Counterfeit goods: complacency isn’t an option

21st September 2023
Paige West

The presence of counterfeit goods in the electronic distribution industry continues to present significant challenges.

Reporting counterfeit goods requires time, effort, and sometimes even legal involvement, making it a laborious process but Peter Greenslade of Solid State Supplies believes this is critical if we are to cultivate a sense of vigilance and commitment to reporting these incidents.

In this article, Peter takes a bird’s eye view and provides his thoughts on why it is essential to foster a culture of collaboration so that the market can combat counterfeiting more effectively.

The last five years have been a rollercoaster for those involved in the supply or demand of electronic components. At times, supply chains almost buckled under the pressure. Covid-19 made the transport and production of vital components extremely difficult while also distorting and intensifying demand for the very goods they were needed for.

Today, thankfully, we aren’t facing such a troubled market. Echoes of past shortages may still be felt, and until a few months ago, demand still outstripped supply. We are now witnessing light at the end of the tunnel however – and manufacturers are finally able to match demand according to some optimistic estimations.

With less pressure on Original Equipment Manufacturers (OEMs) to secure ‘hard to find’ components, counterfeits are less of an issue. However, they are still raising their ugly heads - and unfortunately, due to the fragmented, complex, and opaque nature of the market, there aren’t many easy solutions.

Businesses can report, learn, and cooperate. Indeed, this remains our best collective response to the threat of counterfeit goods. The ERAI is the primary resource for those looking to protect their products from bad players and underperforming parts. The Anti-Counterfeiting Forum is another resource which strives to provide information for those looking to discuss and learn more.

Although these resources have limitations, they are among the best available. Hence, even in periods of stable and plentiful component supply, it is essential that we in the industry, whether that be public or private, Contract Electronic Manufacturers (CEMs), distributors, or OEMs, continue to share information about any faulty, damaged, mislabelled, or counterfeit components we come across.

Component supply may have stabilised…

It is not likely the demand for electronic components will ever subside. Our world relies on processors, chips, memory units, and batteries, and this is only likely to increase as we digitise more of our lives and electrify more transport and industry.

The production of advanced microchips, or the machines that are able to make them, is even beginning to pose a major headache for world leaders as they look into the future and realise that these advanced chips may significantly impact the global order and who sits at the top.  Hence, both America and the EU have passed their own laws to futureproof and supercharge the domestic production of these chips.

Currently, as we know, Asia and particularly Taiwan produces the vast majority of the most advanced chips – and with growing hostility and tension in the region due to Chinese territorial ambitions, this could become a serious problem for the global market.

… But the counterfeit market continues to bite

As supply grows to meet demand for the first time in a long time, the supply of counterfeit components grows too. This is less of an issue for those paying attention, as fewer people in need of parts are struggling to find them, and trusted or regular distributors, brokers, or even geographic areas have enough to go round.

China, for example, now has a reputation for supplying counterfeit components – and some OEMs simply won’t use items from the region. Counterfeiters are also becoming smarter, and we have witnessed some from China setting themselves up as a business in America or the UK to appear more legitimate.

The importance of reporting

The ERAI is the best resource currently available to tackle the counterfeit electronic components trade. It is global and brings together CEMs, OEMs, and governments to form a wide and varied cross section of all involved in the industry. Reports are created and data tracked. Disputes can even be sorted by committee to work out if the supply of counterfeits was intentional or accidental.

Problems persist however, even if most are inherent to the nature of the market. Firstly, it relies on members volunteering, and this has a cost – both in terms of the monetary price of membership as well as the time they must give if they want to share information. This limits who can and will share information.

Secondly, it is skewed towards certain markets, countries, and components, which means it isn’t a truly fair cross section of the industry. For example, more issues are reported from the US. This is likely to cause future issues as China continues to turn inwards and focus on self-sufficiency; manufacturers here may feel there is no need for them to share information with the likes of the ERAI.

Trust is still the best defence

The best protection against counterfeit elements of the electronic components supply chain, therefore, remains the same – only work with those you trust, and prioritise distributors over vendors.

At Solid State Supplies we take a comprehensive approach, providing the safe and reliable route for sourcing electronic components that our customers have appreciated and come to expect from us over the last 30 years.

With that experience comes an understanding of what is not ok. We benefit from strong, long-lasting relationships with supply partners across the world, which enable the business to source problem parts globally and leverage price variances for cost-effective supply. Meeting up with contacts face to face and having real conversations is still a very important part of the process.

Even though supply chain shortages are abating, counterfeit goods will still pose a serious threat to the electronics industry.  Such goods can damage brand reputations, lead to increased safety concerns and cost businesses millions each year.  We must all do our part to protect ourselves and starve counterfeiters of any opportunity. We must not be complacent in this fight. 

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