ICT Africa Headline News

Salvaging Nigeria's Mobile Phone Industry From Counterfeiting, Trademark Infringement

13 August, 2014

Source: The Guardian

By Femi Adekoya
For those involved in the trade of counterfeit products, it remains a lucrative enterprise particularly in an environment where consumers have penchant for foreign goods and popular brands. Leveraging brand equity of popular brands to infringe on their trademarks remains a challenge in the mobile phone industry. This move has led to regulators seeking new alliances to address the influx of such sub-standard products in the economy. The Standards Organisation of Nigeria (SON) believes establishing protocols and technological innovations are key to curbing this menace while protecting consumers. FEMI ADEKOYA writes.

To an unsuspecting customer, the sleekness of a smart mobile phone and touch-screen keyboard associated with certain brands is unmistakably familiar. So is the logo on the back. But a closer inspection and price of an average popular brand of a mobile phone displayed on major highways in Lagos or the Ikeja Computer Village reveals otherwise.

Hitherto, there were fewer counterfeit phones in Nigeria. With technological advances and introduction of smart phones by many global brands, churning out affordable smart phones became a selling point for many Asian brands targeting the large, emerging consumer markets and specifically, Nigeria.

Today, with about N10,000 or less than a $100, consumers in Nigeria can easily access these smartphones, even a huge cost to the economy, considering the dangers posed by many of such phones that turn out to be counterfeits.

The international dimension to this twist has seen global brands, which are alarmed by the rapid growth of counterfeits and no-name knockoffs, pressing the Chinese government to crack down on their proliferation, and are warning consumers about potential health hazards, like cheap batteries that can explode.

Indeed, even Chinese mobile phone producers are losing market share to underground companies, which have a built-in cost advantage because they evade taxes, regulatory fees and safety checks, according to information obtained by The Guardian.

While the phones may look like popular brands, counterfeiters actually add special features like bigger screens, quad-mode SIM cards (which allow four phone numbers) and even a telescopic lens attachment for the phone's camera.

SON expresses concern

Worried by this trend, the Director-General of the Standards Organisation of Nigeria, Dr. Joseph Odumodu, decried the continuous counterfeiting of computers and phones, saying that the micro-economic effects portend danger for the country's economy.

Odumodu said counterfeiting of these goods had impacted on the sales volume, prices and costs of rights holders, likewise investment, royalties and brand value, adding that the impact had been "devastating," because of weak regulatory and legal frameworks.

He noted that the agency's recent surveillance actions at the Lagos computer village led to the raid of the market, a move he described led to the seizure of sub-standard phones worth at least N200 million.

According to the SON DG, the scope of counterfeit products has broadened and the trends indicate that counterfeiters have expanded the types of products being infringed upon from luxury items (watches, designer clothing) to consumer goods, including everyday items such as food, pharmaceuticals, cosmetics, digital products, aircraft and automotive replacement parts.

Odumodu, who disclosed that 80 per cent of mobile phones sold at the Computer Village market, Ikeja in Lagos are fake, informed that majority of the sales of brands including Nokia, Samsung, HP among others were not coming from the original manufacturers directly, but through counterfeiting and grey markets.

"We have come to discovered that larger percentage of sales from brands including Nokia, Samsung, HP and others are not coming from their manufacturers directly but through counterfeiting. It will also interest you to know that about 80 per cent of mobile phone sales at the said largest technology market in Africa (Computer Village) are fake products. This is the battle we are currently battling as an agency and we shall win the fight", he stated.

According to him, some dealers of the global brands appoint agents locally that engage in counterfeiting, by so doing, doing more damage to the brand and the market.

He stressed that people make more money by copying, becoming more powerful than the owners.

The SON DG noted that the impact of counterfeiting on the economy comes in a variety of ways including consumers that believe they are buying authentic products, legitimate manufacturers that invest in safety and quality manufacturing processes, and retailers that want to provide safe, reliable products to their customers.

"It has been established that trade in counterfeit goods is a lucrative and growing business estimated to cost hundreds of billions of dollar each year. Estimates of counterfeit goods in total global trade vary from two per cent (OECD) to as much as five to seven per cent (International Chamber of Commerce). Value of these losses is put at about $400 billion.

New reforms to the rescue

Wary of the intrigues being played by mobile phone dealers in the country, Odumodu unveiled plans by the agency and other stakeholders in the telecommunications industry to initiate a system that would remotely reject counterfeit and sub-standard mobile phones when such phones are activated.

According to him, the move is part of measures to address concerns raised by consumers on the influx of sub-standard mobile phones in the market and on the infringement of intellectual properties of established mobile phone brands.

The new reforms would also see manufacturers and authorized dealers of mobile phones taking responsibility of differentiating their brands through new procedures to be released by the SON as well as the enforcement of the establishment of after-sales service centres in the business environment.

Indeed, the agency noted that the rising poverty level and low purchasing power on the part of consumers remain responsible for the growing merchandise in sub-standards phones.

Director-General, SON, Dr. Joseph Odumodu, during a stakeholders' forum with phone brand owners tagged "Boosting consumers confidence in Nigeria's mobile phone markets explained that the agency is in collaboration with the Nigeria Communications Commission (NCC), the Consumer Protection Council (CPC) and mobile telecommunications service providers to ensure that International Mobile Station Equipment Identity (IMEI) and other marks of quality be used as the yardstick for the identification of counterfeit and sub-standard phones.

Under the arrangement, any mobile phone that falls short of the minimum standards criteria would become ineffective as the mobile phone services will become inoperable on such phones.

He added that SON would also conduct and publish the list of registered phone brand owners in the country; mandate every phone brand owners to have coded identity marks for traceability and proper user guide; monitor compliance on such measures and give deadlines for the enforcement of the reforms.

He noted that SON would set up a monitoring scheme and desk across all entries for which such products have been known for while enforcement of regulations would inform seizures, evacuation and destruction of phones that fall short of the requirement.

He said: "we will ensure that those products that have not been able to provide additional features be removed. Within the next one week, we will be installing a new set of equipment in SON to measure radiation levels not just for the phones but for the components too.

"This meeting is part of our quest to rid the markets of fake and sub-standard phones and accessories which have in recent times turned to a worrisome and disturbing level. Indeed, the Federal Government has become increasingly concerned over the high incidence of fake and sub-standard phones in the markets across the country as well as the potential health and safety implications on the economy of the country.

"We are not talking about IMEI numbers, but some additional features that we would use to identify the real products from the fake ones. It will surprise you that there are about 13 million sub-standard phones in the country, which further increases exposure risks of consumers to dangerous metals and harmful elements that are associated with such products.

"It is the responsibility of all brand owners to monitor and protect their products from the factories (manufacturers) until they get to the end-users. Regrettably, we have since discovered a common trend in the market. Phones are incessantly "cloned" or in local parlance, "copied" by fakers or undesirable elements. This situation remains unacceptable to Government and all hands must be on deck to stamp out the practice completely".

He added that poverty and low purchasing power on the part of consumers might also be responsible for the growing merchandise in sub-standards phones.

"Most times, consumers are constrained by ignorance, poverty and inability to detect counterfeit products. They go ahead to purchase fake products that may be rather harmful to them. Consumers opt for substandard or counterfeit mobile phones because they are cheap and look like the originals. This trend cannot be allowed to continue", he added.

Stakeholders, brand owners seek intervention

A representative of CPC, Mrs. Umego Adaora, who represented the Director General, Consumer Protection Council (CPC), Mrs. Dupe Atoki, advised that consumers must always insist on the right products maintaining that, the body is empowered to cause offenders to replace bad products with good ones.

"Brand owners should conduct business responsibly by looking at the moral issues in business rather than the profit-making motives. We are ready to partner with SON to address this ugly trend and ensure consumers enjoy speedy redress on this issue", she added.

Some of the mobile phone brand owners commended the SON for the move to sanitise the market noting that counterfeit products were already forcing good brands out of the market as well as enjoying the premium such brands enjoy.

Co-Founder, SOLO Phones, Dolapo Ajayi called for a strengthened collaboration of regulatory agencies to curb the menace of substandard products in the country.

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