Imagine this–you go to a store and ask for a packet of Frooti mango juice, and the shopkeeper hands you some duplicate called ‘Frooto’ or ‘Fruit Jump’, which looks identical in packaging. Then you ask them to give you the actual frooti and they try to convince you that the duplicate thing is frooti. Chances are this has already happened to you (maybe not with frooti but some other products) because fake alternatives of FMCG (Fast Moving Consumer Goods) products’ established brands are a big challenge that the Nepali market has been facing for a long time now. These fake items have a larger implication. Before we move onto that, let us understand more about these and why they exist.
These fake alternatives are of two sorts—duplicate and counterfeit. People tend to use the words “duplicate” and “counterfeit” interchangeably, which is not correct. A duplicate item resembles the real thing without copying any of the logos or trademarks. It will be somewhat distinguishable from the original product. A counterfeit item copies trademark details and branding to pass off as the original. The Nepali market has more duplicate items, but there are a significant number of counterfeit items in the market as well. Almost every product in the Nepali market has dupes and counterfeits available.
Duplicates are mostly common in the food industry such as Mountain Dew’s imitation Maintain Dew or Mad Angles’ imitation 3 Angles, to name a few. Established brands of Nepal are also resorting to this (Bikaji’s and Century’s Bikaneri bhujia look the same, also Century’s Kurmure and Pepsi Co’s Kurkure look and sound similar). Moreover, fake cold beverages produced in Kailali, Rupandehi, and Jhapa are available all over Nepal. These products look similar to products like Coca-Cola, Fanta, Real Juice, Frooti, and Slice, as people buy them knowingly or unknowingly. According to the Department of Commerce, these items are mostly found in rural areas and border areas but are not limited to these areas.
The prevalence of such fake items is largely due to the absence of effective legislation protecting intellectual property. This has to be looked into.
Counterfeiting, on the other hand, is quite prevalent when it comes to clothing. Counterfeits of brands like Adidas, Puma, Fila, and North Face are available everywhere in the country. These brands have made a name for themselves in the international market due to their quality and durability. But, people in Nepal have been using their logos illegitimately on various clothes and selling them at stalls from bus parks to air-conditioned shops. People have been buying substandard products for the price of their originals as the traders are coning them into buying those products. As some of these brands have not filed a case against them, regulatory bodies have not done anything as these fake items continue to sell all over the country.
Why is this happening?
The first and foremost reason is inefficient regulators. According to the Department of Industry, there are 900 pending cases against trademark fraud in Nepal. Of them, 536 cases from last year are yet to be settled, while a further 364 cases have been registered with the department in the ongoing fiscal year.
Moreover, the law regarding these has not been amended since 2006 AD. The punishment according to the old law is not strict enough as the law also does not talk about harsh compensation as the only punishment that people producing these items face is a fine of NPR 100,000 and confiscation of all items. Back then, that amount was a lot, but in today’s scenario, it is not much.
Finally, one more reason is that not many people are aware of the differences between the original and fake products. These counterfeits are sometimes too close to the actual product superficially, therefore, it is hard to figure out which is which. Some of the rural places or highway shops just have fake products since it is cheaper for the store-owners. And when one is in need of a product and does not have the privilege of choice, they have to go with availability over originality. The import ban has exacerbated the condition of these lookalike products as consumers demand the goods but do not find them in the market. Consequently, these phony companies have the incentive to produce these products and dupe the customers.
Cause for concern
But why is this of any concern? Why should one even care about this?
On August 14, 2020, officials from the Department of Industries raided shops in Thamel that were selling North Face jackets and trousers. These stores were found to be selling fake North Face goods for original prices without seeking permission from the company. Nepal’s national market’s reputation is deteriorating in the international market because of incidents like these. Big global brands are already not very fond of Nepali markets and this will lead to global brands sanctioning our market by forever refraining from being a part of it. A small chance of bringing in FDI (Foreign Direct Investment) will also deteriorate.
Since lookalikes are everywhere, customers always have to be hyper-aware about everything they are buying, which really questions the existence of regulators and their role. Nepali consumers have been deprived and duped of high-quality goods and services as a result of knockoffs sold in markets with the logos and goodwill of other international brands.
Some companies whose products are actually good but use these cheap tactics will be limited to the small market and lose the chance to go international. Protecting intellectual property will mean encouraging people to come up with innovative ideas in businesses or services. These provisions will encourage entrepreneurship and innovation and provide a sense of security to domestic as well as foreign investors.
What can be done about this?
The prevalence of such fake items is largely due to the absence of effective legislation protecting intellectual property, hence that has to be looked into. A bill related to trademarks, copyrights, and intellectual property rights, which has remained stuck at the Ministry of Industry, Commerce, and Supply for more than two years now, has to be passed. Just making the laws will not do much unless strict implementation can be achieved. For example, in the case of registered companies where lookalikes or counterfeits are produced, while registering the companies, the authorities should go thoroughly as per what the companies are going to manufacture and if it infringes on patent, design and trade mark act. Moreover, customers have to be aware of the differences between an original and a lookalike, until authorities take steps against this, and consumers do not have to act like Sherlock Holmes while buying every single product.
Anmol Purbey is a Research Intern at Samriddhi Foundation, an economic policy think tank based in Kathmandu. The views expressed in this article are the author’s own and do not represent the views of the organization.