HumiSeal takes on fake businesses in Asia to protect product quality and customers

Leading vendor of conformal coating solutions, HumiSeal®, has announced it is taking direct action on a number of fronts against counterfeit products and the organizations that manufacturers and distribute them. One recent case, a company calling itself Kunshan Xiaoxi Electronic even went to the trouble of forging an authorizing letter to try and convince would be customers they were buying legitimate product.

Keith Waryold, Global Business Director for Chase Electronic Coatings (the operating division for HumiSeal) explains why HumiSeal is taking these occurrences seriously and what steps it is taking to ensure customers are protected from this sub-standard product. "More and more we are hearing that counterfeiting in China is reaching a crisis point, not just in our industry but across many and the problem appears to be getting worse each year. We take this situation extremely seriously and will pursue any organization or individual that tries to infringe on our IP (Intellectual Property) in order to protect not only the customer but also the reputation of our products."

"To this end we are actively searching these companies and individuals out as well as making significant investments in our global manufacturing facilities that further standardizes the quality and repeatability of our products including modernized automated equipment."

All authorized distributors for HumiSeal products can be found on the HumiSeal website here: www.humiseal.com/contact-us if you suspect something is not right with your supplier or you are buying HumiSeal branded product from a supplier that is not listed please contact HumiSeal.

Additional information on counterfeiting in general

Source: This is an excerpt from an article originally published in an issue of the China Business Review.

How counterfeiters operate

Counterfeiters worldwide use increasingly sophisticated methods to avoid detection by rights holders and law enforcement bodies. Even if detected, their operating methods are designed to minimize potential penalties.

Corporate practices

Counterfeiters frequently use front companies or front men to register companies that produce counterfeits. This makes it difficult to identify the true players behind a counterfeit operation and make them liable for their unlawful acts. Furthermore, company production and sales records do not indicate that counterfeits are being produced and sold; rather, model numbers and code words are used. Even if a rights holder obtains these records as part of an investigation or raid action, they can be difficult to use unless the meaning of the model numbers and code words can be explained satisfactorily to a court.

Production processes

Like all good modern businesses, counterfeiters use just-in-time production and rarely keep inventories to reduce carrying costs and the risk of seizure. They produce only to order, making it difficult to seize large volumes of counterfeit products. If counterfeiters do keep stock, they usually keep it separate from manufacturing facilities in a secret location leased in the name of a front company, making it difficult to link to the counterfeiter. Rights holders can find these locations only after in-depth investigation.

The more sophisticated counterfeiters will not make products themselves. Instead, they use separate subcontractors to make different parts of the counterfeit goods, which are then assembled by another subcontractor.

Sales and distribution

To avoid detection by investigators, counterfeiters do not provide samples to prospective "buyers" and will refuse to deal with potential customers who do not make a substantial purchase. This can make it difficult and expensive to confirm whether counterfeiting activities are occurring. To mount any type of civil or criminal case, it is generally necessary to have a sample of the counterfeit product.

Even if a counterfeiter accepts an order, the main players behind counterfeiting rarely take delivery of counterfeit products themselves. Instead, products are shipped directly from sub-contractors to freight forwarders. Payment for counterfeits is usually made to entities separate from the production and sales companies. This can make it difficult to tie the counterfeiter directly to seized products, hindering criminal prosecution.

Finally, sophisticated counterfeiters will often buy genuine products on the gray market and mix them with counterfeit products. This can make criminal prosecution difficult because in most criminal justice systems, defendants can avoid criminal liability if they can show that they have been innocently caught up in counterfeiting activities. Those found in possession of mixed products can simply claim that they have been duped and that they checked the products, which appeared to be genuine.

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Updated July 2014