Response strategies of Haco industries Kenya limited to the challenges of counterfeit products in East Africa

Abstract

The proposed Kenya Anti-Counterfeit Bill 2005, describes counterfeiting as " the manufacture, producing, packaging, re-packing, labeling or making, whether in Kenya or elsewhere, of any goods whereby those protected goods are imitated in such manner and to such a degree that those other goods are identical or substantially similar copies of the protected goods". The trade in counterfeits is a growing menace in the developing world due to a combination of lax local laws and low purchasing power of the citizens. However this is not the only negative effect that counterfeit goods pose, counterfeit goods are causing a great loss in sales by the manufacturer of the branded product, and causing millions in lost revenue to the government as importers of counterfeit products usually evade paying taxes. Manufacturing firms are the ones worst affected by this influx of counterfeit products as they lose revenue and market share to counterfeit products. This problem has escalated over the past few years, to a situation where many manufacturing firms are choosing to shut down their operations in Kenya because they cannot sustain their operations with the unfair competition that is posed by counterfeit products. The government has also realized that the issue of counterfeits is a serious threat to development as in destroying manufacturing it is not only leading to loss of jobs for Kenyans, but to loss of revenue for the government which it gets through various taxes that manufacturing firms pay. The research objective was to determine the response of Haco Industries Kenya Limited, a Kenyan manufacturing firm to the threat posed by counterfeit products. A case study was conducted on how Haco Industries Kenya Limited has dealt with this menace in the entire East African region in which it trades as it experiences the influx of counterfeit products which has affected the sale of its products in these markets. The study was conducted by administering interview guides to various levels of management of Haco Industries Kenya Limited to find out how they rate the economic environment in which they operate, the threat of counterfeit products to their business and how they have responded to this threat in the countries in which they trade which include, Kenya, Uganda, Tanzania, Rwanda and Burundi.