Product Integrity Concerns in Low-Cost Sourcing Countries

RT-264 Topic Summary
RT 264

Overview

In response to growing CII member interest in the issue of counterfeiting, RT-264 investigated and has made recommendations on product integrity concerns from low-cost sourcing countries. Data were collected from face-to-face interviews, as well as photographic and documentary evidence. Interviews with industry and government leaders were conducted in China, Taiwan, Hong Kong, Pakistan, UK, Canada, and the United States. The team’s efforts focused on knock-off branded industrial materials and equipment, as well as non-branded raw materials or commodity items.

As of 2003, the total value of all counterfeit products marketed in the world was estimated to be $1 trillion annually. In 2003, U.S. Customs seized $94 million in counterfeit products and goods at ports of entry into the U.S.

This research revealed a fundamental need for a controlled supply chain, including supplier pre-qualification, manufacturer surveillance, resident inspection, third-party verification, and unscheduled in-process inspections.

Key Findings and Implementation Tools

1 : Sources of Counterfeit Products

Sources of Counterfeit Products - According to the data, China is the primary originator of counterfeit goods. The U.S. is the most common destination, followed by China and Canada. (RS264-1, Table 3, p. 26)
Reference: (RS264-1)

2 : Most Common Counterfeited Construction Items

Most Common Counterfeited Construction Items -The most commonly counterfeited items are steel, fasteners, valves, pipe, and, finally, electrical components. (RS264-1, Table 5, p. 27)
Reference: (RS264-1)

3 : Types of Counterfeiting

Types of Counterfeiting – This research focus was on ‘Class B’ counterfeit products, goods and materials clearly produced with the intent to deceive end customers. (RS264-1, p. 3)
  • Class A – Goods produced by means of patent piracy; high-end goods that are as close as possible to real merchandise. 

  • Class B – Goods that look nearly identical to genuine product, but that possess sub-standard internal components and may cause catastrophic failures; products that consumers would normally least suspect; deficiencies would not normally be detected by typical quality assurance systems. 

  • Class C – Obvious junk; poor quality goods that are easy to spot.
Reference: (RS264-1)

4 : Supply Chain Integrity

Supply Chain Integrity - Maintaining the integrity of the supply chain is the most effective way to combat the problem of counterfeit products. This research recommends that organizations adhere to the following guidelines:
  • Training and education of supply chain personnel on the hazards of counterfeit goods and how to prevent and mitigate the damage from counterfeit items in the supply chain
  • Organizations need to develop and adhere to a qualified supplier program
  • Create a testing and inspection program for receipt of products and goods
  • Adopt a zero tolerance policy regarding counterfeiting

 
Reference: (RS264-1)

Key Performance Indicators

Improved quality, Supply chain management

Research Publications

Product Integrity Concerns in Low-cost Sourcing Countries: Counterfeiting within the Construction Industry, Version 1.1 - RS264-1

Publication Date: 08/2010 Type: Research Summary Pages: 47 Status: Supporting Product

Product Integrity Concerns in Low-cost Sourcing Countries: Counterfeiting within the Construction Industry - RR264-11

Publication Date: Type: Research Report Pages: Status:


Supporting Resources

Presentations (CII Annual Conference & Workshops)

Plenary Session - Product Integrity Concerns in Low-cost Sourcing Countries

Publication Date: 07/2010 Presenter: Number of Slides: 15 Event Code: AC10

Implementation Session - Product Integrity Concerns in Low-cost Sourcing Countries

Publication Date: 07/2010 Presenter: Number of Slides: 53 Event Code: AC10

Session - Product Integry Concenrs in Low-Cost Sourcing Countries

Publication Date: Presenter: Number of Slides: 83 Event Code: PIW1011


Education Materials

Product Integrity Concerns: The Threat of Counterfeit Products in Construction - WS264-01

Publication Date: 06/2012 Type: Video Pages: n/a Status: Supporting Product


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