Rising sales of counterfeit electronics worries companies

NEW DELHI : Strong demand for wearable electronics and accessories in India has led to a thriving parallel offline and online counterfeit goods market, which includes counterfeit, stolen and illegally imported products. This has also been helped by insufficient anti-counterfeiting measures, alongside bulk sourcing at lower prices from China, which worries businesses.

For example, Chinese consumer electronics company Xiaomi said it had seized more than 9,000 worth of counterfeit products 73.8 lakh in the first half of 2022 alone. This is a sharp increase from the full calendar year of 2020 when it was only worth 3,000 products 33.3 lakh were confiscated. “From the Xiaomi portfolio, we have witnessed strong piracy of products such as headphones, chargers, adapters and USB cables,” said Muralikrishnan B, President of Xiaomi India.

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He said that in big cities there are hubs trading in the first fake copies of gadgets. Post Covid-19, counterfeit products are now also being sold on websites and e-commerce platforms, he added.

Similarly, Samsung unit Harman, which sells audio products under JBL, AKG, Harman Kardon, Infinity, among others, announced earlier this month that it had stolen counterfeit JBL and Infinity car speakers and subwoofers from stores and manufacturing facilities in Delhi during police raids had confiscated.

“With products like wearables and hearables, it’s very easy to create counterfeit products,” said Faisal Kawoosa, founder and chief analyst at research firm TechARC. He said such products could also be easily sourced from China.

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Kawoosa said the prevalence of counterfeit products has increased due to a lack of strict controls by online marketplaces, and while offline markets are the main breeding ground, “anyone can list and sell products (online)” which has made selling counterfeits easier Products.

Unlike smartphones, where police can use International Mobile Equipment Identity (IMEI) to track and identify each phone, accessories like headphones don’t have the same measures. Additionally, companies like Apple and Google have built in measures to remotely lock, wipe and track stolen cell phones. Apple even allows users to track accessories like Airpods through their phones. Such options are not available for cheaper accessories that make up the bulk of the Indian market.

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Industry experts also warned that counterfeiting poses serious financial risks for businesses and security risks for consumers. “Counterfeit goods in consumer electronics affect economic development and lead to problems such as endangering consumers’ lives due to poor quality and lack of inspection, tarnished brand image and tax fraud,” said Muralikrishnan.

According to a September 2019 report by the Federation of Indian Chambers of Commerce & Industry (Ficci), the Indian economy is losing 1.17 trillion annually due to smuggling and counterfeiting across five sectors including consumer electronics. The domestic aftermarket includes true wireless earphones, wireless and wired headphones, power banks, smartwatches and portable speakers.

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