Print News: HP Joins Anti-Counterfeiting Group
In recent years HP has invested huge amounts to combat counterfeit ink cartridge sellers. Now the cartridge giant has joined the anti-counterfeiting Global Leadership Group.
In an attempt to redouble its anti-counterfeiting efforts, HP has announced its membership of the Business Action to Stop Counterfeit and Piracy (BASCAP) Global Leadership Group. A worldwide organisation, members of the BASCAP co-operate to address property rights issues, as well as share resources to fight counterfeit groups. By the combination of their expertise, businesses within BASCAP aim to increase the effect of their anti-counterfeiting schemes, as well as educate consumers about the problem. Though HP is itself concerned with combating counterfeit ink sellers, BASCAP fights the sale of illegal goods across many electronics industries. BASCAP was formed in 2005 and since then has expanded steadily.
For HP, the rise of counterfeit ink cartridges has become a real problem. It is estimated that of the $3 billion lost to counterfeit sellers in the cartridge industry last year, $1 billion of that was lost by Hewlett Packard. This is according to market research by IDC. Combined with the tough climate of the recession – sales of HP products fell 21% this year in the US – counterfeiters today seriously undermine HP. This is due in part to changes in HP’s business model, which depends on the revenue from ink cartridges. They are sold at prices reaching half that of the printers themselves, which recoup only the cost of production.
Yet while making the ink and toner market incredibly profitable – according to BusinessWeek.com its value has ballooned from $11 billion to $45 billion in ten years – HP opened the way for counterfeiters. While the print giant spent this decade combating legitimate toner resellers, which depend on HP’s own empty cartridges, the market in counterfeit ink exploded. According to LatinTrade.com, since 2003 the revenue lost to counterfeiters has gone from $2 billion to $3 billion. The problem has become so massive that, between 2005-2008, HP’s anti-counterfeiting unit conducted 4,620 investigations, seizing $795 million in fake products.
The decision to join BASCAP is one of several attempts by CEO Mard V. Hurd to combat the counterfeit market. Talking to Cliff Edwards of BusinessWeek.com, he expressed concern that the widespread sale of fake HP toner would ‘damage [the brand’s] reputation. His concern is legitimate because, unlike ink resellers
which don’t pretend to sell original cartridges, counterfeiters imitate HP toner packaging. There are ways of distinguishing – counterfeit toner won’t bear HP’s security logo, for example – but often the imitations are too accurate to be discerned. Moreover, unlike sellers of counterfeit watches, which go for reduced prices, sellers of HP counterfeit ink cartridges often match the prices of the original.
Whether HP will enjoy any success because of its BASCAP membership remains to be seen. Their existing anti-counterfeiting measures have paid some dividends – HP’s website notes that the manufacturer has seized 15 million false ink and toner cartridges in three years. Moreover, HP retains a full-time Anti-Counterfeiting force in existence solely to combat counterfeiting groups. The Force advises customers if they’ve fallen victim to a fake cartridge seller, and also performs sting operations. However, though glamorous, it is difficult to determine what impact such measures are having on counterfeiting groups. Judging by the yearly revenue HP is losing to the black market, counterfeiters are not yet going anywhere.