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Counterfeit Disaster
November 2, 2006 17:46

The question of counterfeit and adulterate products endangering the economic security of Russia has been discussed for quite a long time, but these are only talks. 62% of Russians apprehend to buy a counterfeit good, while going shopping. According to the results of the survey undertaken by the Public Opinion Fund, 53% of Russians purchased counterfeit goods during the past year. 44% of the respondents believe that food commodities (particularly meat and dairy products, preserves, etc.) are most frequently falsified; 31% consider medicaments to rank first. 21% of the pollees mentioned clothes, which is on the third place. Apart from that alcohol (21%), household appliances and cell phones (13%), shoes (10%), tobacco (9%), cosmetics and perfume (5%) are on the list.

Consumers’ opinion is concurrent with experts’ one: the European Commission inscribed Russia on the list of Top Five world counterfeit producers following the results of the last year. In keeping with the data, Russia ranks second yielding to China alone. Ukraine, Turkey and Chili accompany Russia in the group of counterfeit volume of production.

Experts specify that market penetration of products made by unfair manufacturers results in forming of the underground economy sector, discrediting home and foreign entrepreneurs prestige and moral and material losses of companies and consumers, which has an adverse effect on Russia’s chances to become the WTO member. The WTO and all developed countries included into the organization not once reproached Russia for the immense expansion of infringing goods, particularly raging of media piracy.

 All these facts make the government think of the effective strategy and oppressive legislation to fight manufacturers of counterfeit products: recently new amendments to the Intellectual Property Protection Law have been worked out. The bill includes not only provisions of living intellectual property laws of last 10 years, but new enactments, too. The newly introduced institutions are: entitlement to know-how, right to have a brand name; they didn’t have a unified legislative settlement before. For the first time Russian legal system talks about the right on database content and right to publish a work of science, literature or art as well as entitlement to individualization means. For the first time the outrages are to be punished with confiscation of property and cancellation of a corporate entity caught violating the Intellectual Property Right. However, experts notify that much is up to the application of the law-enforcement practice.

 Meanwhile, Russian industry is bearing huge losses from counterfeit production. According to the data provided by Russia’s Industry and Energy Ministry, in 2005 the total volume of infringing and contraband products at the Russian market in the light industry alone made up about 780 billion rubles, which exceeds the level of legal production and import twice. In keeping with results of the survey conducted by the Managers Association, 86.4% of respondents think functioning of the industry will improve, if the State forces illegally brought or manufactured production out of the country.

Nowadays almost anything can be falsified. Last year Uralian customs officials in the course of inspection withdrew 750 items of perfume illegally branded Hugo Boss and L’Oreal. Manufacturers of counterfeit products use all existing holes in Russian legislation to legalize their business. New bill fights not only counterfeit production but also brand squatters: such companies as Coca-cola, Funai, Samsung, Bridgestone, Volvo, etc.

Counterfeit occurrence negatively influences small business enterprises activity; as a result they bear losses due to reduction of contract trading volume, decline in profits and loss of this market segment.


Olga Pletneva

Tags: Russian economy     

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