Bogus ink stink

25 Jan 2005

While businesses have always grumbled about the cost of consumables for printers, the significant tumble in prices of printing hardware in the past few years has brought the issue into sharper focus.

Home users purchasing low-end inkjet printers have faced this issue for a number of years; you buy a €79 printer and the first time you have to replace the ink cartridges you find that the cost is over half the initial purchase price of the printer. Is it any wonder then that so many users are tempted to invalidate their printer warranty by refilling their cartridges with the DIY kits that are widely available on the internet.

Consumables are also a big part of the cost of running laser printers – the favoured model of businesses. Industry sources suggest that the running costs of a laser printer can be up to three times the initial purchase cost over the life of the printer. As a result businesses eager to cut costs can be tempted by third-party manufacturers that provide compatible cartridges at a lower price than the printer manufacturers. This temptation is likely to increase as the disparity between the purchase price and running costs gets wider – Brother for one is set to launch a mono laser printer for €99 this year.

“Manufacturers have to ensure that the price point is realistic and the business model stacks up,” says Bob Horastead, general manager of Xerox Ireland. “You can’t have low-cost hardware and low-cost consumables – something has to give.”

While the manufacturers continue to try to educate users of the advantages of using original suppliers rather than third party or refilled models, a third money-saving option is proving harder to combat – counterfeit consumables that are passed off as the real thing.

“As manufacturers we are worried about the quality of forged products,” says Horastead. “It negates the purchasers warranty and reduces the quality of the product. The users are judging your product and not the consumables, so it’s your brand image that suffers.”

While the problem is nothing new, it is a growing trend, which is why the leading printer manufacturers in Europe have banded together as the Imaging Consumables Coalition of Europe (ICCE). Founded in 1997 by Epson, Hewlett-Packard, Lexmark and OKI, it now numbers 11 members having added Brother, Canon, Konica Minolta, Panasonic, Samsung, Sharp and Xerox over the intervening years. According to the ICCE, the levels of counterfeit product in the market are much higher than initially thought and are typically running at 8-9pc in western European markets such as Ireland. In eastern Europe that figure rises to anywhere between 12-15pc and varies widely in the Middle East – from about 20pc in the United Arab Emirates to 80pc in Egypt.

Rather than targeting end users the strategy of ICCE is to “deal with the problem at the supply level in order to prevent the product getting to the end user” says ICCE director Jag Gill.

Resellers are clearly being offered much better deals by counterfeiters than they receive through legitimate channels. Even those who may have moral qualms are hustled into deals with strong-arm sales techniques, such as “This offer is only available today” or “If you don’t buy it X competitor company will”. Other telltale signs that a company is being offered counterfeit goods are handwritten offers, offers that are made via fax or phone rather than in person, requests for payment in cash and offers that are only valid if the purchaser orders a large quantity.

According to Gill, there are many reasons in addition to the illegality why resellers shouldn’t deal in forged product. These include health and safety concerns relating to toxic inks that can be used in forged products, as well as the fact that counterfeit products are increasingly being supplied by organised crime gangs that are also involved in drugs and other illegal activities.

On a purely economic level the message that the ICCE is pushing to the resellers is that if they don’t help get it off the street they will have to compete with cheaper counterfeit products. Gill accepts that the recent stagnation in IT spending may have done much to give the counterfeiters a foothold in European markets.

“When the market is stagnant there’s a lot more pressure on salespeople to hit targets and we have seen an increase in forgeries during those periods, but the difference during those cycles is not that great,” he says. “There are a lot of companies dealing with supplies in the UK and Ireland; it’s a very mature market.”

In parallel with this activity the coalition also lobbies national governments and the EU Commission to ensure the issue of counterfeit consumables remains high on their agenda. “When you have a lot of people in the game you’ll always have some that are willing to take a risk,” he says.

The ICCE also takes an active role by conducting raids against people dealing in counterfeit product and the manufacturers that are generally located in Asian countries that don’t have strong copyright protection laws, while closer to Europe, Turkey is emerging as a manufacturing hotspot. The problem with conducting raids in many of these markets, according to Gill, is that the authorities are not focused on the protection of intellectual property.

“There’s a lot of groundwork to do before you can get anything done,” he says. “There’s a lot of lobbying to be done as you have to have the laws in place to support our activities.”

By John Collins