A client that manufactures consumer batteries asked us to help with a counterfeit issue they were experiencing in a particular country. According to the client, the quantity of counterfeits went from almost non-existent to flooding the market over a period of six months. The problem became so massive that the client suspected there were more counterfeits than genuine products in that market.
Our quick review of the local battery retail market revealed that the genuine distribution network was so wide that a market survey or test-purchases would not prove productive – after all, batteries were commonly sold at every little mom-and-pop store on every corner throughout the country, in addition to the mid-sized and large retailers. Likewise, working backward from the retail level to try to identify major distributors would also be fruitless.
The client, meanwhile, had identified China as the country of manufacture for the counterfeit batteries, something that allowed us to develop an effective anti-counterfeiting plan.
Our first step was to begin pulling import records from the past year, concentrating on batteries being shipped from China. We also watched for batteries originating from other countries in case they were being transshipped from China via a third location. When we had collected all of the records, we subtracted shipments handled through our client’s official distribution channels. What we had left were imports from our client’s competitors, independent importers and the counterfeiters.
Further analysis of the documents allowed us to weed out the imports from legitimate competitors, which tended to be large shipments on a regular schedule, imported through well-known logistics companies and with detailed paperwork. That left us with the counterfeiters and any independent importers.
We studied the remaining documents and identified three importers bringing batteries into the country – two on a somewhat sporadic basis, with the third importing substantial quantities over the past eight months.
We identified what we believed to be the suspect importer, so we now could devise options for our next investigative step. On the one hand, we could conduct records searches and surveillance on the importer to attempt to identify their clients, warehouses, vehicles, et cetera, and then bring in law enforcement. Or, we could work directly with customs to attempt to stop the shipments while they were still in port. We chose the latter.
We contacted the director of enforcement for the local customs agency and presented our findings. The director agreed to work with us and identified an inbound ship- ment from our target set to arrive the following week. The director advised that he would contact us as soon as the shipment hit the port.
He indeed did contact us the next week and informed us the shipment was arriving the following day. He asked us to be present when the shipment was inspected in order to authenticate any of our client’s products. Sure enough, when authorities inspected the shipment, they found tens of thousands of counterfeit batteries of our client’s brand. They also found a similar quantity of a competitor’s brand, and the competitor might not have even realized the extent of their own problem in the country.
Following the successful seizure, the director asked that we provide product-ID training to the customs inspectors, which would allow them to authenticate suspicious shipments on their own.
Over the next two months, we worked closely with customs to identify and inspect suspect shipments, and our efforts paid off. Customs conducted three more seizures for our client before the counterfeiters changed their strategy to mislabeling their manifests, changing their importers and reducing their shipment sizes. Counterfeits of our client’s products are still available in that country, but the quantities and availability have been greatly reduced, and we continue our efforts to reduce them even further.