To dupe customers, counterfeiters make exact or close copies of the branded product packaging, and they place it in the market with hard to resist pricing.
Failed by Fakes
Nepal has always been a huge market for counterfeit goods distribution but it has massively hit the market post-Covid 19. The pandemic offered fresh opportunities for trade in such products through various social media platforms. Currently, New Road and Indra Chowk is the hub for counterfeit haircare products. “The market share of such goods is more than 40%,” said Govinda Subedi, a retailer in New Road.
During a market survey done by the WOW team, we spoke to several sellers and buyers in the New Road area and the findings were surprising. Even the smallest cosmetic store in the area has at least 12 different brands to offer in just Keratin Shampoos. These are the brands that you have never heard of.
Brands which they claim are imported from Korea or Philippines, sadly lack import tags, and when you crosscheck these products in internet, you can easily differentiate it from the original. A shampoo brand that we found in almost every store was Argan Oil Shampoo priced at Rs 900 for 900 ml. The packaging of this product is an exact copy of Rebuilds Argan Oil Shampoo which is apparently not available in Nepal and is priced at US$ 15 internationally. (see pictures for reference)
When we asked a buyer why did you buy the Argan Oil Shampoo, she said, “It’s cheaper and argan oil is trending right now. And the shopkeeper claims this shampoo is their bestseller.”
Such counterfeit products are also easily available on leading e-commerce platforms. “The rise of the e-commerce industry has exacerbated this problem, allowing for greater penetration of counterfeit products made with harmful, low-quality ingredients. Convincing counterfeits make it difficult for consumers to tell the difference between fake and genuine haircare products when shopping,” says Joy Gurung, Hairdresser, Veda Salon. These products are typically sold with sellers often targeting customers with misleading claims, discounts and unusually low prices for branded products.
Nepal’s haircare products market is said to be as large as 7 billion, but the sector is increasingly at risk from the growing trend of counterfeit products. What is more alarming is that 89% of consumers acknowledge that fake products are present in the market, and 31% are willingly purchasing fake.
It is not just Argan Shampoo, other shampoos have cheap lookalikes. Sunsilk had become Sosilk, Tresemme had become True Me. These examples shed light on how poor consumer and industrial laws in the country have resulted in an increase of fake and substandard goods in the market. Even officials involved in monitoring shops for these fake goods admit that fake goods are prevalent in Nepal. “We have not been able to monitor products on a large scale. We go on inspection after a complaint is filed,” said Dik Bahadur Karki, Director, Department of Industry.
“Moreover, the growing availability of counterfeits affect the sales and profit margins of genuine product vendors, thereby reducing the Nepali market’s growth and negatively impacting the Nepali economy,” says co-owner of Prakash Store in Khichapokhari. Prakash Store has been in the market for more than 55 years and is known for selling only genuine products.
Past Cases
Hindustan Unilever had registered a case on July 6, 2016 with the DoI against shops charging them with selling fake Lakme, Dove, Nivea and other products. Hindustan Unilever is the parent company of Unilever Nepal. The police swooped down on Pawan Emporium, Roshani International and Nikita Impex at Makhan, and Anjaliwala Impex in New Road, in the heart of the capital’s business district and confiscated some goods which they handed over to the DoI.
Violation of intellectual property rights of Indian companies in Nepal is one of the issues that the Indian government frequently raises during trade negotiations between the two countries.
Nepal’s Department of Industry has been awash with trademark, patent and design infringement complaints, admit government officials even as the country marked World Intellectual Property Day on April 26, 2024. “We have so far received 1,500 complaints regarding trademarks, patents and designs,” said Yagyaraj Koirala, Director General of the Department of Industry. However, industry insiders say settling infringement-related cases in Nepal can take years or even decades. That’s because the Department of Industry which handles infringement cases is not a fully judicial body, and instead depends on the country’s judicial system, which is notorious for delays.
To be specific, Amrita Bogati, Law Officer, Department of Industry shared, “Currently there are five petitions filed related to haircare products and final decision has not been made in any of the cases.”
The Difference it Makes
The consumers are green washed. Many unknown brands package their product highlighting the trending words like “Keratin”, “parabens and sulphate free”, “chemical free”, “cruelty free”, etc. But when you read the label, the scenario is different.
Counterfeit haircare products may contain harmful ingredients such as lead, arsenic, mercury, and other toxic substances. These substances can cause severe allergic reactions, skin irritation, and in some cases, long-term health issues or damage.
Joy Gurung shared an incident where one of its clients had to chop her hair completely due to the use of cheap haircare product with big promises. “The lady came in to the salon requesting hair treatment for a procedure gone completely wrong. She had bought a hair treatment from the market which claimed the result to be silky smooth hair in one wash. The treatment cream was a mixture of straightening cream, mercury and other chemicals. Hair straightening cream is a process, one just can’t apply an over-counter treatment. The product damaged her hair so badly that we had to chop it off,” she shares.
Advocate Alpana Bhandari, Attorney-at-Law, said the Consumer Protection Act of 2018 (2075 BS) in Nepal allows consumers to file a lawsuit against a haircare brand if the product harms them. “The Act protects consumers’ rights to obtain quality goods and services and seek compensation for damages,” she shared.
Counterfeit haircare products typically lack the quality standards and efficacy of genuine products. They may not deliver the promised results and might even cause adverse effects due to substandard ingredients or improper formulations.
Various media reports have put into spotlight about the potential health hazards and harm including organ failure and severe allergies that can come from using hair and skin care products that do not meet international safety guidelines and standards.
Tips to protect yourself
“Usually, the price is the best tipoff that the goods are counterfeit,” said Joy Gurung, adding, “If the price looks too good to be true, it is usually a sign that you are buying counterfeit goods”
“The consumer should know what they are buying; a quick check on the internet will more often than not save them from falling into a trap,” said Dik Bahadur Karki. The government body has regulated an made it mandatory to have tags on imported haircare products. The tag has information such as importing and distributing company’s name, address and contact number. “Such tags help the consumer to know that the product is original,” shared Rita Shrestha, another retailer in New Road. But she also shared that the implementation and awareness of this rule has many gaps.
“For importing haircare brands in Nepal, the importer/country dealer must obtain an EXIM code and import haircare items, and the Trademark of such products must be registered in Nepal prior to being released to the market to ensure legal compliance,” added Alpana Bhandari.
Many industry insiders shared the following tips for the consumer:
Know your brand and be a vigilant consumer: Buying from authorised sellers, retail or online, ensures that you are purchasing an authentic haircare product with a proper receipt. Don’t fall into false marketing gimmicks where shopkeepers offer huge discounts for “imported products” or something they say is “new in the market.”
Know your brand’s labelling: Whenever you buy haircare products, pay close attention to the packaging. Counterfeiters often use colours, artwork and font types that are similar to the original. However, there usually are visible differences in the size, logo and colour scheme of the packaging. The difference might be as small as a change in the font of the text. Look carefully and if it appears flimsy, lacks the brand or logo, has graphics or a name that is similar to but not quite the same, it could be counterfeit. If you are a regular user and have a keen eye, you might be able to spot it in an instant. If not, then visit the brand’s official website for a check.
Know your brand packaging: The best brands invest in high-quality sturdy packaging that is intended to stay intact throughout its journey from manufacturing to retail. Look for tamper-proof features and other information to identify genuine products. Some brands allow you to check the authenticity by looking up the serial number on their website/app or scanning the barcode.
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