Anti-counterfeiting strategy unfolded: A closer look to the case of a large multinational manufacturer

Research Summary: We examine in detail how one large mobile phone manufacturer develops its anti-counterfeit strategy and seizes counterfeit products on the market. We couple qualitative data (observations from 150 counterfeit sales points worldwide, two focus groups, a survey with 151 respondents, interviews with 90 informants) with econometric analysis of 3,333 fights the focal firm undertook against more than 2,000 counterfeiters in 75 countries over 6 years (2006–2011). We focus on firm's seizure of counterfeit products when consumers' safety is at risk. As the firm is more sensitive to product safety than counterfeiters, we found that the firm generally performs larger seizures when unsafe products are involved, but this is less true in the firm's main market, likely because higher profitability offers higher incentives to counterfeiters. Managerial Summary: In companies' fight against counterfeiters, product safety plays a pivotal role. We suggest that companies have a particularly high incentive to seize counterfeit products when the product carries potential safety risks, because the occurrence of safety issues seriously harms its reputation. This research explores the anti-counterfeit strategy undertaken by a large manufacturer operating in the market of mobile phones and in the market of ancillary products (e.g., batteries and chargers). Results show that larger seizures occur in the ancillary rather than in the mobile phone market because while authentic companies have high incentives to seize mobile phone and accessories, as both involve safety risks, counterfeiters have a greater incentive in the main market and thus put less effort in ancillary markets.