Xerox Tightens Grip on Counterfeit Suppliers

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Business process and document management leader Xerox Corporation (XRX) recently conducted raids and prosecutions across the world to track down counterfeit products, confiscating thousands of products in the process. The latest raids were conducted in China and Dubai.

Xerox shored up its fight against black market printer supplies worldwide as it became aware of the fact that counterfeit products inadvertently lead to damaged equipment, substandard output and increased costs.

Recent Raids

Xerox recently seized over 1,500 boxes of fake toner cartridges, posing as authentic Xerox products, from Chinese compatibles manufacturer Zhuhai Warmth Electronic Co., Ltd.  The company, along with a linked firm Zhuhai Supricolor Image Co., Ltd., was put on a cease-and-desist order, prohibiting them from using fake packaging.

Similar raids were conducted in Brazil, Londrina and Turkey by Xerox and other Original Equipment Manufacturers (OEMs). These led to confiscation of thousands of counterfeit Xerox products, including security labels and product identification materials. A Baltimore man, convicted for stealing and selling Xerox consumables worth $55,000, was sentenced for 26 years.

Impact of Counterfeiting

The printer consumables industry is a particularly easy target for sham distributors.  This is because fake toners are not inspected properly by consumers and it is difficult to distinguish them from the originals until they are used.

According to a research conducted by The Imaging Supplies Coalition, the global impact of counterfeiting is estimated to be $3.5–$5 billion annually. This figure may even go up in the near future. Separately, apart from OEMs, counterfeit production adversely affects governments, resellers and customers by way of tax evasions and investments in inferior products.

Anti-Counterfeiting Measures

In recent times, printer supply makers including Xerox, Canon Inc. (CAJ), and Lexmark International Inc. (LXK) have been battling the increasing sale of inauthentic toner cartridges throughout the U.S. These OEMs have joined forces as a global team comprising brand protection, corporate security and legal divisions.

As an anti-counterfeiting initiative, Xerox launched the Genuine Xerox Rewards program last year, which rewards customers for confirming the authenticity of their Xerox products online. Xerox also outlined simple ways for customers to validate its products, like purchasing them directly from Xerox or authorized Xerox resellers, and/or looking for authentication labels.

Hewlett-Packard Company (HPQ), another active crusader against counterfeiters, has seized over $795 million worth of forged products till date, according to a media report.

Xerox, along with the other companies mentioned above, are members of the Imaging Supplies Coalition, a trade association of imaging companies that have joined forces to improve awareness on counterfeiting issues.

Xerox currently holds a Zacks Rank #3 (Hold).

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