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Protecting brands from rip-offs in China

by James Nason, 01 October 2015
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Gennady Volchek Authenticateit

Authenticateit founder and CEO Gennady Volchek explained how the brand integrity protection platform works at the recent Ag in the Asian Century conference in Toowoomba.

How can companies exporting to China ensure that only their product sells under their own brand in the market, and not lesser quality rip-offs?

China is not only one of the world’s biggest markets but it is also one of the world’s counterfeiting “superpowers”, according to the UN Office and Drugs and Crime, which estimates that almost 70% of all counterfeits seized globally originate in the country.

Counterfeiting is clearly a big problem and one from which meat exporters are not immune. Last year leading Australian Wagyu producer David Blackmore pulled his high-end, premium product from China after discovering counterfeit products were being passed off as his beef, and fearing the damage it would do to his brand reputation in the market.

However, potential solutions appear to be emerging.

Beef Central recently reported on the product developed by Chinese-based technology company YPB which involves embedding invisible and safe trace elements into imported products. With a simple wave of an electronic scanner, the integrity of the product can be verified at any point throughout the supply chain.

Another company offering a solution to combatting the counterfeifters was highlighted to delegates at last week’s Ag in the Asian Century conference in Toowoomba.

“Authenticateit” is a cloud-based serialisation and track and trace platform designed to help brand owners and manufacturers – from big corporates to small SMEs – protect their brand in the market while giving consumers confidence that the product they are buying is the real deal, not a lookalike, inferior quality rip-off.

Company founder and CEO Gennady Volchek explained how it works to Beef Central.

“At production when you label your packaging, you add a GS1 Datametrics code, which uniquely identifies your product,” he said.

“It gives it an identity.

“Then as that product moves through the supply chain and is sold to a distributor and another distributor and then to point of sale, all those transactions are recorded in the cloud track and trace system, so we know where it was made and we will know where it ends up.

“And then the consumer, before they make a purchase, they can scan this Datametrics code (using a free App on their smart phones) and confirm it is the genuine product.

“So basically they have complete visibility of where it has come from. If it has been substituted somewhere, obviously the link will be broken and the consumer will not get the confirmation.”

Implementation of serialisation and traceability also speeds up border clearance for brands due to the integration Authenticateit has with World Customs Organisation and relationships with CIQ China.

Authenticateit was in development from 2011 and became available for brands in different industry sectors from 2014. Mr Volchek said there are now 20 Australian and international brands using the company to protect the integrity of their brands globally, including beef exporters Sanger and Bindaree.

The bigger and more successful the brand, the more likely it was that counterfeiters would attempt to copy it, Mr Volchek said.

“That is obviously a big problem, you can spend a lot of money developing a brand, so it is important to ensure you retain the ownership and that others don’t take advantage of your investment.”

Not only does it make commercial sense to protect your brand in Asia, it would also soon become a legal requirement to do so, Mr Volchek said.

From the start of October – which is today – it is now mandatory for food producers in China to use track and trace systems on their product.

“If you are exporter, they expect that next year they will make it mandatory,” Mr Volchek said.

“So there are too sides to it – it is a compliance issue, and secondly you want consumers to know what they buy.”

Finding ways to protect the integrity of brands in China was a hot topic of discussion during panel sessions at last week’s conference.

Dirk Pretorius, the CEO of iconic Australian dairy brand Frosty Boy, told the conference that the company has had to remain extremely vigilant to protect its brand in China.

“We are registering the Chinese name for Frosty Boy, but that doesn’t mean you aren’t going to see your brand get used somewhere.

“We have had an experience where a frosty boy factory that opened up in China under the same brand and even approached customers as the local representative factory. You have just got to act and make sure you get them closed down.”



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Reader's Comments


Comment
  • Allen Roberts October 1, 2015

    The only way to really protect your product/brand is to have absolute control over the supply chain from the production point in Australia to the point where the consumer buys it for consumption overseas.
    This is challenging, and perhaps expensive, but technology is coming to the rescue. A combination tracking technology and through chain transparency will deliver it.
    Choices will need to be made, customers, markets and channels you will need to forgo because they do not comply or maintain the T&T, but in the end, it can be done.
    A personal presence is virtually mandatory.

  • John Gunthorpe October 1, 2015

    Counterfeiting beef product has been going on as long as we have been killing cattle. Remember the kangaroo meat that found its way into grinders in the US. Before we formed AMH in 1986 one of our shareholders continued running his steer boxes for an hour each time they switched to heifers. Of course he had brown paper bagged his local DPI inspectors. Regularly zaibatsu trading houses in Japan would sell Australian marbled product as US or even domestic Holstein to secure super profits from unsuspecting customers.

    So we should not see this as a Chinese problem. David Blackmore sold his product to leading restaurants in China and elsewhere so he knew his customers and he could be certain that his product was being consumed under his protected brand. However the copy brands went into other restaurants and hotels without his knowledge. No amount of tracing would have stopped this.

    Meat packaging can be broken down many times from Australian exporter to overseas customer and for legitimate reasons. I am sure that JR McDonald and his exporter Sanger are using this technology for the best of reasons, but unless they are in retail-ready packs, they still run the risk of copying.

    Unfortunately this is a part of doing business in the beef trade. Yes we should prosecute those caught copying protected brands but this is not so easy in overseas markets where laws and the legal system are very different to our own.

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