Jean-Louis Evans at TÜV SÜD Product ­Service uncovers the increasing case of counterfeit components entering the ­consumer electronics supply chain and what to watch out for to avoid the dangers of being non-compliant

Over the last 50 years, at global product testing and certification organisation, TÜV SÜD Product Service, there have been many cases seen of counterfeit products  in its laboratories, but over the last eighteen months that volume has significantly increased. Figures from the European Commission show that in 2011, EU Customs detained almost 115 million products suspected of ­violating intellectual property rights (IPR) compared to 103 million in 2010.

The value of the intercepted goods represented nearly 1.3 billion Euro ­compared to 1.1 billion Euro in 2010, according to the Commission’s annual report on customs actions to enforce IPR. In terms of where the fake goods originated, China continued to be the main source, accounting for 73 percent of all IPR infringing articles.

Issues of counterfeit goods and components entering the supply chain are particularly prevalent in the consumer electronics market. For example, TÜV SÜD recently tested white plastic mains adaptors with a three-pin plug. While the packaging indicated it was suitable for iPhones, tests showed that they posed a threat of electrical shock and fire because of a number of design and manufacturing defects: they did not have adequate insulation, the internal connections relied on solder alone to maintain their position, they were not designed to withstand foreseeable overloads, and the pins were not adequately sized.

The laws of demand and supply are fuelling the significant rise in counterfeit electronic products as consumers increasingly demand cheap goods, often having a preference for low cost over any concerns about quality or safety. With the prevalence of a ‘pile it high and sell it cheap’ mentality, so many manufacturers and importers are deliberately choosing to disregard European standards and directives, applying arbitrary short cuts.

Not only does this have major implications for the safety of end-users, but also for reputable brand owners and manufacturers who, while they take product safety and compliance seriously, may be caught out by a failure within their supply chain. This is particularly becoming an issue for UK and European manufacturers, which design and develop products in their own country, but outsource the manufacture to the Far East.

While they may have checked the quality of their immediate Asian supplier’s operations, can they be assured that the various component manufacturers further down the supply chain are as rigorous in their quality control and as honest in their approach?

Spotting the rogue component

Not only can electronic products and components be counterfeit, their testing and compliance documentation can be too. It is therefore essential that those importing electronic products and components go beyond just ­gathering evidence to ensure that their supply chain complies. They must ­validate that the evidence is correct – ensuring that reports and certificates have been issued by recognised testing laboratories, that they match the product; are properly dated and signed, are relevant to the current requirements and do not use out of date standards.

Also, it is vital to check the issue dates of the reports, as reports that are more than two years old may not  relate to the product in its current form due to material and manufacturing changes made over time. Indeed, many retailers send out their own testing experts to audit factories abroad ­regularly so as to ensure that products and components comply.

A signed declaration of a product’s conformity against the requirements of all applicable EU Directives (which is mandatory when CE marking a product for the European market) can also be faked. Any declaration of conformity needs to be backed up by a technical file, which is the evidence that a product has been tested correctly, demonstrates compliance, and justifies the CE marking on a product.

Ultimately it is the company that places the item for sale within the EU market that is responsible to prove CE marking compliance, so any retailer should extend their compliance management process down their supply chain to the manufacturer and insist that they provide the evidence in the form of test reports and certification. Only then can they be confident that they are not unwittingly buying counterfeit products.

It is also important to ensure that any factory you deal with outside the EU has a Quality Management System in place and is regularly audited by an independent third-party. Do also consider pre-shipment and post-shipment inspections, taking random samples from boxes to ensure that the goods meet expectations.

Before the products are sold in the EU, send samples for a ‘spot-check’ so that they, and their test and certification evidence, can be verified as being compliant. Ensuring the correct testing and inspections are completed at an early stage minimises the risk of counterfeit components being used within a product and enforcement authorities insisting on it being withdrawn from the market.

The risks of outsourcing

As a core reason for manufacturing being moved to countries like China is cost, the ideal scenario of fully and regularly auditing all the suppliers in the chain often cannot be justified financially. A more realistic approach is to create a supply chain matrix, and focus the audits on the high-risk ­suppliers with which a manufacturer has had issues with in the past, and on those in the supply chain responsible for supplying safety-critical parts such as fuses, plugs or electrical cables.

It is important that thorough ­production system audits and good inwards inspection should be a focus to stem the tide of counterfeit ­electronic goods and components that are flooding into the European market.

TÜV SÜD Product Service