Seeking quality assurance
With business booming in the Middle East's construction industry, so too is the number of copycat goods entering the market. MEP Middle East reports.
The boom in the Middle East's construction industry has created a rise in a much less welcome trend - the sale of counterfeit and copycat products.
Counterfeiters are seizing the opportunity to introduce fake products into the region, but another reportedly larger problem is the production of copycat goods. Here firms are not selling goods under a falsified trademark, but instead are copying the general design of a reputed manufacturer's product and even their documentation. However in doing so they are using lower quality materials and less exacting manufacturing processes.
"Copycats are becoming increasingly widespread and increasingly aggressive," reports Jakob Lochte, marketing director for Grundfos in the Middle East. "In geographical terms, most copycats are Asian, but their influence is felt everywhere.
"The first copycats began producing for their home markets and by exporting to their immediate neighbours where no-one else was copying products. For our SP range, for example, we first saw copies popping up in Taiwan and other Asian countries - now it's spread from there to the Middle East," he adds.
Often closely resembling the genuine products externally, the counterfeit copies generally do not produce the same levels of performance. In the case of pumps and valves, this means potential leakage; pump performance curves not being met and shorter product lifespans. It can also mean the complete failure of hvac systems in extreme temperatures.
"They fail quickly," states Raphael Khlat, general manager of ITT Bell & Gossett distributor Faisal Jassim Trading. "They are not of the same metallurgy and not the same [exact] design. They may be the same shape, but they won't fit exactly, so will wear out quicker," he explains.
"The copycat pumps may look like ours, but they don't perform like them and they don't last as long. While they look alike on the outside, it can be a very different story on the inside," states Lochte. "The copies are getting better looking, but they are still most often not made towards any international standards as is the case with original products."
Manufacturers report that the problems in the pump market are mainly restricted to the smaller-scale products. These are easier to duplicate and the greater numbers used make it more worthwhile than attempting to copy larger, more expensive items.
"We are mainly dealing with largescale pumps for district cooling applications...there are rarely copies on the market," states Khlat. "It's very difficult [to copy] because they are of a large cast iron design. The value of each pump is also bigger, so it's unlikely people will take [a fake] because it's such a large investment.
"But there is a problem with small-duty pumps - there are plenty of copies in the market, which are similar products but not coming from the original manufacturer," Khlat adds.
"Counterfeiters are market-orientated and it's all about the money, if they can sell 500,000 of a product, that is the one that they will copy," reasons Edward Hardcastle, regional director of intellectual property consultant Rouse & Co International, a member firm of Dubai-based Brand Owners Protection Group (BPG).
It is not only the actual products that are being copied though, there is a growing number of cases of falsified documentation. "We have seen examples of companies copying our pump curves directly, transposing them straight onto their own so-called documentation," reports Lochte. "This is illegal as it means that the customer will not get what he is paying for. He will in fact get something less as the actual performance curve of the copy pump cannot be exactly the same as the original [product]."
This is also the greatest problem in the valves market reports Eric Gre, sales manager, TC Gulf: "We are facing this problem in Qatar where the specification [documents] have a lot of contradictions. In valves it is not counterfeiting that is the big problem, it exists for sure, but it is the certification of products [that is worse].
"Here we don't have somebody coming in with different version of our name, they're saying here's a valve with my name on it, but they are not saying where it was manufactured or the country of origin. Some UK-based companies for example are are giving the certification on their UK letterhead, but in fact they were made in China," he states.
"The consequences is we don't have the quality of UK or USA [products]. They make improvements but you can never match the quality of the materials for example," he warns.
So what problems will occur when using such copycat products? "You have to do more shutdowns," states Khlat. "With gaskets or rubber seals firms may get away with using for a short time, but they will fail quicker," he adds.
"If the contractor gives a one-year warranty and the valve is only used once, they don't know there is any problem during the warranty period. Here in the region as soon as a system is running it's very rare to switch it off; it's 24-hour operation," explains Gre. "It's only when there is a maintenance problem and they need a tight shut-off that they will have a problem as the valve will not close. So if you don't do any maintenance for two years and the warranty was for one year then [as a client] you are in trouble," he warns.
"The real cost only starts after the pump is installed," Lochte warns. "It is only then that the customer finds out what high efficiency means when he has to pay the energy bill. The customer will also find out that the pumping performance is lower than promised because the documentation is most often fake."
The market is fighting back, backed by government and independent organisations. "There have been big changes in the UAE. The intellectual property laws were revised in 2002 and the Intellectual Property Rights Unit for Dubai Customs was set up in 2005," states Hardcastle. "A Consumer Protection Law was issued in August 2006 and became law at the end of November, so is being implemented now," adds Hardcastle.
The BPG is a non-profit organisation that was set up to tackle the illicit replication of genuine goods and help enforce intellectual property rights. The Group set up a branch in Dubai to cover the GCC and Yemen in May 2006. It is doing a study on the economic impact of the counterfeiting trade in the UAE, following similar moves from other groups in the region. This is expected to be produced in the first quarter of 2007.
Penalties exist across the entire region to counter the trade in counterfeit goods and those who sell products with imitated trademarks face fines or imprisonment. Using lower quality copycat goods can also lead to penalties: "If contractors use fakes it is possible that they could be prosecuted," states Hardcastle. "Common sense prevails - if a contractor has put a counterfeit product in a premises and as a result of this [someone has been hurt] the police are likely to take a pretty dim view of that contractor," he explains.