Business | Economy
Fake cosmetics business swells to $210m in Gulf
Counterfeit cosmetics and toiletries have grown into a $210-million business in the Gulf region, a loophole that may be exploited by terror groups to support their operations, an industry official said.
- By Jay Hilotin, Staff Reporter
- Published: 00:00 November 5, 2006
- Image Credit:
- Robert Taylor-Hughes, managing director for the Middle East and West Asia of Beiersdorf.
Dubai: Counterfeit cosmetics and toiletries have grown into a $210-million business in the Gulf region, a loophole that may be exploited by terror groups to support their operations, an industry official said.
The market for cosmetics and toiletries in the Gulf region was estimated at $2.1 billion last year, up from $1.8 billion in 2004.
Between 2000 and 2004, the GCC authorities seized fake products worth $50 million, the bulk of which ($35 million) was confiscated in Saudi Arabia, reveals industry reports.
The UAE confiscated Dh14 million worth of fake goods - cosmetics, electronics, car parts - between February and June this year from warehouses in Dubai and Sharjah.
In August $2 million worth of counterfeit cosmetics seized in Sharjah, including fake Christian Dior and L'Oreal cosmetics, according to the Sharjah Economic Department.
To combat the menace, brand owners such as Beiersdorf, Johnson & Johnson and L'Oreal have launched joint anti-counterfeiting drives in the Middle East and China, believed to be the origin of most of the fake cosmetics and toiletries. "A counterfeit item is as good as cash," said Robert Taylor-Hughes, managing director for the Middle East and West Asia of Beiersdorf, makers of Nivea.
The Hamburg-based company has allocated a one-million-euro war chest to combat counterfeiters of their products, he said.
"Counterfeiters are not just a few guys in a shed mixing cream and pouring them into a tin. They are linked to organised crime, money laundering and, in some cases, even terror groups. And they always find the weakest route to the market," Hughes said.
Recently, Beijing authorities apprehended a counterfeiting gang about to ship a container full of fake cosmetics bound for a UAE free port from the southern Chinese city of Shenzhen, near Hong Kong, said Hughes. "Some of the members of the gangs were actually Arabs who have used the UAE either as transit point or repackaging base before re-exporting the fake stuff Eastern Europe and other places."
The World Customs Organisation estimates that 70 to 80 per cent of the profits from counterfeit goods from the Asia Pacific region are used to finance organised crime and terror groups.
Next month, the Brand Owners Protection Group, an industry group formed to help the UAE authorities fight copyright violators, will help train Customs inspectors to screen out dodgy products, Hughes said.
The group is also planning to study the extent and impact of counterfeiting on Gulf economies.
But to stamp out bootlegging, deterrent penalties must be slapped on shops that sell fakes, said Hughes. "You can never stop counterfeiting. But you can minimise it by hitting the distribution network, which would deprive the counterfeiting gangs of their cash."
Officials at the Dubai Economic Department said consumers can also help fight counterfeiting at the retail level by reporting directly to the authorities.
"We will investigate any complaints against a defective product. But consumers must keep their receipts so that if they need it later, they can prove it in any forum," said Adil Al Hilo, an official at the Consumer Protection Section at the department.
Retailers caught selling fake products can be fined Dh5,000 for the first offense, and subsequent offenses may carry heavier penalties, he said.
In July, Dubai officials announced they will deport those found trading in counterfeit goods.
Your comments
Let the advertisements of these products clearly mention who are their authorised distributors and retailers. I have seen it in very few ads only. Common people cannot check and verify the daily use products they buy from an outlet.
Harry
Dubai,UAE
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