**MC - Manufacturing Country.
o Liberalisation and Globalisation: One of the major reasons being promotion of small scale industry and liberalisation of policies for trade and industry for growth of economy as a whole without countercheck of the activities they are engaged in. The licenses are issued by the government but there is no effective check system to see if the conditions of the licenses are duly complied with.
• No Business Opportunities: India has liberalised it polices for setting up and promotion of industries by providing various infrastructural facilities but has failed to generate business opportunities. As a result of which there is voluminous increase in industrial zones and establishment with no work. So the Indian industry has to depend upon the job work of the developing nations which do not have infrastructural facilities.
• No Restrictions and Countercheck: Certain manufacturing companies (MC) (Pharmaceuticals, Cosmetics, Packaged Food etc) were allowed to flourish to its extreme limits with no restrictions/licensing as it was expected that there would be end of Transition Period of the TRIPS agreement.
• Outsourcing: The cost of production being low, multinationals manufacture their goods in MC to cut down their production cost and market their products to the European, American and African Countries to earn more profits. MC have become major source for conversion of goods on job-work basis. As a result of which the goods manufactured in MC are acquiring goodwill in the international market especially in African market. Knowing this fact, some unscrupulous manufacturers have started indulging in direct export of the counterfeit products to their counterpart in international markets to earn quick money.
• Globalisation of trade due to increase in mass communication: Due to globalisation and foreign investment in MC, foreign brands starting pouring into MC. It has generated new opportunities to the counterfeiters to manufacture the foreign brands at low price.
- The Consumers have no proper product knowledge about the foreign brands.
- There is tendency among the middle class people to buy the branded goods at the cheapest price, especially foreign brands.
- It is easy for the counterfeiters to copy foreign brands.
- Lack of information about the product to the distributors, retailers and the consumer.
- Due to the rise in demand of the foreign product and shortage of the supply for the same.
- The price of the original foreign brand is high. So the Counterfeit also fetch good price with high profit margin.
- Lack of Proper Marketing Strategies: “consumer demand drives counterfeiting”.
- Lack of information about the export market amongst the manufacturers of the foreign brands. The foreign company have no direct relationship with the various channels of trade for distribution of their goods. So proper detection of the counterfeiters is not possible.
- No initiative by the foreign companies to enforce their rights.
Lack of Political Will to tackle the problem: In MC there is lack of political will to combat the counterfeiting industry as the most of the political parties are operated by the funds of these business communities. Till date no one of the political parties has arrived at the agenda to fight against the illegal act of counterfeiting. The attempt was made to introduce bill seeking capital punishment for the manufacture and sale of spurious or misbranded food and drugs, there is no outcome till then.
• Corruption: The Counterfeiters offers bribes to the government officers to get their illegal work done like for obtaining various licenses, permissions and approvals or product registrations. The government officers issues licenses for the sake of money without noticing the fact that they are playing with the life of public in general.
• Perception of Crime: The society in general considers these commercial crimes to be of low grade, harmless and of less serious nature. In MC the commercial crime is considered to be of less serious nature in the society. So the enforcement agencies concentrate more on other criminal offences which are considered to be of more important by the society.
• Media Coverage: The mass media gives no coverage to these types of offences so they exist unheard and unknown. The common man is left ignorant about existence of such type of illegal activities.
• Trade Organisation: There is no active involvement of Trade Originations to fight against the counterfeiters. They can assimilate together to fight against government to claim their rights but they hesitate to initiate actions against each others or to check the activities of the member of their organisation. How can they blame the Government for the effective enforcement of their right when they are themself not vigilant?
• Detection of the Counterfeiter is problem: As the counterfeit product is made exactly as same as that of the real one detection of the counterfeit product and the counterfeiter becomes difficult. Mostly the fake name of the marketer of the product is mentioned so it becomes difficult to trace the origin of the goods and the actual manufacturer of the goods. The goods are manufactured without obtaining licenses or are obtained with false name. In country like MC where there is no harmonised system of licensing it is practically difficult to trace the counterfeiter.
• Job-work: In most of the cases the manufacturer is required to obtain the license for the manufacture of the products. So the name of the manufacturer appears on the product, leaving aside the person who has ordered for the goods to be manufactured on loan license basis. The person who places order never comes into picture. If at all any legal action arrises the innocent manufacturer who has done the act on job work has to suffer.
• Batch wise production: Mostly the counterfeiting is done batch wise so that as soon as the batch is released in the market no production of the same product is done by the manufacturer till it exists in market. Meantime other similar category of the product is selected for manufacture of counterfeit products so there remains no trace of the goods being manufactured unless someone admits it.
• Organised Crime. The counterfeiters have their own lobby and channels of trade which facilitates the distribution of these fake goods undetected.
o High Profitability: drives to illegal act: The profit margin over the counterfeit product is high as there is no additional cost involved in marketing, advertising and on research of the product which is borne by the original manufacturer. The cost of the counterfeit product is negligible and fetch good price as that of the original. The high margins of profit motivate the counterfeiters to indulge in these illegal activities overlooking the punishment and fines for such offences.
o No Accountability for sale: There is no accountability for the sale of the products across the counters so the sale of counterfeit products goes undetected. Every product sold must be made accountable by issue of memos or by use of bar codes, especially in case of medicinal products. The customers most oftenly are not issued memos, they must insist on the memos or rather the issuance of the memos with the name and address of the customers must be made mandatory so that check system is maintained on the sale of the goods.
o Lack Of Harmonised System: MC is country of diversity, in MC there are Central Acts and State Acts. The Constitution has empowered the States to decide over some issues and to frame its own policies. As a result of which there is lack of harmonised system and co-ordination of the policies of States. This benefits the counterfeiters who can obtain the licenses from two different states for the same product. If at all they are caught in one state they may continue to manufacture the products from some other states. There is harmonised system for registration of the trade marks. So why there can’t be harmonised system for registration of licenses? This may help to detect and control the crime and effective enforcement or rights in countries like MC.
o Fear Of Damage To Goodwill: Most of the legal actions are ignored due to fear of damage to reputation of the goodwill of the corporate or the brands. The companies are unaware of the extent of existent of product counterfeiting. Even those who know tend to avoid publicity for fear of adverse implications, particularly effect on brand image.
o Lack of Consumer Awareness and Advancement of Technology: There is lack of market information to the customers about the existence of the counterfeit products. Moreover due to advancement of the technology counterfeiting has become very easy and effortless tasks to the counterfeiters.
o Illiteracy: Mostly it is found that these activities mature due to innocence, ignorance and illiteracy of the consumers. The consumer is unaware and is unable to distinguish between the original and the fake ones. The majority of the MC population lives in Villages where the literacy rate is low. The Counterfeiters makes their base in these territories to market or to dump their products.
o Changes in purchasing habits of Consumers: Due to the evolution of the modern methods of marketing of the products through Internet and telemarketing. The Counterfeit products find direct entry in the households.
o Constant survey requires huge funds: The Government of any country cannot afford to deploy
their resources for continuos detection and enforcement which require huge funds that can be utilized for some developmental activity.
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