Red Bull insists it watches the Chinese market closely to guard against fakes after authorities arrested 13 people in August and seized thousands of counterfeit energy drinks, as an analyst warns the issue is a serious problem in 'virtually every product category'.
Tina Deutner, Red Bull spokeswoman, based in Austria, told BeverageDaily.com today: “This doesn't concern our Red Bull. Of course – as in all other countries - we monitor the Chinese market attentively, check cans regularly and protect our trademark against any infringements.”
The South China Morning Post reported last night that the arrests took place across 10 provinces and that 3,800+ boxes of can, ingredients and packaging were seized.
12 illegal production lines were making 2,400 cans per day, according to the article, while criminal gangs made a 3.7 yuan (55 cent) profit on each fake sold.
As pictures published by the paper show, fake products can be almost indistinguishable from the genuine article, but the health risks to consumers are high.
Ferreting out the fakes
James Roy, senior analyst at China Market Research Group, told BeverageDaily.com this morning that despite years of the government pledged to crack down on counterfeiting, "it is still a serious problem and fakes abound here, and are present in virtually every product category imaginable".
One major reason why Chinese consumers were so eager to load up on products like infant formula and diapers abroad is that they worry that even the imported versions sold in stores in China might be fake and harmful to their child, he added.
"The situation has improved and there are laws against counterfeiters in line with jurisdictions around the world, however a challenge for companies is that a large part of the onus for investigation and building a case for prosecution lies with them," Roy said.
"Law enforcement authorities typically do not go out of their way to look for counterfeit products, so intellectual property owners have to do some digging to find out where they are coming from and report them to officials, whether they be police or local AICs (associations of industry and commerce)."
Fragmented distribution channels were also hard to police, Roy agreed, with manufacturing often sub-contracted out to firms that were hard to monitor closely.
"And it can still be difficult to monitor your own employees to prevent them from walking out the door with your intellectual property (IP) and start a rival counterfeit factory," he added.
"Companies have to ensure they have solid policies in place and remain extremely vigilant about anything related to their IP, both within their supply and production chains and in the marketplace where copies of their products might be on sale."
Red Bull on 'Brand Protection'
In a section on its website flagged ‘Brand Protection (And What Everyone Should Know About It)’, Red Bull says its takes brand protection “very seriously” across a large portfolio of trademark rights.
“None of these trademark rights, or any confusingly similar signs, can be used without Red Bull’s consent. Doing so constitutes an infringement of our absolute rights…something we cannot accept.”
In buying counterfeit goods, the consumer deceives themselves, since they are not getting the same quality of product and are supporting criminals “and even terrorist groups” financed by fakes.
Such consumers also support production of goods made under unacceptable human and environmental standards and increased tax rates – since counterfeiters do not pay tax.