Clever Counterfeiting ContinuesClever Counterfeiting Continues

The enterprise still needs to rely on the OEM to ensure counterfeit components are not used in their products.

How sure are you that the IT products your purchase or lease are not counterfeit or do not contain counterfeit components? The enterprise depends on the product reseller and the Original Equipment Manufacturer (OEM) to police this issue. But what if there is shortage of parts or long delivery time for components? The product from the OEM may contain components that do not meet the requirements and may fail and /or cause safety problems. The OEM may have gone outside the group of authorized parts dealers, to the open market, to meet their product delivery schedule.

The open market is where most of the counterfeit parts are sold. When supplies are scarcer, then counterfeiting increases. Conversely, the presence of plentiful legal supplies tends to reduce the sale of counterfeit parts.

The problem with counterfeit parts is that the enterprise has no way of identifying the counterfeit components. The article "Counterfeiting continues to grow, but the industry fights back" in EDN Electronic Business March 8, 2011, stimulated a new look at the counterfeiting problem. I posted three earlier blogs on counterfeiting IT technology, "ICT Knockoffs", "The Counterfeit Network: Penalties and Prevention--Part 2" and "Is Your Network Counterfeit? (Part 1)" as early as June 2008. The problem continues to exist.

The primary source of these counterfeit products and components is China. India may be the next source of counterfeit parts, but that has not yet occurred. It appears that some of the manufacturers of legal parts produce counterfeit parts during the downtime of some Asian plants. Previously, the counterfeit parts were simple, like a capacitor. Now, the counterfeiters are moving into more complex components. Other counterfeiters clean, resurface and falsify the markings on scrap components so it looks like a legal part.

The Chinese government has instituted a certification process under the Reliable Electronic Component Suppliers (RECS) system. The RECS system, is endorsed by The Ministry of Industry and Information Technology (MIIT), and is jointly supported by the China Quality Management Association for the Electronics Industry (CQAE) and the China Electronic Purchasing Association (CEPA).

The RECS system certifies and authenticates electronic component manufacturers and authorized distributors who provide products from legal and reliable sources. RECS was established in response to the growth of counterfeit products in China. It is designed to promote legitimate product sources, ensuring the reliability and traceability of those product sources. How well RECS works needs to be determined.

A major fear is that the counterfeit components will find their way into the Department of Defense, NASA and other government agency systems. Other enterprises fear that counterfeit components will compromise the reliability of their systems as well.

The U.S. Customs Department has been increasing their vigilance. They have improved operations and are arresting counterfeiters and the distributors who knowingly offer the counterfeit components.

The problem with those organizations receiving the counterfeit technology is that they do not want to publicize their problem for fear of losing customers. They do not want to expose themselves to bad publicity.

Law enforcement is improving, but the counterfeiting problem will not ever be completely eliminated. The enterprise still needs to rely on the OEM to ensure counterfeit components are not used in their products.