Excerpt from: China Supply Chain and Logistics Strategy
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| October 14, 2005 | | Supply Chain Strategies for Dealing with Counterfeit Suppliers | | I recently attended a lecture in Shanghai which discussed the counterfeiting experiences of
2 major multinational manufacturers in China. These companies have
developed innovative strategies for combating counterfeiting. One speaker
commented that approximately half of the world’s supply of automotive parts
were counterfeit!
The dangers of counterfeit products
entering the supply chain are severe. Companies sourcing in China must
devise effective strategies to minimize the exposure to such risk.
- Understand
Intellectual Property protection in China and take appropriate action
- Buy
direct from manufacturers or authorized distributors
- Implement
business processes which reduce your chances of buying from independent
distributors or brokers
- If
sourcing is outsourced make sure you understand and validate the sources of
supply and audit the methodologies and purchasing records
- If
working with independent distributors use a paper or electronic trail to
identify the sources of the products
- Understand
your independent distributors and how they operate. Audit their operations and
business processes and work closely with them to put in place processes that are
mutually beneficial
Multi-national
companies are working together through organizations such as the Quality Brands
Protection Committee http://www.qbpc.org.cn/
The QBPC mission is "to work cooperatively with
the Chinese Central and local governments, local industry, and other
organizations to make positive contributions to anti-counterfeiting efforts in
the People's Republic of China."
Companies
must do their own investigation work on the counterfeiters with their own
in-house team since criminal prosecution in China is rare. (working with the
QBPC helps lessen the financial burden of doing alone since firms in similar
industries collaborate and share costs) They then provide all of the evidence
to the Chinese authorities for follow-up. The police wont’ help you unless you prove that your company is an
expert in counterfeiter’s operations.
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