Saudi Arabia’s Ministry of Commerce and Industry Cracks Down on Counterfeits In Boost to Consumer Protection
SUSTG.org | Lucien Zeigler | 6.10.13
The Saudi MCI recently confiscated over 6,000 counterfeit smartphones. Here’s what they did with them, and how the MCI is working with Saudi Customs authorities and others to take on the challenges of counterfeiting.
This week, Saudi Arabia’s Ministry of Commerce and Industry (MCI) issued a press release on the Ministry’s Web Site that authorities had seized over 6,000 counterfeit cellphones. Looking to send a message to would-be counterfeiters and violators of consumer protection regulations, MCI authorities placed the forged phones in a pile then drove over them all with a bulldozer.
Saudi Arabia’s MCI has actively pursued and prosecuted counterfeiters in the Kingdom, but the illicit commercial activity, ranging from fake educational degrees to computers and smartphones (and many things in between) is proving difficult to stamp out.
Officials have achieved measurable recent gains in combating counterfeiters and increasing security of intellectual property rights, and essential to those successes has been the increase in cooperation between Saudi Arabia’s governmental bodies that are tasked with eradicating dissemination of forged or non-standardized goods, some of which can be directly harmful or dangerous to the public.
The MCI isn’t the only anti-forgery governing body in the Kingdom. Saudi Arabia’s Customs Authority regulates goods entering and exiting the Kingdom, while Saudi Arabia’s MCI regulates goods within Saudi borders. However, Saudi Customs is part of the Saudi Ministry of Finance. With Saudi Arabia’s Ministry of Culture and Information as the regulator of copyrights, most often for media like movies and music, three ministries are tasked in some way with helping to protect the public and ensure that violators of consumer protection rights are brought to justice.
Most active inside the Kingdom is the Saudi MCI. That ministry conducts random, unannounced inspections of manufacturers all across Saudi Arabia, hoping that the element of surprise will allow officials to catch counterfeiters red-handed with forged parts, technologies, or other goods. When they do, the businesses or establishments are often shut down and the perpetrators are prosecuted for putting profit before public safety.
MCI has pointed out that these on-site inspections of factories and marketplaces “aim to foster a market free of misleading practices and behavior that harm the consumer,” the Ministry says on its Web Site. And few sectors have been immune to the reach these inspections. One of the most surprising openings for counterfeiters in Saudi Arabia has been in the automotive sector. Last year, a GM Global Investigations team “carried out a series of investigations and raids, and supported Customs with product detentions in Saudi Arabia” and other MENA nations. As a result, “thousands of counterfeit automotive spare parts were removed from the market and destroyed, thereby protecting consumers across the Middle East from poor quality parts,” the automotive giant said on its Web Site.
GM followed up on last year’s busts with a seizure of 50,000 ACDelco counterfeit products, in conjunction with Saudi authorities, in February of 2013. Most recently, on Saturday, June 1st, the MCI seized over 7,000 more forged automotive parts from a variety of manufacturers in Dammam.
Despite the MCI’s ongoing efforts, counterfeiting is big business in Saudi Arabia for those willing to risk getting caught, like it is in many countries. The market for forged electronics alone in Saudi Arabia is SR6bn ($1.6bn) per year, the Jeddah Chamber of Commerce and Industry (JCCI) estimates.
“Wherever you have an emerging market where you see market growth, there is market growth for everybody; of course this also provides a ground for those people that are into counterfeiting,” said one regional executive at a conference in Dubai in 2011. “If you look at other trade hubs, business hubs across the globe, wherever you see the combination of trade hub and growing economy, you will see counterfeiters,” he said.
Given that the problem is not unique to Saudi Arabia and is shared by the other GCC states, a GCC-wide body was established in 2001 to deal with cross-boarder standardization. The GCC Standardization Organization (GSO) deals with coordinating general GCC economic, financial and monetary policies, but it also moves forward efforts to standardize commercial, industrial and customs regulations between the countries to make enforcement easier on officials. The GSO will join the MCI, Saudi Customs, Culture and Information, and other ministries in stamping out counterfeit goods in the Kingdom. Nabeel Mullah is secretary-general of the GSO, which will soon be housed in a new building in Riyadh’s diplomatic quarter. The foundation for a new headquarters was laid in Riyadh in December; with the Saudi Arabian Minister of Commerce and Industry Dr. Tawfiq al-Rabiah on hand to extend King Abdullah’s support the organization.
An International Problem
In late April of 2013, a major forum was held at the King Abdulaziz City for Science and Technology (KACST), an independent scientific organization in Riyadh. The 2nd Saudi Intellectual Property Forum 2013 at KACST discussed the “The Economics of Intellectual Property” and sought to “enhance the understanding of Intellectual Property’s contribution to the national and global economy and how intellectual property can be used to stimulate innovation among societies.”
Events like the Saudi Intellectual Property Forum in Saudi Arabia demonstrate an awareness of the importance of property rights within the Kingdom’s borders, but the problem is an international one, and for Saudi Arabia, the bulk of counterfeit or forged items come from China, placing the onus to enforce the ban on importing counterfeit goods on Saudi Customs authorities.
Salleh bin Manei Al-Khlaiwi, General Manager of Saudi Customs, was quoted as saying that his department seized “6.7 million kg drugs, 34 million kg narcotic pills and 871,000 tons of counterfeited materials and goods in 2012,” according to Arab News. Saudi and Chinese officials announced intentions to work together in December 2011 to create a blacklist of exporters and importers of counterfeit goods from China. Chinese officials also expressed their willingness at the time to formally sign an agreement with the Kingdom based on the one they had already signed with the EU.
Saudi Arabia’s efforts mirror those of other countries around the world. Real efforts by the MCI and other organizations to strengthen consumer protection in the Kingdom will benefit all citizens by promoting fair markets and reducing commercial fraud. This would bring Saudi Arabia closer to attracting more international investment and interest in the Kingdom’s fast-growing economy.