Think of fake products, and designer handbags or watches might spring to mind, maybe even tobacco and spirits. But in China, where even Apple stores have been found to be fake, hygiene products are also not always what they seem.
According to reports in the Chinese media, in May 2013 the police put an end to a counterfeit sanitary product operation. It was reported that 19.6 million counterfeit sanitary products packaged as popular brands, including Procter & Gamble’s Whisper and Unicharm’s Sofy, were seized, along with 100 tonnes of raw material. In addition, 43 arrests were made and 20 production lines halted in what police estimated to be a US$24.4 million operation. And the recent scam is by no means the first – a similar operation in August 2012 saw more than 16 million fake branded sanitary products seized.
While sanitary products are far from glamorous, the high margins achievable through using cheap, substandard materials and the relative ease of manufacture, along with the vast number of potential consumers – at 487 million China’s female population aged 15-64 is the world’s largest – mean the category has plenty of appeal to counterfeiters. On top of this, if sanitary products are being counterfeited, then it stands to reason that nappies and incontinence products may well be too.
Chinese consumers used to product scares
China has a long history of product scares – the issue made headlines around the world in 2008 when six babies died and 300,000 became ill after drinking tainted baby formula. As a result, many Chinese consumers distrust domestic brands and, particularly where matters of health and hygiene are concerned, those who can afford to prefer to buy foreign brands. Of the top five hygiene manufacturers in China, only one – Hengan – is a domestic player.
However, with counterfeits on the rise, now even branded hygiene products may not be what they seem and so cannot always be trusted. While the Chinese government has stated its intention to crack down on fake products and widely publicises successful operations such as the recent sanitary protection raids, the problem is widespread enough – and the US$14 billion Chinese retail hygiene market valuable enough – to warrant manufacturers taking the matter into their own hands and devoting efforts to address it.
Communicating with consumers is vital
Communicating directly with consumers is vital – a customer buying a fake branded product may well never return to the brand if they have a bad experience with the fake, but believe it to originate from the brand, meaning years of potential sales could be lost.
Firstly, manufacturers must get the message out that their branded products are safe, while warning that counterfeits of their brand are available. While traditional media campaigns could be utilised, the internet and social media in particular provide an ideal arena for this kind of awareness campaign. A guide to how to spot a counterfeit, the dangers of using a counterfeit – the fake products that came to light recently were discovered because of an upturn in women reporting feeling ill after using the products – along with a list of authorised retailers on websites and shared on social media would all make a difference. Timely and reassuring messages such as these will increase consumer confidence in a brand – perhaps even gaining it new consumers – while remaining silent runs the risk of sales being lost.
Direct selling a safe but unexplored channel
The problem with fake products has become so widespread that many Chinese consumers are heading to Hong Kong for their everyday goods. So many Chinese have taken to buying baby formula in Hong Kong that in March 2013 the country’s government imposed a two-can limit on the amount of powdered milk that can be taken out of the country. According to reports in the Hong Kong media, sanitary towels are now starting to appear on mainlanders’ shopping lists.
For consumers who live too far from Hong Kong to warrant a trip, the next best option is to buy foreign brands online. Spurred on in part by safety scares, internet hygiene product sales have grown at a pace in China and now account for 4% of the retail market, up from 1% in 2007. Like the rest of the world, direct selling has yet to take off in the country, but in categories with such high brand loyalty there could well be rewards for a hygiene manufacturer prepared to invest. After all, what better way to get a guarantee of product authenticity than by buying it from the manufacturer itself?