We are in the Museum of Counterfeits, where you can find examples of goods
that are subject to counterfeiting.
Why would you ever counterfeit a lighter?
Well, even though they are cheap,
they still offer some margins
for profits that counterfeiters exploit.
There is lots of costly technology behind these products.
All these safety related aspects are very costly.
To make a chainsaw that is safe costs money.
Counterfeiters do not observe any of these norms.
These objects can be really dangerous.
I would not be willing to get even closer to this one.
You can see in illicit trade,
everything ranging from illicit pharmaceuticals, narcotics,
tobacco, alcohol, you name it.
This is a problem that is much bigger than anyone can imagine.
Fake cocoa, fake toys, fake escalators, fake masks.
That do not meet any safety norms.
Counterfeiters say I’m going to use the cheapest components that I can.
I’m going to sell it for 20% of the price.
Think of all these goods that can be potentially dangerous,
like cosmetics.
We've seen how dangerous it is.
Some areas of the skin, were burned off.
You take your car to a garage,
are you sure that the spare parts in there are really genuine?
Do you trust the guy who puts these parts inside?
We are facing a very well organized criminal enterprise.
Consumers don’t even know that they are buying fake products.
Hey guys we’re about to go on TikTok live. I’m super excited.
This is from Foreo.
-And it’s like this little thing. -You’re like addicted to that.
It’s like, whatever, like if you have puffiness you just do this.
Foreo is the largest seller of beauty tools in the world.
Our products are super highly quality tested.
We use these medical grade silicones that really keep it reusable for
a long period of time.
I have been a fan of Foreo for such a long time.
I use the Foreo Luna 3
and the UFO 2. Goodnight.
In the beginning of 2018 we’re doing extremely well.
I get a call sort of in the middle of the night. It's from Australia.
Well, we've got this issue,
one of the toothbrushes caught the bed on fire
that they were charging it on,
and it was like, wow,
that’s absolutely shocking to me.
This is the real thing.
Here is the knockoff version.
It turns out, of course,
This is a device that looks like a Foreo product,
is not a Foreo product.
It was, you know, something that was very eye opening.
All of a sudden,
I’m online everyday looking at eBay and Amazon and Alibaba and Wish.com.
And I’m looking going, oh, my gosh, there are hundreds,
thousands of listings of fake products.
It's pretty difficult to define what is illicit trade, right?
The range is extremely broad.
Everything that is not legal in a country is illicit, right?
Might be not legal for many reasons. Because of tax problems,
because of intellectual property rights issues.
Or there are some goods that can be legal
but they become illicit when traded.
Think, for example, of oil or gas.
If you smuggle gas without paying excise tax.
That becomes illicit trade.
The largest sector of illicit trade
is counterfeit products. There are lots of goods
that one that would not even think that they could be counterfeit.
Actually, producers of cherries from Tasmania suffer from counterfeiting
The label of Tasmanian cherries is somehow a signal of quality, right?
And there is lots of cherries that are coming not from Tasmania,
sold worldwide, but with this, well, deceiving label.
That’s illicit trade.
In some cases, people are aware that when they go to a flea market,
the pair of shoes that they get might not necessarily be genuine.
But the general level of awareness, is relatively low.
This is an issue that affects all kinds of companies from many
different industries and for all kinds of sizes,
fashion and luxury and sports, cosmetics, toys.
But in the more recent years,
we are finding fake products in construction
and agricultural machinery. Many have tried to stop this.
That is very complicated. And that was a case of Foreo.
I’m manually doing this process, right.
I’m going through and with Excel sheets tracking hundreds and
thousands of listings and submitting reports to Amazon and Ebay.
a month I was like, this is not sustainable.
So I started trying to figure out are there services out there that could
help and assist and automate this process.
At Redpoints we’ve produced a very cost efficient technology.
By using image recognition and machine learning,
we are able to detect and process 30 million links a day.
Even with my efforts, even with efforts of Redpoints.
It's a process that is ongoing.
You're just constantly making sure that these counterfeiters are not
harming you and more importantly, your customers.
Technology leads to complex globalised supply chains.
It can also introduce opportunities
for criminals to infiltrate these production channels.
Whenever we study counterfeiters,
we realize that these guys actually do not develop their own ways of
transporting products or their own ways of getting to the end consumer.
What they do is they just freeride on existing trade solutions,
on existing e-commerce solutions.
China is a huge center for illicit trade for a number of reasons.
Because it does produce so many legitimate goods and useful goods.
There are so many factories that are able to produce these
in a quick and easy and straightforward manner.
Any mode of transport employed in legal trade
is also employed in illicit trade.
Goods come from China.
Then they go to many other countries,
European Union, Australia, Sub-Saharan Africa,
the United States, Latin America, with many transit points on the way.
Big containers full of illicit stuff mixed sometimes with legal stuff.
For customs, for police, for other enforcement officials,
it is impossible to open every single shipment
every single container.
We can estimate that the total value of fakes in world trade amounts
to 500 billion US dollars annually.
This is an order of magnitude of GDP of countries.
We should not forget that it’s not only about the scale of the problem.
But also about its damaging effects.
And I’m not only talking about health and safety risks.
I’m also talking about financing criminal networks.
About corruption that can be driven by illicit trade,
poor working conditions in factories that produce
counterfeit goods.
Trade is great, and I often tend to say without trade,
we wouldn't have most of these goods that surround us.
Without trade, we wouldn't have coffee, and without coffee, I die.
So trade is good, but it comes with a risk.
And we need to have some knowledge to really tell good from bad.