Leo Burnett Behind New System to Blunt Counterfeiting in China

'1-Tag' Lets Consumers Authenticate Products and Avoid Potentially Hazardous Ripoffs

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HONG KONG (AdAge.com) -- When Jim Leu orders a Johnny Walker Black, he makes sure to shake the bottle. If a bunch of air bubbles form, he doesn't drink it, suspicious it's the fake product that sickened him so badly at a Chinese karaoke bar that he had a lingering headache for days.

Counterfeiting is a global menace -- it accounted for $610 billion in global losses in 2006 -- but it's especially rampant in Greater China, the worldwide epicenter for both manufacturing and consumer concern. While U.S. consumers tend to equate counterfeit products with faux designer handbags, the stakes are a lot higher in China, where brand pretenders in categories from liquor, food and infant care to shampoo and even feminine protection have been proven dangerous and even deadly to the populace. Some 200,000 people perished in China last year as a result of taking fake pharmaceuticals, Ronald K. Noble, Interpol's secretary general, said in a speech.


Compounding matters is frustration that the Chinese government has had little success curbing fakes, nor have marketers, which tend to deal with counterfeiting defensively after a brand suffers from a PR blow incident and lost market share. "In China, you end up talking about counterfeiting all the time," said Jeff Bradley, Leo Burnett's chief operating officer for southern China, Hong Kong.

Mr. Bradley thinks that he has found a solution -- one that circumvents government monitoring entirely, helps consumers and Burnett clients and has the handy benefit of being a non-advertising revenue generator for the agency.

Burnett teamed with Heidelberger Druckmaschinen, printing experts in Heidelberg, Germany, to create the 1-TAG, an anti-counterfeiting application that allows shoppers to validate whether a product is legitimate. The high-security tag can be applied to a product to serve as a signature authentication. Users capture the product tag using a mobile phone camera and free software that automatically decodes the security tag and displays the information. Products can be verified and authenticated at every stage of their manufacture and distribution, right through to the consumer, who becomes the final authenticator of whatever they are buying.

The 1-TAG label is applied to products during final manufacturing stage, giving a brand owner full control over information content and production numbers, with the added benefit of avoiding production overruns. "This means that it is possible to conduct supply-chain inspections and checks at every stage of distribution to verify and authenticate a product with a cost effective and flexible supply-chain tool for distribution and sales staff, using a standard mobile phone," said Bernd Vosseler, the technical specialist in brand-protection technologies responsible for 1-TAG's R&D project.

The owner of the brand can also load data into the tag code, such as a full description of the product, conformity guarantees, the date of manufacture, the product expiration details and even the market of destination, which can be a powerful tool in addressing problems like product theft and diversion.

Burnett won't share details about the cost of the system, or which marketers are taking place in its test program. But a likely participant is Procter & Gamble Co., China's largest advertiser and a main client of Burnett in Guangzhou. The agency did say the program, which can be rolled out globally and work with almost any product, is not limited to companies that work with Burnett, which opens up a new revenue stream. "It's not proprietary to our clients," said Mr. Bradley. "The more brands involved the better."

Other anti-counterfeiting systems have hit the market over the years, but they usually rely on unique identifier numbers consumers need to key in and send to a central database. Confirmation can take several minutes, and the system can be hacked by savvy programmers uploading duplicate codes. "If two identical numbers get entered, how do you know which one is real and which one is fake? Hologram labels don't work either, counterfeiters can fake those too," Mr. Bradley said. The 1-TAG system uses a "secret code placed on the label. To hack this one, you'd have to have incredible computing resources and super high-level security. Only a government would have the resources to do it."

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