home in Abu Dhabi the Ministry of Information and Culture recently closed a number of shops selling audio, video and computer goods who were selling pirated tapes, film and software, which were seized and destroyed.
The ministry has made it clear it will crackdown on pirated intellectual property as it affects the international reputation of the UAE. The UAE Copyright Law which was implemented in 1992 gave retailers until September 1994 to get rid of all pirated goods. Since the expiry date hundreds of shops have been raided and many closed.
In the UAE the Business Software Alliance has been effective in reducing piracy rates and has set itself the target of reducing piracy to less than 50 per cent of total sales by the year 2000.
In ten Middle Eastern countries alone software pirates are estimated to have caused losses of more than $ 92 million to the major producers based in America and Europe.
But the UAE has achieved a massive reduction in software piracy of up to 28 per cent over 1996 and 1997 because the government here recognised the close link between copyright protection and investments in the country.
Inferior
What is counterfeiting? It is the deliberate imitation of a brand, generally together with the packaging and product configuration and styling, so as to suggest that a product is made by a particular highly regarded producer, when it is, in fact, an inferior copy.
A recent MORI in the UK showed that 40 per cent of those interviewed said they would knowingly buy counterfeit goods.
Counterfeiting is a black economy. It uses poorly paid cheap labour while the owners get rich. In countries where tax is an issue they won't be paying corporation tax or income tax. And since the brand owner suffers, they will make less profit, pay less tax and employ less people who in turn will therefore pay less income tax. So the whole economy suffers.
Counterfeiting is theft, pure and simple. Theft of a brand name and reputation that a company has built up over years and years of investment in products and marketing to create something that people want. Counterfeiting is wrong. And when you knowingly buy counterfeit goods you are in effect handling stolen goods. You are damaging the economy, you are putting people out of jobs, you are damaging the reputation of your country and harming its economic prospects. And you could well be assisting organised crime.
As you pull on your slim fit Levi 501s, slip the Nike t-shirt on, lace up the cool looking Caterpillar boots and slip on the shades and head on off to hit the town just think of what you've done. Yes, you've just got dressed - but hang on clothes aren't just what you put on to cover your body with anymore - they're cool, chic, a statement of style - of who you are. And many people express themselves today through the brand names they wear with pride.
After all jeans aren't jeans if they're not Levi 501s or Calvin Klein designer jeans, teenagers count for nothing amongst their peers if those huge clod-hopping trainers they wear aren't emblazoned with Nike, adidas or some other 'in' logo.
But brands don't come cheap nowadays and where there's brass there's muck so to speak - and the muck in this case is the criminal fraternity who cash in on hard won brand loyalty by manufacturing and selling cheap counterfeit versions of top branded goods. And as the popularity of brands soar so do the profits of the underworld bosses behind the huge trade.
I can almost hear you say well, so what - I've saved myself some cash. OK, the goods are cheap but almost certainly they're not as good a quality as the real brands. Almost certainly they won't last as long which means that almost certainly you'll have to fork out to buy more clothes much sooner than you'd planned.