In times of economic uncertainty and tight budgets, many companies face the challenge of optimizing their anti-counterfeiting efforts (ACF) in China without sacrificing effectiveness. Completely halting ACF is not an option, as this would lead to a resurgence of suppressed piracy and render previous investments futile. The financial damage from short-term revenue losses (often 3–5% of annual revenue), medium-term market share losses, and long-term brand value erosion would increase again.
A previously underutilized lever for increasing efficiency lies in optimizing the ACF strategy. Our experience has shown that the Radiation Strategy (Atomic Bomb Strategy) is particularly effective. In this approach, a suitable, not overly resilient counterfeiter is targeted with a massive core action (investigation, raid, lawsuit with damage claims). This action is then exploited communicatively. Other counterfeiters are directly warned through legal letters referencing this strike, dealers and customers are informed of the success of the action through informational letters, and the industry or the broader public is informed through targeted ACF public relations in appropriate media. This strategy leverages the ripple effect, enabling original manufacturers to kill several birds with one stone.
Another budget-friendly ACF strategy involves not directly attacking a counterfeiter with costly legal measures, but rather taking an indirect approach by disrupting their supply chain. Many Chinese suppliers of components react very sensitively when they learn that their parts are being used to manufacture counterfeit end products, as this could land them in legal trouble. In China, it is common for counterfeiters to outsource the production of counterfeit components to suppliers to mitigate risk. This supply chain disruption strategy also works within the distribution chain—dealers come under the investigators’ radar when they sell counterfeit products.
With the Phoenix Strategy, we refrain from legal actions against numerous counterfeiters. Instead, we allow the original brand to rise like a phoenix from the ashes by enhancing it with complementary services. Maintenance, repair, training, and education play a significant role—they form brand systems together with the product, which are much harder to copy. This strategy also includes the cancellation of maliciously registered sub-classes of trademarks for services that the original manufacturer is often unaware of. An example of this is the registration of a service mark for machine maintenance services under subclass 746 for the brand of an original machinery manufacturer. In China, there is now a clear trend in counterfeiting towards fake services, which counterfeiters also offer for original products.
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