How a Korean Cosmetics Giant Combats Rampant Counterfeiting

Updated: Mar 7, 2020

There is not a legitimate industry in the world that welcomes counterfeiting; but imitative products must be particularly objectionable for the cosmetics industry. The sheer losses in sales revenue, brand damage, and the potential health risks to users, all weigh upon the industry when “fake” cosmetics enter the market.

According to a recent report by Allied Market Research states that cosmetics companies spend billions on anti-counterfeiting measures, with approximately $37 billion spent in 2014 alone. However, a cynical mind would question the effectiveness of these efforts when, last year, governments seized more than 2.8 million fake Estée Lauder products over 1500 incidents. Given standard interdiction rates, the trade could easily amount to more than ten times that figure.

Perhaps the worst part of counterfeiting is how accessible it is. Finding a supplier willing to manufacture knock-off products is relatively easy. By creating an Alibaba account, one can reach out to thousands of suppliers in China, Hong Kong or Taiwan--some of whom may already be working for famous brands like MAC or Dior.

In short, counterfeiting is a healthy, burgeoning sector, part of a $461 billion annual trade of pirated goods. It is simply too big to rectify when counterfeit products have already entered the market. A smarter idea would be to try and prevent it before it happens.

Enter Amore Pacific--the world’s seventh largest cosmetics company, and the largest in its home country of South Korea. The damage dealt by counterfeiting to Korean companies adds up to $7.2 billion a year. Instead of relying solely on foreign law enforcement measures, Amore Pacific decided to take the initiative.

In 2017, after years of searching for answers to the counterfeiting problem, Amore Pacific discovered a solution. It was a mold counter that utilized IoT technology to automatically track and transmit mold shot counts, cycle times, and location information to corporate information systems.

To Amore Pacific, perhaps the most appealing thing about this device was that it could track mold location. Like others in the industry, Amore Pacific outsourced their molds--and their manufacturing--to suppliers. However, once their molds were sent out, they had no monitoring system capable of tracking where their molds were or how they were being used. This allowed less scrupulous suppliers to move their molds to other facilities and create “fake” products, all without authorization. However, with the new devices attached to the molds, Amore Pacific would be alerted if their molds were moved beyond their designated tracking radii, or if the molds were being used outside of regular operating hours.

The device also helps prevent counterfeiting by monitoring real-time shot counts. In the past, Amore Pacific would only know the number of end products delivered to them, and not the total number of parts created during the manufacturing process. But with the mold counter, they could compare the quantity of delivered products to the quantity of actual production (shot counts). Any deviations between the two values would be set to alert the company.

The results of these applications were exceptional. Amore Pacific could now monitor the entirety of their mold activity with a few clicks in their system. It was as if they could look over their suppliers’ shoulders without actually being there. The company has since identified honest and effective suppliers, and have built long-term relationships with them. They have also identified their less ethical partners, the ones that would try to trick or imitate them, and have since cut their losses.

With the new IoT device, Amore Pacific essentially nipped counterfeiting in the bud. They curbed some of the most rampant aspects of their counterfeiting problems and, in so doing, drove themselves to new levels of success.

The “eMoldino” digital mold counter is the first IoT mold counter to be designed, after five years of R&D with Samsung Electronics, primarily for OEMs. It was first introduced to the market in 2017 and has already become a favored solution by large global manufacturing companies such as HP and Samsung Electronics.

Counterfeit prevention is just one of the large-scale applications of eShotLink. If you would like to learn about the other applications, please visit insights & analytics or stay tuned to our company page.

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