The real cost of buying cheap counterfeits

The lure of big-name brands at a cheap rates drives the trade in counterfeits, but where do the profits go?

Some of the Dh48 million of fake cellphones seized by Dubai Police in the last two weeks. Photo: Courtesy Dubai Police

With the police clamping down on counterfeit products in the UAE, arresting 45 people in the last two weeks and seizing tens of thousands of replica mobile phones, it's worth looking at why this is a multimillion dirham market segment and to understand the psychology driving those who buy fake goods.

We live in a world where brands say as much about the purchaser as they do about the product itself. Research by the UK-based Association for Consumer Research (ACR) suggests that consumers see high-profile brands as bridging the gap between the actual and ideal self. When buying aspirations exceed one’s budget, some will buy a fake version of a big-name brand rather than a genuine product with a less-prestigious name. While some might naively think the fake is the real thing, most buyers are fully aware the products are fake and even illegal.

While this helps explain why the market for counterfeit goods continues to boom despite the efforts of the authorities, consideration must also be given to the ultimate cost of fake goods.

Buying a “Rollex” watch or a “Nokla” phone might seem to be a harmless attempt to live a glamorous life on a meagre budget. Often these are just brands piggybacking on more established names. But the Apple iPhones and Samsung Galaxy models seized by officers would have been passed off to potential customers as the real deal. The proceeds from this mammoth illicit trade do not just cheat companies out of the rewards for creating the prestige of their brand. Even more important is that the profits from the sale of counterfeit goods are going to criminal enterprises rather than to reputable businesses.

The effort needed to create a factory and then smuggle in the various phone parts separately for assembly is significant. It is the kind of effort that only an organised crime syndicate could undertake. Such syndicates do not begin or end with counterfeiting goods. At one end, they can easily turn their attentions to counterfeiting medicines, which causes serious harm. At the other, they use the same methods to smuggle in drugs.

The UAE’s success as a global transshipment hub will make this country a natural place for counterfeit goods to be passed through or peddled by unscrupulous merchants. The authorities here are fully justified in cracking down on this illicit trade.