‘You’re not going to scare everyone are you?’ One distributor was concerned that we were going to raise the spectre of tons of counterfeit phones coming into the market. Well, we haven’t used the words ‘flooding’ or ‘swarming’, but there is no hiding the gravity of the threat posed from the first batches of fake phones surfacing in the UK mobile industry. The fake N95 we bought this week was pretty good. It looked and felt like the real thing, made phone calls, took photos, and had a similar basic menu system. The most amazing aspect of it is that this wasn’t a refurbished phone, but one where virtually all the components were counterfeit.
For Nokia, this is a problem so difficult to get control of that it is difficult to know where to start. It has struggled with fake batteries, introducing holograms and stiff penalties for anyone caught with fakes. However, the real problem is in China, where the lack of serious consideration for intellectual property has meant people openly manufacture counterfeit-branded products. Designer clothing brands have appeared to turn a blind eye to fake handbags being sold in markets, because it appears to be a parallel market to their genuine stockists and customers.
For Nokia, the concern is that the fakes will appear in authorised stockists. That leads us to the distributors and traders. Official distributors are constantly under pressure to compete with grey buyers, and the common practice is mixing some grey market products to bring down the average cost price. Mixing fake products will potentially give the official distributors an even tougher time, causing confusion in the market. There is also the issue of trust. How safe will a dealer or even a customer feel, knowing there is a risk their Nokia phone is a fake? It is critical that Nokia tackles the problem head on, and the first port of call is not in the UK, but at the factories in China making the fakes.