A trip to the local souk can be fun. It is full of color, full of people, full of activity — and full of fakes. But hey, we all know a fake when we see one. The label says Prada, Christian Lacroix or Ralph Lauren but they are not top-quality and cannot possibly be real — certainly not at the prices charged. Meanwhile, hawkers offer Rolex and Cartier watches at SR100 apiece. All fakes. How could they be anything else?
The other day, I was in Jeddah’s “Filipino Souk” on Rawdah Street near Saudia City in Jeddah. Counterfeit goods were all over the place: The shoddy leather wallets stamped “Dunhill,” the SR10 sunglasses marked “Gucci,” the perfumes with tacky packaging but famous names. “If the police seized everything that’s fake here,” a colleague suggested, “there’d hardly be anything left.” Traders were brazen. “These aren’t real,” I said pointing at some leather goods marked “Dunhill.” The stall-holder just smiled.
But do we really know what is fake and what is real? Ahmad El Zubaidi of Hemaya Universal thinks not. His company tracks down counterfeit goods across the Kingdom leading to their seizure and destruction by the authorities.
There is a serious awareness problem, he says. It is easy with the street hawkers, shoddy leather goods and badly packaged perfumes. But the counterfeiters are good — very good. In what he calls his “museum” at the company’s Jeddah head office, it is almost impossible to tell the difference between fakes and the real McCoy.
Some of the most famous brand name goods are there: Soaps, face creams, detergents, radios, calculators, ink jet cartridges, spark plugs and vehicle spare parts, tea, coffee — and so much more. All fake, all sold in Saudi Arabia. The quality of packaging was near perfect. Even the manufacturers can have difficulty telling the difference. It is big business, and getting bigger all the time. There are more fake goods being sold than ever before.
In 2001, it was estimated that, worldwide, $360 billion a year was lost by legitimate producers of goods, software, DVDs and the like. By the end of last year that figure was up to $780 billion a year. In the GCC, it is a $7 billion annual loss to real business, in the Kingdom, $4 billion a year.
Counterfeiting (of goods) and piracy (theft of intellectual rights, mainly software, movies and music) were one of the Top 100 issues in Saudi Arabia’s application to join the World Trade Organization (WTO). The authorities are committed to putting a stop to them. But it is a monumental task.
Hemaya has been making inroads. It has contracts with almost 30 companies, mainly international, to investigate and report where counterfeit copies are being sold. Some 80 investigators go round shops and markets throughout the country looking for fakes.
Apart from Jeddah, Hemaya has offices in Riyadh, Eastern Province, Abha, Madinah, Taif with another four planned in Hofuf, Qasim, Jizan and Tabuk. Anything found is reported to the local municipality and the Ministry of Commerce and Industry (the Ministry of Information for intellectual goods). After that there is a raid, goods are seized and those involved arrested and in some cases jailed.
In the past two years, Hemaya’s operations have resulted in 3,000 raids and counterfeit goods seized worth SR250 million had they been the real things.
It is not just in the souks that fakes are found. This is a sophisticated business and there are some unscrupulous shopkeepers only too willing to pass off fakes as the real thing. In some cases, the vendors are quite open about it: “Do you want an original or do you want a copy?” customers maybe asked. Not always. Shopping at the top end of the market is no guarantee of buying the real thing.
El Zubaidi produces a pair of white leather Italian shoes, bought in one of the smartest stores in Jeddah and costing SR850, marked down from SR1,060; the soles came off the first time they were worn. Some shop owners mix originals and fakes, he says. “Some businesses are just greedy. They are out for a quick buck,” he says.
Even supermarkets are unwitting victims to counterfeiters, he says. They run out of a particular item and if they cannot get it from their normal supplier turn to a market wholesaler. In some cases, they are supplied fakes so good that they are completely unaware.
There is a particularly neat little scam taking place, El Zubaidi says. A vehicle sole agency sells SR1 million worth of spares to a wholesaler; a little later he returns items worth SR200,000 as unsold and is reimbursed. Except that the goods have been replaced with fakes and the man in charge of the warehouse cannot spot the difference; the agency only finds out later (if it finds out at all) that it has unwittingly been handling fakes.
There is an attitude problem, El Zubaidi agrees. A “Gucci” bag at SR40 has to be a fake but there are people only too happy to buy. Price can be a factor, he says. But not when it comes to fake medicines, fake car spares or fake electronic goods — of which there are a lot. “They can kill.” The real problem is that people are simply unaware of what is and what is not real. There is fake for everything in the Kingdom, he says. Not all of it comes from China or India as some people might suspect. Fake auto spares come from Turkey and Pakistan, fake shampoos from Syria. There is even a thriving counterfeit industry in the Kingdom turning out fake shampoos, detergents, leather goods and the like. “There are some very innovative people here,” El Zubaidi says. The pity is that they put their efforts into faking other people’s goods when they could be making their own.
Making people more aware is a part of Hemaya’s business. It is involved in a new consumer magazine, Consumer Eye, and it recently signed a contract with the Saudi customs authorities to provide awareness training for 600 inspectors.
Every successful raid and fakes destroyed is good news for clients who include manufacturers of famous name watches, cosmetics, foodstuffs, perfumes, software, spare parts and electronic goods. But fighting the counterfeiters is a monumental task. Hemaya has hit just 0.3 percent of the problem in the Kingdom. More amazingly, apart from a company in Jordan and one in Dubai (both concentrating wholly on intellectual piracy), Hemaya is the only one taking on the counterfeiters in the whole Middle East. Needless to say, business is booming. There are more clients in the pipeline, more investigators are to be taken on, an office has been set up in Bahrain and there are plans to open in Egypt and Lebanon. It is a growth industry — and it is working not just in the interests of the manufacturers of real goods, it is helping honest businesses in Saudi Arabia too.
Not just that, Hemaya’s existence may also have provided that little extra helping hand getting Saudi Arabia its WTO membership. “Thanks to Hemaya’s hard work and diligent follow-up providing excellent services to local and regional communities, we were able to score a few more points in our accession negotiations,” says Fawaz Al-Alamy, who was the Kingdom’s chief negotiator for WTO membership. Quite a feather in Hemaya’s cap!
