WikiLeaks: How U.S. trailed Chinese companies selling counterfeit products into Nigeria

The U.S. government is concerned by Chinese companies that have infiltrated Ikeja Computer Village, Nigeria’s leading technology market cluster, to push counterfeit versions of American tech products into the country, according to confidential dispatch from the U.S. Mission in Nigeria to Washington, which has been made public by WikiLeaks . [blockquote right="pull-right" cite=" William Howe , Acting Consul General in the U.S. Consulate in Lagos"]According to the cable, the Nigerian office of HP reported to the mission that the U.S. technology company loses between $20-30million in potential revenue annually “due to ink and toner cartridge counterfeiting.” [/blockquote] “It appears mainland Chinese firms view Ikeja as an ideal operations base for selling pirated computer hardware and software products”, senior official of the US Embassy in Nigeria has said in confidential 2006 cable to Washington to underscore increasing concern over economic losses to American technology companies, HP and Microsoft, according to WikiLeaks. WikiLeaks, the online, non-profit organization, which publishes secret information, news leaks, and classified media from anonymous sources, was initiated in 2006 in Iceland by the organization Sunshine Press, which claimed a database of more than 1.2 million documents within a year of its launch. Julian Assange, an Australian Internet activist, is generally described as its founder, editor-in-chief, and director, according to Wikipedia. WikiLeaks has gained global attention when it collaborated with major global media organisations to release U.S. State department diplomatic "cables." It has now emerged from a ‘cable’ released by Wikileaks that the U.S. government was alerted about a syndicate of Chinese companies, who work through Dubai in the United Arabs Emirate, to sell counterfeit products in Nigeria. In a February 2006 classified cable, William Howe, Acting Consul General in the U.S. Consulate in Lagos, said that the mission was contacted by U.S. technology companies, HP and Microsoft, over alleged sale of counterfeit versions of their products in Nigeria. The entry of Chinese companies to push counterfeit technology products in Ikeja Computer Village, Nigeria’s leading technology market cluster has been a major source of concern for the U.S. government, which has investigated the problem. The fresh revelations have shown that the U.S. government raised concern over the infiltration of the market by Chinese companies that sell fake, substandard and counterfeit versions of products by U.S. brands. According to the cable, the Nigerian office of HP reported to the mission that the U.S. technology company loses between $20-30 million yearly in potential revenue “due to ink and toner cartridge counterfeiting.” Howe said in the cable, that counterfeiting will likely increase in the country because the affected tech companies claimed, “local law enforcement and the Nigerian Copyright Commission (NCC) are doing little to combat intellectual property right (IPR) violations.” The U.S. official also said that the Computers and Allied Products Dealers Association (CAPDAN), the umbrella body of businesses in Ikeja Computer Village, said it has received growing enquiry from Chinese companies interested in partnering with their local counterparts. The US cable said that these partnerships have helped to worsen the counterfeiting problem, as Chinese companies have been able to infiltrate the market to sell the illegal products. “Technology Distribution Ikeja Branch Marketing Manager Obinna Onwu said CAPDAN and local law enforcement would periodically stage "raids" at Otigba market. However, he noted police often would either return the goods to street vendors or keep the items to sell themselves. Organizations like CAPDAN are merely staging these raids for publicity to make it appear they are combating IPR violations, when in fact they profit by it, he said”, the US Acting Consul said in the cable to Washington. Please view the full details of the US Consulate Cable in the next pages: Classified By: Acting Consul General William Howe for reasons 1.4 (B) and (D) 1. (C) Summary: Hewlett-Packard (HP) executives complain the number of outlets selling counterfeit HP ink/toner cartridges has increased the past year, costing the company millions of US dollars in lost revenue. Local law enforcement and the Nigerian Copyright Commission (NCC) are doing little to combat intellectual property right (IPR) violations, they said. Counterfeiting likely will increase. End summary. ------------------------------------------- Hewlett Packard Claims Revenue Losses of 20-30 Million/Year Due to Counterfeiting ------------------------------------------- 2. (SBU) Consulate Staff visited the Otigba Street Ikeja Computer village with Hewlett-Packard Printing Supplies Manager Jovita Agwu February 21, to obtain a better sense of the traffic in counterfeited goods. The Ikeja Computer Village comprises over 1,500 businesses, many of them selling pirated or counterfeit products. Technology Distributions, one of HP's main distributors, frequently visits the Village in the near vain attempt to encourage the businesses there to sell HP authorized products. 3. (SBU) General Manager of Hewlett Packard, Maduka Emelife, intimated HP Nigeria was losing between USD 20 to 30 million per year in potential revenue due to ink and toner cartridge couterfeiting. According to Emelife, counterfeiting occurred two ways. First, Nigerians obtained discarded HP ink/toner cartridges from dustbins, use imported ink to refill them, and then resold them at less than the price of a genuine HP cartridge. Alternatively, Nigerians import cartridges from Chinese firms via Dubai, import ink directly from China, and sell them in open markets, including the Ikeja Computer Village. However, because Ikeja Computer Village has become a frequent target for unannounced police raids, many street vendors have moved to Alli Street in Tinubu Square on Lagos Island, company representatives said. Consumers can purchase counterfeit HP 92ADeskJet toner cartridges, valued at USD 65, for 11 US dollars (naira 1,500) and HP 42A ink cartridges, valued at USD 35, for less than 5 US dollars (naira 600). According to Hewlett-Packard and Technology Distributions representatives, for every licensed HP ink cartridge, dozens of counterfeit products are sold. ----------------------------------- Lack of IPR Enforcement, Awareness, Drives High Counterfeit Rate ----------------------------------- 4. (SBU) At Ikeja Market, over 90% of purported Hewlett-Packard ink/toner cartridges were counterfeit. Company representatives estimate counterfeiting rates for Nigeria as a whole is over 80%. We did not find one shop that did not carry counterfeit HP products. On average, total sales volume for HP licensed ink/toner cartridges at Ikeja is 1,000 per year, or 20 per week, with numbers reaching between 30-50 during special promotion weeks, according to company sales representatives. (Comment: These sales numbers, however, are insignificant compared to thousands of counterfeit products sold openly at Ikeja and Lagos Island. End Comment.) -------------------------------- Chinese Firms Engaging Nigerians to Sell Counterfeit Cartridges -------------------------------- 5. (C) Technology Distributions Ikeja Branch Manager, Rita Momah, said she periodically witnessed Chinese vendors seeking local Nigerian partners to sell unlicensed HP ink/toner cartridges in both the Ikeja and Lagos Island area. The number of Nigerians visiting Dubai to meet Chinese businessmen is increasing, she alleged. Technology Distributions and HP said they will compile a list of Chinese companies engaging Nigerians to sell counterfeit products, and will attempt to discover how counterfeit products are imported from Dubai to Lagos. 6. (C) In an earlier visit to Otigba Market with Microsoft Nigeria representatives, we gathered information suggesting that several Chinese firms were hiring local Nigerian vendors to sell pirated Microsoft computer products (reftel). The Otigba Market-based Computer and Allied Products Dealers Association of Nigeria (CAPDAN), said their organization is receiving an increasing number of requests by Chinese businessmen seeking local Nigerian partners. It appears mainland Chinese firms view Ikeja as an ideal operations base for selling pirated computer hardware and software products. -------------------------------- No Support from Government; Local Police Part of the Problem -------------------------------- 7. (C) Emelife complained HP has received little support from the Nigerian Copyright Commission (NCC), the Standards Organization of Nigeria, customs, and law enforcement agencies in combating IPR violations. He said HP had offered training seminars to government officials, including customs officials to assist them in curbing the import of unlicensed HP products, but no significant progress has been made. He said local government was ineffective in enforcing IPR laws. 8. (C) Technology Distribution Ikeja Branch Marketing Manager Obinna Onwu said CAPDAN and local law enforcement would periodically stage "raids" at Otigba market. However, he noted police often would either return the goods to street vendors or keep the items to sell themselves. Organizations like CAPDAN are merely staging these raids for publicity to make it appear they are combating IPR violations, when in fact they profit by it, he said. ------- Comment ------- 9. (C) HP's tale is the familiar one of flagrant IPR violations in Nigeria. No significant progress has been made in tackling IPR violations since our last visit to Otigba Market in September 5, 2005. To date, weak regulatory agencies such as the NCC, lack of resources to fund IPR enforcement, and the cheap costs of reproduction make Nigeria and Lagos ideal for firms interested in producing and selling counterfeit items. End comment. HOWE Source: WikiLeaks

WikiLeaks: U.S. trailed Chinese firms selling fake products through Ikeja Computer Village

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