Sorting Out Counterfeit Electronic Parts in Russia

Counterfeit parts primarily hurt high-mix, low-volume manufacturers that produce expensive and complex equipment in small lots on a contract basis. Because of their unsteady purchasing process, these companies buy components from thousands of brands, and they can buy tens and sometimes hundreds of units at a time.

Electronic component manufacturers put such companies at the end of their client list and give up on these least valuable clients during shortages. Consequently, these companies often turn to a market of independent distributors, where they encounter many dishonest suppliers who take advantage of the open market.

This is an urgent issue for all countries producing electronics. However, bogus electronic parts hurt the Russian market the most for three reasons. First, the vast majority of Russian electronic equipment manufacturers belong to a high-risk group -- they produce complex equipment by small lots on a contract basis and have specific procurement processes. The chart below shows the market segmentation by customer groups.

Electronic Manufacturers by Market in Russia

Second, a lack of skilled manpower in planning departments aggravates the difficulties in supplying such production. Third, many distributors do not follow an ethics code, making it difficult to sort out the honest suppliers, and ways for customers to exchange recommendations have just began to take shape.

Electronics manufacturers may not eliminate their purchases on the open market, because million-dollar contracts cannot wait for a couple of parts from official distributors. To reduce risk, manufacturers should work primarily with official, or franchised, distributors and dealers, leaving independent distributors as a backup.

A significant tool against counterfeiting is improving the professional skills of workers who are responsible not only for supplying, but also for manufacturing planning. Proficient work planning can cut down the amount of emergencies in the procurement process. As a first step, the Analytical Center of Modern Electronics conducts workshops such as "Supply and Inventory Management of Electronic Equipment Manufacturing" and "Electronic Equipment Manufacturing Planning."

The most difficult issue is selecting honest electronic component distributors. No distributors working on the open market can guarantee their parts are genuine. An honest distributor would inform the customer about risks that can arise. A dishonest one would hide the risks or simply mislead the customer.

The recently founded Association of Suppliers of Electronic Components (ASPEC) suggests an ethics code for the distributors. In signing the code, a distributor accepts the responsibility for counterfeiting and disinformation. Even though the code does not have a legal effect, it helps identify companies that seek civilized market relations.

The ASPEC and the Analytical Center of Modern Electronics will conduct a seminar devoted to counterfeit components control. We would be glad to accept any recommendations for experts to perform on the seminar. Detailed information about the Russian electronic component market may be found on our Website.