August 08,
2007
Busting
the Myths About Counterfeiting
The
counterfeiting of electronic components seems to be as big a problem as ever.
But that’s hard to say for certain, since most counterfeit parts probably go
undetected. Counterfeit parts are getting higher in quality, thus more
difficult to identify. That busts the myth that counterfeit parts are
substandard.
There
are plenty of myths about counterfeiting. Some experts in the electronics
industry say you should stick with franchised distributors to avoid copycat parts.
Nope. Many non-franchised distributors have programs to weed out counterfeit
parts. Most people believe copycat parts come mostly from China. In reality,
counterfeit parts are coming from many corners of the globe. While there is
certainly some truth to these blanket generalizations, it turns out these
assumptions don’t always stand up to reality.
The
problem of counterfeiting shouldn’t turn buyers away from the gray market. “I’m
reluctant to paint the gray market with a broad negative brush. When you look
at non-franchised distributors such as Smith & Associates, counterfeiting
hasn’t hurt their business at all,” says Tom Valliere, SVP at Design Chain
Associates, a consulting firm in San Francisco. “They have good internal
programs to manage counterfeiting.”
Valliere
concedes there is a higher chance of counterfeit parts among non-franchised
distributors. But he insists that distributors and brokers who are known and
respected are safe. “There is higher risk in the non-franchised sector, so you
have to be more diligent, but there is a tendency in this business to lump them
in the same bucket,” says Valliere. “The key thing is to know who you’re
dealing with. If you’re going to buy through a third party, just make sure you
have confidence in them.
Another
myth about counterfeiting is that it’s mainly a China problem. Valliere
acknowledges that China is a propagator of copycat parts, but he also notes
that China is a victim of misperception. He points out that counterfeit parts
are made all over the world. “Some of the counterfeiting is coming from the
former Soviet Union and Eastern Europe,” says Valliere. “The Soviets have a
long history of counterfeiting. Counterfeit parts are also coming from Thailand
and India.”
Valliere
notes that China has made progress on legislating against counterfeiting.
“China has a huge problem and they recognize it,” says Valliere. “But now they
have good laws on the books. They provide a law at the civil level and one at
the criminal level.” Law enforcement can be weak in rural China, however.
“Those laws can be poorly enforced when you have local people who overlook the
law,” says Valliere. “If there is a local CD counterfeiter with employees,
there are no incentives to shut it down.”
Many
believe most counterfeiting is limited to high value parts. Again, Valliere
says this is not necessarily so. “People assume the higher value parts are
going to be counterfeited,” says Valliere. “But some of the real low end chip
resisters are getting counterfeited.” He also says there isn’t much
counterfeiting at the semiconductor level of components. After all,
counterfeiters don’t build pricey fabs. “It takes little capital to copy
low-end parts, as opposed to semiconductors. Semiconductors require
sophisticated equipment.” Even so, copycat semiconductors do show up on the
market. “There are some counterfeit semiconductors being produced by
unscrupulous employees at legitimate semiconductor plants.”
Valliere
believes counterfeiting is as widespread as ever, that it affects virtually all
of the component suppliers. “Probably 100 percent of electronic manufacturers
have been victims of counterfeiting,” says Valliere. He also notes that it’s
getting harder to identify counterfeit parts. “Detecting counterfeit parts is
difficult. It’s like identity theft – you don’t know you’ve been a victim until
it happens. A lot of counterfeiting is going undetected because counterfeiters
are getting better.”
Counterfeit
parts are getting hard to identify because they’re not always substandard. They
often get detected when a part breaks down. But what if the part doesn’t break
down? “Counterfeit parts do not necessarily mean low quality parts,” says
Valliere. “Most of the counterfeit parts are good quality. There was a resister
manufacturer who discovered their parts have been counterfeited, and there was
nothing wrong with the counterfeit resisters.” Valliere believes we all have
products that are full of counterfeit parts that nobody has detected. If the
product works just fine, we’ll never know that the components inside are
copycats.
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