Tracking Down the Product Pirates
The investigators can barely believe their eyes. Based on everything they know, this underground garage should serve as the counterfeiters’ warehouse. However, nothing is to be seen — only empty parking spaces and a few parked cars, surrounded by bare walls. Suddenly, one of the investigators walks toward one of the walls. It looks suspicious to him and is clearly covered with bumps when viewed up close. The detective’s intuitions are correct, as the plaster falls off after only a few strong blows. They reveal the outline of a door lock. The men quickly uncover the door and open it. Bull’s-eye! The investigators’ flashlights glide over shelves upon shelves filled down to the last centimeter with more than 6,000 counterfeit windshields from various brands. The brand protection team in China can report the strikingly successful raid to the company’s headquarters in Germany. The big haul causes the experts at Global Brand Protection in Stuttgart to rejoice, as more than seven months of painstaking investigative work were needed to make the raid possible. “We are professionals when it comes to tracking down counterfeit Mercedes-Benz products on the market,” says the team’s leader, Peter Stiefel. “We investigate dubious offers on the Internet and cooperate closely with customs officials and law enforcement agencies. It’s often like putting together a complicated puzzle, because our opponents generally operate worldwide in mafia-like organizations.”
DANGEROUS PARTS
The production of counterfeit brand-name parts has greatly expanded in recent years and is now being performed on an industrial scale. Almost all automotive parts are pirated, from windshield wipers and wheel rims to oil filters and tie rods. Although there is a great demand forthe cheap parts, few customers suspect that they might be risking their lives by buying them. “You literally risk losing your life and limb with safety-relevant parts such as brake disks,” says Peter Stiefel. In order to arrive at a more precise assessment of the risks, Stiefel’s team regularly cooperates with development engineers from Mercedes-Benz to test confiscated counterfeit parts. The results are shocking. When subjected to the great stresses of the tests, counterfeit control units sometimes catch fire, rims break, and brake disks begin to glow and burst. But the risks are also high when parts do not suffer such dramatic failures. “We now know that the effectiveness of a counterfeit brake lining is up to two times worse than that of a genuine part,” says Stiefel. “This means that the vehicle’s braking distance can almost double. You can therefore imagine what can happen out on the road.” The experts at Daimler recently simulated such a real-life driving situation in a test drive. On a test track, drivers conducted evasive maneuvers with two Mercedes-Benz C-Class sedans. One of the vehicles was equipped with a genuine Mercedes-Benz tie rod, while the other contained a counterfeit one. It came as no surprise that while the sedan with the genuine Mercedes-Benz part easily navigated the obstacle course, the other vehicle’s tie rod couldn’t withstand the stress and broke. The vehicle began to swerve and could no longer be controlled.
A SHADOW ECONOMY WITH HIGH GROWTH RATES
The brand protection unit is in action worldwide so that customers do not suffer such catastrophic consequences.Throughout the world, around 100 lawyers and external investigators help the Stuttgart-based team track down product counterfeiters. “We want to catch the big players and destroy their production and sales organizations,” says Stiefel. That’s why the investigators don’t let up in their efforts even after a successful raid. “We file criminal charges and initiate civil lawsuits for prohibitory injunctions and the compensation of damages in order to make the counterfeiting business as unattractive as possible. To this end, we use all of the legal means at our disposal,” says Stiefel. Such rigorous action is indispensable because the days when counterfeit products were assembled in relatively small numbers in back-alley workshops are long gone. Today the business with allegedly brand-name products is run by a globally operating, criminal industry. It makes profits that are as high as those in drug trafficking, but has to fear penalties that are much less severe. This has serious consequences for the economy and society at large. Not only do counterfeiters pay no taxes, they also reduce the revenue of the producers of genuine parts and thus often endanger the associated jobs. Moreover, the manufacturers of counterfeit products care as little about employee rights and fair working conditions as they do about the prevention of environmental risks. They make no quality checks and are not interested in possible drawbacks or risks for the users of their products. The only thing that counts for them is making money. According to a recent study by the auditing and business consulting firm Ernst & Young, counterfeit products cause an estimated E56 billion in financial losses each year to German companies alone. The culprits benefit from technological advances and global sales opportunities. Fake brand-name products are especially swamping the market in Germany and other European countries. The focus is no longer just on luxury watches, sports shoes, and designer handbags, as counterfeiters are increasingly targeting brand-name spare parts and accessories for automobiles. Such parts are a lucrative business that promises secure sales and high profit margins.
SEEMINGLY GENUINE, BUT APPEARANCES ARE DECEPTIVE
The counterfeiters generally offer their products through large online trading platforms that are becoming increasingly popular among drivers. According to a study conducted by the market research institute TNS Infratest, around 6.5 million customers bought automotive spare parts, accessories or tires on the Internet in 2014. That’s an increase of 15 percent on the previous year’s result, and the numbers continue to grow. Today’s product counterfeiters know how to make their imitation parts look authentic — so authentic, in fact, that even experts have trouble distinguishing them from genuine parts with the naked eye. Products often need to be tested in order to determine whether they are fake or not. That’s why customs officials and police officers cooperate closely with manufacturers like Daimler. No matter how perfect counterfeit products seem to be, appearances are deceptive. The “brand-name” surface that is imitated down to the last detail generally covers a badly made product consisting of low-quality materials that can’t meet any quality or safety standards. If this weren’t the case, these parts could never be sold at the “bargain-basement” prices for which they often are offered. Few buyers of fake spare parts probably know that they are purchasing illegally manufactured products. And even if they suspect that parts are being offered by a dubious supplier, the low prices will nevertheless tempt many of them to buy the items. However, people who think they can save money with a low-priced imitation product will often be disappointed. The cheap parts can lead to costly repairs, not to mention the risks they can pose to drivers. That’s why it’s good to know that the brand protection unit’s investigations have repeatedly been successful. “Together with our colleagues at Global Service & Parts, we help to confiscate huge numbers of counterfeit products each year. More than 1.6 million products were confiscated in 2015 alone, with most of these items being spare parts,” says Stiefel. Moreover, the culprits are often caught and brought to justice. Peter Stiefel and his team were especially lucky with the Chinese counterfeiter warehouse mentioned at the beginning of this article, because the main suspects gave themselves up to the police after the raid.
