The effect of counterfeit health products on e commerce business in dubai
Counterfeiting of products is done mainly to make profits out of other imaginary products (Johansson, 2009). This is an offense taken very serious by many jurisdictions. Due to this, the majority of the counterfeiting the rimes are considered by Convention as organized crimes (Stark, 2015). Since the emergence of organized commerce, few goods have passed off to be high-quality merchandise, despite that this has taken a different meaning as well as proportions in the present t world of globalization (Stark, 2015). With outsourcing is one of the common advent used in the product manufacturing currently, companies are considered responsible for the research, marketing as well as design of their products while at the same time the production of the goods takes place in countries that have the necessary manpower, resources and where the cost of production is cheaper (Stark, 2015).
Data collected in 2008 showed that there were over 140 countries had counterfeit products (Stark, 2015). This is according to the data collected by World Customs Organizations. Despite that there is no accurate data on the extent of counterfeiting, it is estimated that the volume of counterfeit products in the market range from 5-7% in the world market, with these products having estimated worthiness of $600 million yearly (Hall & Antonopoulos, 2016). Despite that this value has no empirical support; it has been termed to be very high. This is a great increase as compared to the same value back in 2007, where the percentage counterfeit products in the world market were estimated to be 2% and with a net worthy of %176 billion (Hall & Antonopoulos, 2016). Counterfeit products are not determined on their level of safety to the consumers.
Batteries are some of the products that are prone to counterfeiting. With the fact that these products are normally made from cheap and low-quality materials, they are prone to explode (Hall & Antonopoulos, 2016). On the sector of health, counterfeit medicines lack active ingredient (Hall & Antonopoulos, 2016). To make matters worse, they can even contain substandard dose which allows the microbe to become resistant to the medicine. Counter the feet producers normally take advantage of the global sweatshops as the major brands work on improving labor standards together with safety at the workplaces (Hall & Antonopoulos, 2016). Counterfeiters continue to enjoy cost savings from dirty business when licensed manufacturers keep on working to improve the safety of the production environment. To summarize the scenario, counterfeiters undercut everywhere where the international community tries to establish good practice standards for industry (Karaganis, 2011).
From this, it is clear that counterfeiting has a great impact on the lives of many people in the world. Counterfeiting causes many deaths in the world, but it is tough for one to understand that death was caused by these products. This also shows how this market is likely to remain dormant since the original products find a little market, with the counterfeit goods dominating the market. Most of the counterfeit products in Dubai are sold through online channels such as e-commerce. The country has gone to the point of shutting down all the online outlets that dealt with counterfeit products. This led to the shutdown of 4879 social media accounts and 30 websites (Bian & Moutinho, 2011). This was a way of bringing the effect of counterfeit products in the Dubai market into a seizure.
During France Renaissance, for more than ten years, the supporters of the Pope directed a parallel minting with the aim of undermining the official coinage that had been issued by the Protestant King (Johansson, 2009). At this time, official counterfeiting was only allowed for the princes. Hence those who were involved in this passed through severe punishment that included being boiled while still alive (Hall & Antonopoulos, 2016). Despite this, product counterfeiting is older than this period. It can be remembered how Egyptian and Babylonian priests put in place inscriptions from the former civilizations on the monuments with the aim of increasing their legitimacy and proceeds (Bian & Moutinho, 2011). Romans had to use their commercial institutions in punishing these kinds of abuses that took place on their products.
During the guilds’ Middle Ages, merchants and artisans were required to affix all their products with distinguishing marks that differentiated their products from those that are of low-quality and other imitations (Al‐imam et al. This marks also assigned responsibility for ant case of inferior product. Trademarks became common in the UK in the thirteenth century (Rector, 2018). Bread bakers were required to assign all their products with marks and goldsmiths also had to put marks on their products for identification. This thus is an indication that counterfeiting is a common phenomenon in China since from time immemorial. According to this priest, Chinese were able to imitate whatever they have ever seen happening in this world (Johansson, 2009). U. S government came into the concern of counterfeiting about one hundred years ago.
The origin of counterfeiting of U. S since it had the largest cotton plantations, but had no processing units. Thus it could continue to supply the British with its raw materials. In addition to this, U. S was the largest exporter of cotton since it had no processing unit. To ensure that the U. Also, copyright could also get patent protection provided that the copied product was from a foreign origin. This made copyright and piracy common in the U. S because it was protected by the nation’s constitution. A good example is that work of Charles Dickens, was after visiting the United States in 1842, he found pirated copies of the work of his novels stored in Boston bookstores (Johansson, 2009).
From this, it is thus clear that counterfeiting has its main origin in the U. K through shipments that came from China and which passed through UAE ports (Kamoun, 2008). Dubai is prone to counterfeit goods since all goods from Asia and Africa pass through the country before they are around to reach the rest of the world (Johansson, 2009). The goods pass through Dubai at a very high pace with only six hours taken to determine the origin and safety of the commodities before being allowed to enter the rest of the world’s market. UAE has responded to this problem by coming up with a committee that is mandated for ensuring that all the products that enter into this market are safe and are not counterfeit ones.
1 Problem statement The e-commerce market provides businesses with huge markets due to their ability to access international markets all over the globe. Research has proved that there was an 80% increase in counterfeiting between the year 2008 and 2013, with European Union IPO report claiming that most of this increase has been facilitated by e-commerce. The margin of counterfeiting is currently more than ever before, and there is still the possibility of this to increase more and more if the right measures are not taken to curb the problem. With e-commerce, counterfeits can easily hide and move from one region to another without being noticed. As a way of bringing this issue into an end, some of the e-commerce platforms, with this including Amazon, e-bay, as well as Trade for me has employed strict anti-counterfeiting policies together with other takedown procedures.
Despite these measures that have been taken, cases of counterfeiting are reported on a daily basis. Counterfeiting seems more pronounced in Australia as 962536 seizures were made during the same period with this estimated to have a market value of $19. 3 million (Al‐imam et al. According to the report that was given by ICC (International Chamber of Commerce), the overall value of counterfeited and pirated goods is likely to reach $959 billion by the year 2022 (Rector, 2018). Majority of the responses given by the consumers of the counterfeit goods gave a negative response about the quality of the products and claimed that they would not buy again from these online shopping centers. Dubai is also facing the same case with reports showing that are some medicine products that have been regarded as pirate and counterfeit.
3 Research questions For this research to be able to address the above objectives, the following items are to be used; 1. How has e-commerce contributed to the continuous increase of counterfeiting in the world market? 2. What are some of the risks associated with counterfeiting of health products? 3. How has counterfeiting affected the economy in the regions that are prone to counterfeiting? 4. What are some of the measures that can be taken to address the issue of counterfeiting? 1. Other products that are also highly vulnerable to counterfeiting include pharmaceutical products, optical media, and computers. For the last two years, confiscated cigarettes have also been topping in the list. The following table shows some of the products that have been current seizure by the U.
S government. Data that was recently collected in the European Union showed a similar trend in product vulnerability to counterfeiting. A well-remembered case of counterfeiting in pharmaceuticals is the case of a 22-year old Argentinian woman who was given an injection for iron aiming at curing mild-anemia. After some days, the woman died due to liver failure. Analysis showed that the woman received a counterfeit medicine, but it was not possible to determine the source for this product (Nastase, 2008). Measures that were taken to eliminate the product from the market were not successful since it was intensively distributed to the market making it hard to bring it into an end. The blood thinner Heparin was found to contain an artificial active ingredient that was obtained from China back in 2008 (Nastase, 2008).
In addition to this, they also avoid the cost of meeting quality assurance together with minimum wage regulation. The major costs incurred by the pirates are the seizures of some of the products from the market. The profits made from counterfeiting could be large if it were not for the start-up and overhead costs (Kamoun, 2008). With no tax taxes that are incurred by the counterfeiters on their products, they make a two-third profit margin as compared to the licit manufacturers (Burns, 2016). Majority of the products can be manufactured with easy through the use of high technology equipment with this equipment being widely available at a low price, with the availability of scanning, modeling and printing facilities that are available; it is effortless to produce convincing copies through the use of reverse engineering (Burns, 2016).
This has been supported by the reduction in the trade tariffs thus allowing more goods to flow in the international market. Creation of the free-trade zones has played an important role in increasing the counterfeit goods since counterfeiters can freely sell their commodities to the world trade without any restriction. In Dubai, large amounts of counterfeit drugs were being supplied to the market through the use of a free-trade zone, which is referred to as Jebel Ali (Burns, 2016). With this being the oldest free-trade zone in Emirates, it handles more than 11 million containers every month (Burns, 2016). The origin of the drugs is from China where they are then exported to Britain through Hong Kong, and to this free-trade zone in Dubai.
Therefore, counterfeiters have been taking advantage of such products since already they have a wide market all over the world. Expansion of the markets and trade channels has also played an important role in the increase of counterfeiting. The growth of the world market has allowed manufacturers to enter into the market that they were unable to enter into before. Counterfeiters normally use three major distribution outlets to market their products to the final consumers; these include established retail shops, internet and informal channels (Chaudhry & Zimmerman, 2013). It is regarded difficult for retail shops to sell counterfeit products. 1 Counterfeit and imitation Imitation is common among American firms. Counterfeiting is defined as the fraud activity of fixing a trademark falsely to a product (Avery, 2008).
This makes the false trademark to appear indistinguishable from the legitimate product. This is usually done to convince consumers to buy the fake product in the belief that the product is the same as the original brand product. Consumers who end up buying counterfeit product remain dissatisfied by the performance of the product, which is sometimes something of disbelief to them. The trademark contained on the counterfeit products is such that they are just forged, but they appear very similar to the original one. There are three well-known types of counterfeiting namely money counterfeit, trademark counterfeit and software counterfeit. In the case of the software counterfeit, illegally made copies of computer software programs are sold (Sell, 2010). The counterfeited software usually appears identical to the original software, but their functioning is different from how the original ones would function (Sell, 2010).
As a way of controlling counterfeiting, manufacturers of some of the common software programs have come up with live updates and internet registration. One has to decide who to imitate since no one can emulate everyone. Businesses tend to imitate other business that is done well in the market and which is also well known in the market (Bosworth, 2006). Firms that want to be imitated are always visible and authoritative, while those that do not want to be imitated take measures that limit the chances of them getting imitated. Imitation is taken as an innovative measure, and most of the times it is not a crime as the case of counterfeiting. One of the reasons why some organizations opt for imitation is that it saves time and attention in the process of decision making (Bosworth, 2006).
Imitation helps in the diffusion of the new products into the market since the consumers of these goods easily adopt them without the need of too much information but by the use of the history that has been created by the firm from which the new firm is copying. Imitation of established industrial products is widespread in the advanced markets where retailers use the developed products to overlap supply with the other retailers while at the same time increasing profits and providing their consumers with reasons why they should come back and repurchase the products (Sell, 2010). Imitation of the decisions that are made by the competitors leads to the violent fluctuations in the business investments (Sell, 2010). Many new firms like imitating the strategies that are employed by those organizations that are already successful in the market.
Many of the SMEs apply imitation with this based on media and oral transmission of the information to improve their production and market performance (Sell, 2010). 1 Dangers of imitation Despite imitation playing an important role in the market, there are also some ways that imitation is likely to have to a firm in the market. Some of the advantages that are associated with copying include that it allows new firms in the market to improve their performance with ease; it also brings profit to the organization easily and enhances the reputation of the new firm (Atwood, 2010). However, imitation limits creativity. Organizations that are imitating others are only limited to achieving what their mentors have done, but they have no plans to invest in other areas that the original firm may have failed to invest.
Most of these imitating firms do not expand their market beyond where the firms that they are imitating from have reached. Those firms keep waiting for other firms to innovate a new strategy so that they can imitate from them (Pil & Cohen, 2006). This is an indication that imitation kills the ability of the firm to come up with new strategies and products that they can sell in the market. Firms that is prone to imitation never like investing in research and development activities. Imitators always remain some steps behind from those that they are imitating from (Pil & Cohen, 2006). They usually wait for a new strategy, approach or product to be launched so that they can copy it. It has been found that almost 20% of the global electronic parts that are located in the world are counterfeits (Holst-Knudsen, 2018).
The global electronic industry loses a total of $100 billion each year to the counterfeiters (Holst-Knudsen, 2018). 2 Effect of counterfeiting to the community Many problems are associated with counterfeit goods in society. Counterfeits keep increasing in the market every day. The social impact that counterfeits have are also damaging. However, this may also be an unsatisfactory solution since some of these products are normally sold at meager prices that are much tempting to the consumers. When people think of counterfeit goods, they only think of fake handbags, but they do not think of the great challenge that these products may have to the economy. Counterfeits cause a loss of $ 200 million annually in the U. S in business and industrial sector (Alfadl et al.
In every year, about $500 billion is lost in the world due to counterfeiting (Alfadl et al. Majority of the products bought from this site were clothes, electronic devices and shoes (Rector, 2018). In addition to this, other 393 cases were reported outside ECC-net since the traders of these products were located outside EU (Rector, 2018). ECC-Net was able to intervene for other 169 cases since the traders of these products were just located within EU. This is an indication of how counterfeiting crimes are common in different trade unions. From the reports collected in the case of counterfeiting in the European Consumer Center, it is clear that the majority of the counterfeit traders are located outside the European Union (Rector, 2018). Consumers who buy counterfeit products knowingly would not buy genuine products due to the higher prices that genuine products have as compared to the fake ones.
This is an indication that counterfeiters cause stiff competition to the legitimate companies by stealing their intellectual properties while they do not pay for taxes or complying to the quality and safety regulation (Sell, 2010). This unfair and illegal competition displaces the legitimate businesses from operation with this having a great adverse effect on the business, the economy and the consumers generally (Sell, 2010). Back in 2013, almost $ 597 billion of genuine economic activities were displaced due to counterfeiting. Counterfeiting also causes 2. Many foreigner investors are likely to withdraw from investing in many of the developing countries in fear of losing their invested capital. Currently, the total reduction of Foreign Direct Investments is at $ 111 billion. This is because companies have fewer incentives in investing in countries where their Intellectual Properties are likely to get stolen and benefit others.
Counterfeiting also causes an increase in crimes in the society. In addition to forgery being a crime itself, it also creates an increase in criminal activities as it provides money that can be used in committing crimes. These products are of great danger to human health. Some deaths have been reported with most of these deaths arising from consumption of counterfeit medicines. Counterfeit other drugs have been found to lack the active ingredient, thus posing no curative effect to those that take them. Others have been found to have more than doubled the recommended amount of the active ingredient. One of the reasons why counterfeit are of great harm to society is because some of the consumers think all products that exist in the market are original and safe for human consumption.
These counterfeit pesticides are of great threat to human health, food security and environment (Bian & Moutinho, 2011). Perfumes and cosmetics are other pharmaceutical products that are normally sold through online channels and which can be of great threat to human health. Some of these cosmetics are known to cause allergies together with other physical reactions (Bian & Moutinho, 2011). A good example is the counterfeited MAC kohl which was found to contain six times the amount of recommended copper (Lambkin & Tyndall, 2009). This is very dangerous to the fact that copper is a heavy metal, and it may cause a lot of health problems including cancer. A good example is the steering components that have been counterfeited together with the airbag mechanism. It is clear that the safety of the vehicle is affected by these components (Staake, Thiesse, & Fleisch, 2009).
If they are inferior, then the car is likely to cause an accident. The safety of the vehicle is thus not approved. Electronic devices are also prone to counterfeiting with most of them made with inferior wires and insulation that can easily catch fire when overheated (Staake, Thiesse, & Fleisch, 2009). If this syrup was assessed for quality before entering the market and also to determine the amount of active ingredient present, the loss of 200 lives could have been avoided. Failure to do this, the product was allowed to enter into the market and ended up causing the death of 200 people. Assessment of the syrup found that it contained ethyl glycol instead of glycerin (Wilcox, Kim, & Sen, 2009). This has the same effect as counterfeiting.
The quality of the final product is not assessed before the product is released to the market. These make the legitimate companies lose their consumers to the counterfeiters. The genuine consumers lose those consumers that want to buy products at lower prices as well as those that want to buy the counterfeit goods without knowing that they are not genuine. This forces legitimate businesses to reduce their investment or research, thus undermining invention and innovation (Sheng, Zhou, & Li, 2011). Counterfeiting discourages innovation. Most of the legitimate companies spend a lot of capital making new products and protecting them before they enter into the market (Sheng, Zhou, & Li, 2011). Consumers end up branding the legitimate companies disgrace for mistakes that they never made. Counterfeiting is causing an increase in the cost of running business.
This also has led to a decrease in productivity in the business sector. Many businesses are not willing to increase their productivity with the fear of losing their properties to the counterfeiters in the market. In addition to this, companies are required to ensure top protection of their products before they enter into the market failure to which their products will end up being counterfeited (Staake, Thiesse, & Fleisch, 2009). 5 million worldwide with this being due to the counterfeiting black market (Staake, Thiesse, & Fleisch, 2009). The rate of proliferation of counterfeiters makes the process of eliminating counterfeiters together with their products financially crippling, something that many organizations have not been able to afford (Wilcox, Kim, & Sen, 2009). Due to this, many business organizations are mainly focused on the most important market for businesses together with large seizures.
Such organizations have been forced to withdraw their efforts in the small markets that are believed to have been fully intruded by the counterfeiters (Wilcox, Kim, & Sen, 2009). Also, such businesses have been forced to adapt to the new circumstances and come up with new strategies of surviving with those conditions. In addition to this, counterfeiting inhibits the growth of enterprises (Norum & Cuno, 2011). Many enterprises cannot develop in such market situation since the limited available market is filled with fake products, limiting the available market for genuine products. With the fear of intellectual property theft, many investors are scared from investing in such a market, which ends up inhibiting the growth of the new enterprises. Majority of the new enterprises grow due to research that the owners of these investments put to come up with new products that can compete favorably in the market.
In such a case, potential investors are also discouraged from making investments in the market as they fear that they may not earn back their invested capital (Norum & Cuno, 2011). This is a way of informing the consumers about how dangerous it is to consume pirated products whose quality has not been approved by the relevant authorities. There is a number of legal actions that consumers can face when finding in the position of counterfeit products. Abuse of intellectual property rights is one of the crimes that are taken serious. Anyone found in the position of the fake product may, therefore, be charged with manipulation these rights. Possession of counterfeit products may lead to detention or destruction of the product without compensation of the amount spends in purchasing the product (Phau & Teah, 2009).
Majority of the products that are counterfeited are the luxury ones. Luxury goods are characterized depending on their quality, uniqueness, exclusivity, hedonism and self-expression (---). These are regarded as the five characteristics that differentiate luxury goods from the ordinary goods. Commodities sold at high prices are considered as luxury and are always affordable to the consumers of the luxury products (---). In relation to luxury products, there are four types of consumer perceived values namely functional value, financial value, social value and individual value (---). Counterfeiting is thus likely to exist for long due to its high profits as compared to the traditional manufacturing process. With the improved quality of the counterfeit products, it is extremely hard for the consumers to distinguish the counterfeit products from the original ones.
Consumers who have little knowledge on luxury goods are decisive and they are likely to buy the counterfeit products due to their appearance and low prices. In this case, counterfeiting can be described into two categories; deceptive counterfeiting and non-deceptive counterfeiting; deceptive counterfeiting includes the situations where consumers purchase counterfeit products without being aware of their state and where the consumer is misled by the counterfeit products (---). In that case, the consumer believes that he is buying a product made by a certain manufacturer, where at the end the product is not made by the genuine manufacturers that the consumer thinks. Government authorities needs to strengthen intellectual property protection so as to avoid product piracy and trademark infringement. Counterfeiting and product piracy has led to the increase in the crime rates in the society.
This is associated with decrease of the available employment opportunities as most due to the counterfeiting of products. Many countries are finding it difficult to provide their citizens with adequate employment opportunities. Counterfeited products reduce the amount of income available for government to invest in activities that it can earn income from. The investors always prefer countries with development infrastructure for easy transport and communication. This also leads to the decrease of the available employment opportunities as other investors may even get out of such economy due to the lack of quality transport. 5 The protection of trade marks Protection of the intellectual property rights is one of the most important issues and which government have increased their priority in. it is importance for government to maintain this priority on intellectual property as it plays an important role in innovation and economic growth (---).
In addition to this, improvement of this concern is also of importance because it enables the government to control piracy and counterfeiting, which is a common phenomenon in most of the economic markets. It is unlawful for any organization to use unregistered trademark. Infringing of registered trademarks is common. Infringing trademark has to be used in the market for the owner of the original trademark to have an opportunity to sue the other party that was using the trademark in the market (---). This causes confusion in the minds of the buyers, leading to the deceptive counterfeiting (---). There are number of reasons why it is important to provide protection of trademarks. No one is given the right of represents one’s product as his or hers when it is not the cases.
Thus, this is considered as a form of infringing, and serious legal measures can be taken to control this. Another reason why it is important to protect is due to exploitation of trademark. This leads to the loss and dilution of the brand. Consumers change the way that they perceive the brand when they come across the fake products in the market (--). The second one is copying the color scheme (---). This also may be described as infringing an existing label. This is common with the unregistered trademarks. During registration of the trademarks, it is not possible for two trademarks that are similar to get registered. This is to avoid confusion of the consumers when the trademarks share a common label (---).
Registration of the trademark allows the owner of the trademark to take legal measures against those who infringe their trademarks. This is not the case with the unregistered trademarks. Registration of the trademark gives it unlimited lifetime especially on renewal. The owners of the trademarks are required to renewal it after sometimes as a way of maintaining their trademark. References Avery, P. Imitation and Imagination: John Ruskin, Plato, and Aesthetics. Carlyle Studies Annual, 26, 141. Pil, F. K. , & Cohen, S. International Journal of Consumer Studies, 42(6), 687-703. Alfadl, A. A. , IBRAHIM, M. , IZHAM, M. The role of brand image, product involvement, and knowledge in explaining consumer purchase behaviour of counterfeits: Direct and indirect effects. European Journal of Marketing, 45(1/2), 191-216. Gabrielli, V. , Grappi, S. , & Baghi, I.
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