going to attack everything over a bigger number of units.” At the end of day, the biggest challenge is attacking counterfeiting at its root cause, which is the factories where these goods are being made. What we try to do is look at the value chain of counterfeiting. In the same way that in order to make authorized goods, there are manufacturers, distributors, and retailers in the chain, for counterfeit goods there’s a manufacturer and a distributor to get goods from country “A,” where they’re manufactured, to country “B,” where they’re sold. There’s also often a distributor in country “B,” and a retailer. So we need to attack each part of that value chain in order to make a dent in it, but the hardest part to attack is at the manufacturing level, because it’s the area where we have the least visibility. It won’t be surprising to anyone that a lot of those manufacturers are in China, and it is very difficult to get transparency within that Chinese market. So we can try to disrupt the flow of goods coming out of China, but it’s very difficult to actually go into China and pinpoint where a huge volume of these goods are being made and to stop them, especially when you have such a variety of licensed products. What we try and do is make it as difficult as possible to make money from counterfeiting Peppa Pig items. We try to damage the manufacturers economically so they might turn their attentions elsewhere. We’ve done raids in Brazil with the police where goods were seized, which sends a message to the local retail community that we’re a company that protects its brands. We’ll also do customs actions such as seizing goods going into the country, in which the counterfeits are seized and destroyed, so now the distributors are out of pocket. And then we think, “Where do those distributors buy the product?” They often do it through the online auction sites and online B2B sales houses. So we remove those listings, and the more you remove them, the more difficult it is for the distributor, and the manufacturers in China, to make a market for these goods. With the rise of the Internet, is counterfeiting now a more sophisticated business than in the past? I think the value chain of counterfeiting hasn’t changed, as there have always been manufacturers, distributors, importers, and retailers. But perhaps what has changed is the ability for people in Brazil, for example, to buy counterfeit goods in quan-
MAY/JUNE 2015
tity from people in China. Perhaps 20 years ago, your Brazilian importer would need to go to China and negotiate in person with a Chinese manufacturer and distributor, whereas now they can go onto many websites and order those goods. So it takes out the complexity of that kind of negotiation. What about the sophistication of the counterfeit goods? For the market we are in, the distinctiveness of how our characters are drawn makes counterfeits very easy to spot. You will hear of certain brands that have unusual elements in their designs that you and I, as consumers, cannot see, but the [brand owners] always see. We don’t go to that level, but there is a repeating pattern of images used in counterfeit goods, and we know those images are unauthorized. We also have a very strict product approval process, and the sales team that does the anti-counterfeiting work with me is in the same office as the product approval team. So we’ll have a picture coming in from our Brazilian lawyers, and it will take us roughly five minutes to find out if it’s counterfeit. One of the great things about eOne is that we’re a very nimble organization; there aren’t layers of bureaucracy. We don’t have the lawyers in Office “X,” and the product reviewers in Office “Y.” In general, I’m sure there are very sophisticated products in which it’s difficult to tell they’re counterfeit. But in our market, where the unit values of the products tend to be quite low, I would think that level of sophistication would damage the counterfeiters’ profitability. Is it possible to estimate the financial damage caused by counterfeit? It’s very difficult, to be honest, because counterfeiting has been here for a long time, and I don’t think we’re naive enough to think that we’re solving a problem. What we need to do is make it as difficult as possible for counterfeiters and the whole value chain of the counterfeiters to operate. We try and catch the big fish, or disrupt the channels into the market in the hopes that we send a clear message to the infringing community there. It’s very difficult, and at the end of the day, what’s important to us is to create properties and brands that are here for the long term. On that basis, we don’t look to guarantee a return on investment on dollars spent acting on infringement. The return on investment is the opportunity for your brand to be around in five years. ■
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