Data suggests counterfeit accounts for 15%-20% of products made in China
Whether you’re talking the supply or re-export the aftermarket is big business in the Middle East, which is proving to be a gift and curse with counterfeit a serious problem.
It is a reasonable bet that many, if not most of the people reading this article have at some time bought a fake. For men this is probably the acquisition of a fake Rolex or Breitling watch. For women it is likely to be a Louis Vuitton or Chanel bags.
Many people regard these fakes as a bit of fun. There is a perception that they are hand-made in poorer countries and that you are somehow supporting a poor economy, almost in a charitable way.
Nothing could be further from the truth. Fakes are backed by organised crime and are often more organised than the distribution channels for the real items.
Asia is the principal source of the world’s fake brands market with China the largest source economy. Official estimates suggest that counterfeit products account for 15%-20% of products made in China, representing 8% of China’s US$2.6 trillion GDP.
Some faking is as impressive as it is laughable. In August 2011 a total of 22 fake Apple stores were discovered uncovered in the Chinese city of Kunming. Employees of the stores were actually under the impression that they worked for Apple.
Some is much more serious. An entire African village recently was infected with malaria. There was no apparent reason for this, the medicine they were issued was the same and this mass infection engendered a World Health Organisation investigation. In fact one batch of malaria medicine issued to the villagers was fake and made of chalk.
This past May, prestigious British medical journal ‘The Lancet’ published findings that 30 percent of 1,700 malaria pills tested in Southeast Asia and West Africa didn’t work. In one-in-three cases, a box labelled as treatment for the mosquito-borne plague actually contained pills made with inert chemicals, expired active ingredients, or ingredients cut to stretch one pill into several — enough to fill the box, each scantly more medicinal than an M&M.
So fake Rolexes are bad and fake medicine can be deadly. But what about fake machine parts? Well it’s easy, all you have to do is not buy fakes right? Not really.
A recent US investigation found counterfeit electronic parts in their military aircraft. The year-long investigation by the US Senate has pointed to suspected bogus parts — amounting to over a million — in C 130 J transport aircraft as well as the test aircraft of the P 8 Poseiden series of maritime surveillance planes.
Both these aircraft have been contracted by India in the past few years under the Foreign Military Sales (FMS) pact with the US. More worryingly, most of the suspected electronic parts — ranging from chips in the display systems of the C 130 Js to components in the ice detection system of the P 8 — have originated from China. If there is one place you don’t want to find fake parts it is in your principal transport fleet for ground troops. Or on a construction site of course. It’s fair to say that if a construction operator owns a Bentley and a Cat bulldozer that the bulldozer will be operated more than the Bentley. People buy machinery because they need it.
As many Gulf region residents will attest much of this earth moving equipment is used on a twenty four hour basis.
So how big is the problem of fake parts? According to a survey carried out by the Committee for European Construction Equipment, just under 50% of machinery manufacturers surveyed believed they had seen examples of non-compliant machinery on a job site. A further 37% believed that they had lost sales due to a customer opting for a possibly cheaper, but non-compliant piece of machinery.
Manitowoc Cranes director for the EMEA region, Philippe Cohet advised greater use of RFID tagging during the production process to make identification of counterfeit parts simpler. He also emphasised the importance of educating sales staff and distributors on how to spot non-compliant machinery to provide further checks and balances in case non-compliant machinery has already entered the supply chain.
Caterpillar told CMME why counterfeit parts are a bad idea.
“If you buy fake air filters you face the following problems: Improper size (dimensions) which can cause fit problems and sealing issues that allows for leak paths,” said the company.
According to Cat, one of the principle concerns is poor quality material. Substandard material used that does not have the level of efficiency required to adequately protect the air intake system leading to premature turbo failures and excessive wear in the engine cylinders.
Another worry is products that use an insufficient amount of material. The less material used, which can impact the life of the filter causing more frequent filter changes which introduces more debris into the air intake system.
Then there is poor construction which build leak paths into the filter, allowing debris to bypass the media affecting engine component life.
“If your choice is to then use counterfeit fuel, filters and fuel/water separators, you can expect the following: material that is not efficient enough to capture the smaller particles that do most of the damage to fuel injectors.”
According to world’s largest equipment manufacturer, leak paths allow unfiltered fuel to bypass the media which can shorten the life of fuel injectors and fuel pumps. Less robust design can lead to fatigue failures that over time lead to filter leaks. Thus increasing the potential for catastrophic “thermal events”, says Cat.
Please note the rather enigmatic use of the words “thermal events.” If you have a particularly vivid imagination you could see yourself watching $750,000 worth of plant burning like a bonfire because you decided to save $100 on a filter. And of course most plant is not replaceable in a short amount of time.
So what happens if counterfeit engine lube filters are your bag? Well, less robust design could cause filter cans to rupture due to high pressure event (such as cold starts). Again poor material quality that do not effectively remove the ‘right-sized’ particles, can lead to early bearing failures and excessive valve wear. Finally poor construction with built in leak paths allow unfiltered oil to bypass filter media and shorten engine component life.
And what about hydraulic/transmission filters? Counterfeit products using cheaper mataerial will not remove the correct particles and raise the possbility of lower of performance in control valves and early component wear.
Unfiltered oil can shorten component life of control valves, pumps, cylinders while also adversely affecting the hydraulic system performance – leading to sluggish controls, loss of system efficiency and more downtime. Many of these systems are at high pressures and catastrophic failure can occur (ruptured filters, etc).
So the advantages of using genuine parts are, according to Caterpillar’s point of view: “real parts are precisely designed and manufactured to operate as a system for the customers’ equipment. Only original parts are updated with the latest engineering specifications guaranteeing that they will offer the life and performance needed. They are backed by a solid warranty protection.”
So that’s the danger, but where does it come from?
“Counterfeit spare parts for cranes originating in Asia are spreading into regions including the Middle East”, explains Thibaut Le Besnerais, global product director of tower cranes for Manitowoc Cranes.
He adds: “Most counterfeit parts are produced in China and that is where the largest market is. However parts are spreading to other markets such as the Middle East and India, counterfeit parts are largely not a problem in Europe due to customer awareness. In Europe the consequences of a mistake are bigger, so operators are more careful. In the Middle East] you have to educate the market.”
Jean-Pierre Zaffiro, global product director of Manitowoc, said that Chinese companies were manufacturing fake parts but were copies of much lower quality. “Generally you get what you pay for,” said Zaffiro. “Suppliers are targeting the market through websites. Crane parts need to be resilient as jerking can occur. High-grade steel is more ductile [stretchable] in cold climates.”
“Counterfeiters do not guarantee what steel grade they use as they buy it from questionable suppliers. Cost savings are small but accidents are expensive,” he warned. Counterfeit crane components have been blamed for a number of tower crane collapses in Asia.
Rudolf Wiegand, Man Truck’s Vice President, After Sales agrees: “Non genuine parts are made of inferior quality material and lack quality checks.
“They may cause severe damages, additional costs and increase down time for the vehicles.
“For that reason during 2013 MAN will focus on a number of campaigns to enlighten our customers about the costs occurring as a consequence of counterfeit parts and about the safety risks associated with non-genuine parts.
“We have a very open dialogue with the OEMs and other vehicle manufacturers about safety and we see that there is lots of potential to improve the safety of the roads by showing the dangers of counterfeit parts.”
So what do we do? We know that largely speaking the counterfeit parts come from the same place that Peking duck comes from. Well actually the Chinese are trying to begin to police the problem themselves. In 2011 China announced its intention to set up a national office to handle intellectual property rights (IPR) infringement and counterfeiting, according to theXinhua state news agency.
The announcement came just ahead of the 10-year anniversary of China’s accession to the World Trade Organisation (WTO). Over that time, the country’s share of global exports has risen from 4% to nearly 11%, but that success has been mirrored by complaints that the country has become the primary hub for manufacture of a host of counterfeit products.
The sad fact is though that as long as there is greed and opportunity there will be counterfeit. The decision that operators need to make is not what the saving on fake parts are but what the potential real cost is.