By Mike Santora | Associate Editor
Year over year, the threat of counterfeit bearings remains persistent. A lucrative market and a history of spotty legal backlash keeps would-be counterfeiters emboldened. But for the last two years raids and seizures are on the upswing. Bearing manufacturers are getting better at targeting counterfeiters and creating awareness for consumers. Here’s how industry professionals are protecting customers and what customers can do to protect themselves in 2018.
The National Intellectual Property Rights Coordination Center (IPR Center) is an interagency government organization that focuses on IP rights and enforcement, specifically counterfeit products. At a summit in late 2017, it was stated that in the previous year, the estimated value of global counterfeit products had risen to around 3- 3.5% of global trade. Compare that against 2013, where there was a 2.5% increase from the previous OECD study. A clear pattern of counterfeit growth has emerged for the last 10 to 15 years for all products. So why, specifically for bearings, has there been such an increase in counterfeit activity? Schaeffler’s Director IP, Americas, Antun Peakovic says it likely has something to do with risk versus reward.
“If you sell $1million of counterfeit bearings, you may get a small fine. If the theft is really egregious, you might even get some jail time. But it’s more likely a conviction would lead to a fine or something with parole. By contrast, if you sell $1million in narcotics, you’re going to get a very steep penalty.”
To combat the steady stream of counterfeit bearings flowing into the market, manufacturers have had to get better at locating the problem and making customers aware of it. Frequent meetings with U.S. and foreign customs agencies, authorized distributors, and end users have helped target the problem. Meanwhile, groups like the American Bearing Manufacturers Association, The Federation of European Bearing Manufacturers’ Associations, and The Japan Bearing Industry Association have banded together to improve counterfeit awareness. These groups make up the World Bearing Association and its website, Stopfakebearings.com. Created in 2006 by three regional bearing associations, WBA works to support the lawful interests of those in the industry through sustainable development, open economic engagement, and legal protection.
The website focuses on prevention through creating awareness and keeping open channels of communication within the industry. The website states, “Awareness comes before action. Help your associates, customers and friends to protect themselves against counterfeits by letting them know about the problem. WBA is more than happy to provide communication materials for this purpose. We are dedicated to informing about problems with counterfeiting of premium brand bearings and to assisting supplier,distributors, and supplier law enforcement agents in the identification and eradication of product piracy.”
One of the most pressing challenges is dealing with counterfeit packaging. Counterfeiters lack the knowledge and resources to create passable fake components so they rely on slick packaging to create the illusion of premium products.
“They haven’t made any improvements in engineering know-how or expertise. But their ability to copy packaging, and marking, and make products look more genuine, has improved. Part of that’s due to technology. You can scan or copy things and reproduce them so easily now, where maybe 20 years ago, you couldn’t. They are getting better at marking and packaging, which requires us, of course, to get better at marking, and packaging, and knowing our products very well, so that small indicators can mean identification one way or another,” says Peakovic.
While new packaging techniques might be showing up in counterfeit bearings, there is still an abundance of older products counterfeiters are trying to move. Peakovic also explained that there are plenty of stored bearings from the last four or five years that are going to pop up.
“That’s the most common counterfeit we see; the counterfeiting of products that have been on the market, or labeling that has been on the market for a few years,” says Peakovic.
Companies are not changing their products to combat this. They are changing how their labels look and how their boxes appear; this is an ongoing and ever-evolving process. Larger manufacturers make tens of thousands of different part numbers and millions of bearings every year. Consequently, having an annual change of packaging, box type, or overall re-vamping, is certainly not cost effective. It continues to challenge manufacturers.
The easiest thing that companies can change is how and what they mark. For example, individual part marking. For Schaeffler, that means each part has its own identifier, a data matrix code and the label matched to the bearing inside the box. That QR code is individual to that product, and that bearing, and that production date. It’s very specific and very difficult to copy.
Additionally, several companies now have apps that customers and can use to identify counterfeit products. Available on iPhones and Androids, users can scan codes on a product and can identify, at least, whether the code has been scanned before. This process keeps a log of whether the code has been scanned before, and whether it’s been determined to be counterfeit. Apps like this help make communication global, immediate, and more difficult for counterfeiters to adapt to, something they are quite good at.
“One thing about counterfeiters is they adapt well. If they start getting caught across the border, they begin to change patterns. In some countries, Brazil, for example, they will send blank product, something that can be marked in-country and packaged in-country. They’ll send blank bearings, which are not infringing on anything other than, perhaps, customs regulations, in a sense that they’re not marked with country of origin. But they don’t have any brand on them. It’s relatively easy to find marking equipment that can mark these products,” says Peakovic.
Counterfeiting is a global problem with fake components coming from around the world, not just countries like China and India, with a long history of infractions. Products are shipped from the US to South America, and vice versa and they are also shipped from Germany and other countries. Once a counterfeit bearing has infiltrated the marketplace it can be sent anywhere. Nearly every type of bearing is subject to counterfeiting. Every product, size, and part number is vulnerable. The fast-moving products like small ball bearings such as a 6200 series or 6300 series ball bearing are common simply because of the product’s production volume. Means of distribution looks to have a slightly larger impact on the counterfeit market in the next few years.
Smaller shipments of counterfeit products have been a problem in the last year and could continue through 2018.
“10 years ago, or even, 5 years ago, we would get container shipments. We would get large-volume counterfeit products shipped to a particular distributor. If you caught those, then great, you stopped the whole shipment of counterfeit products. Now what we see is these expedited freights, FedEx, even for very large products. Even for two-ton products, we’ll see airfreight products going through. Sometimes those are caught. But you can imagine if you have one container with 20,000 bearings and you catch that container, fantastic. If you have those 20,000 bearings divided up among 10,000 shipments, you’re not going to catch all 10,000 shipments,” says Peakovic.
The pattern is for a multitude of smaller shipments. A development that is much more challenging to stop, both at customs and for manufacturers. But manufacturers maintain that continued education and communication can help keep counterfeiters guessing.