Unmarked goods to become counterfeit

Labelling will add problems to entrepreneurs but will not protect the market from fakes, experts say

The turnover of unmarked light industry goods — textiles and clothing — has been banned in Russia since this year to combat counterfeit products. Entrepreneurs can mark the unsold remains of goods in warehouses until the end of January. However, from February 1, even things that are not put up for sale will be considered counterfeit. About how the labelling process is taking place in Tatarstan trade enterprises, the consequences for those who do not have time to pass the procedure by the “x hour”, as well as about the expected effectiveness of this measure in the consumer goods market — read in the material of Realnoe Vremya.

“This is a fiction and unnecessary labour costs”

“We haven't finished the work on clothing labelling yet, but we hope to finish it by the end of January," Shamil Sattarov, the director general of the PARTY21 chain of stores, told Realnoe Vremya. “We are barely in time, although, thank God, only the 'coat' category still falls under the marking.

According to Sattarov, all this complex work on labelling will not bring significant changes to the situation with counterfeit goods:

“In fact, now the shoes that are imported from China and sold in the markets often can not be passed to trading enterprises using labelling because the labelling is there, but sellers do not have an accounting system. That is, all the work on labelling often turns into fiction and leads only to extra fees from businesses that pay significant amounts for the annual maintenance of this system. This is money that is collected from small businesses for someone else's benefit.”

Shamil Sattarov estimated the costs of labelling for his company as insignificant but noted that it is not only the equipment that cost:

“This is also a large labour cost for labelling, reporting. Therefore, we are lucky that we do not have to label all the products.

“The system is not yet well established”

Aelita Perepelkina, the director of the Kazan-based Barsprofi PLC, which has been registered in Volzhsk since the end of 2019 and specialises in wholesale footwear, is also critically considering the introduction of labeling for a new group of products:

“We've been through it all, and it's been very difficult! We have about 40 product lines, and each one is represented in the size from the 36th to the 47th. For each [in Honest Sign system], a description must be provided, it is entered manually — you can not copy it. We print out the chips ourselves — sometimes printer does not work, then paper does not fit... Then they should be pasted on each half-pair — the left and right shoes, the box, the package in which the box is placed, and all the stickers are of different sizes... Then you need to “tick” each sticker, and if there is an error, it is impossible to clean the chip from the system — in the system it is listed as unsold products...

According to Perepelkina, the labelling system is not yet well established and does not fit well with the 1C accounting programme:

“We, for example, make a shipment of a thousand pairs of chipped shoes with heels, and half of the chips suddenly come out without heels. And to fix this error in the programme, it takes about two days, specialists come — and their call costs 40,000-45,000 rubles! This is an expensive job, but so far we do without a corresponding surcharge on the product — we take funds from household expenses. Fortunately, we do not come into contact with the return of shoes, as in stores, but it is scary to think what will happen if a truck is returned — we are wholesalers.

Aelita Perepelkina says that her company's shoes are sold in the markets chipped according to all the rules, but this does not mean that there are no fakes on the market among shoes with chips:

“Someone can just stick a sticker and not register it in the system. That is, outwardly it is not counterfeit, but in fact — counterfeit.”

Without a chip — a fine and a jailed sky

Nevertheless, since February 1, the absence of chips on clothing, with the exception of underwear, hosiery, thermal underwear, pajamas, bathrobes, jumpers, sportswear (but not ski jackets!), hats and gloves, threatens the seller with severe sanctions. The law provides for fines: for individual entrepreneurs — from 20 to 30 thousand rubles, for organisations — from 100 to 300 thousand rubles. And the unmarked clothing itself will be confiscated.

If it is proved that the consumer who bought an unmarked product received harm — for example, a blouse or coat when wearing provoked an allergy — the amount of the fine will increase three times, and if the seller finds a large batch of unmarked clothing, he faces criminal liability, and the maximum penalty here is imprisonment for up to 6 years with a fine of 500 thousand rubles.

In case of problems, “let entrepreneurs contact the Authorized Representative”

It is worth noting that February 1, 2021 will only be the starting point for the next stage of the large-scale campaign that began in Russia 15 years ago. In 2005, in order to combat counterfeit alcohol products, they introduced excise stamps and issued a bill requiring every store to read them. As a result, according to official data, the number of crimes in the production and turnover of alcohol decreased by 20%. In August 2016, the marking of products made of natural fur became mandatory, and from July 1, 2019 — shoes. Now it's the clothes' turn.

“Persons selling goods subject to mandatory identification marking are required to use cash register equipment," says Filipp Zarubin, the head of the Public Reception Office of the Business Ombudsman of the Republic of Tatarstan Farid Abdulganiev. “When several legal entities that are part of the same production chain sell goods that are subject to mandatory labelling, each organisation must have a registered cash register equipment and its own scanner of marking codes. The main purpose of labelling, as we see it, is to protect bona fide entrepreneurs from unfair competition. If one produces products legally, pays taxes, and the other produces counterfeit goods, there is an imbalance. The labelling system should equalise everyone, it gives not only the end customer, but also all participants in the chain the opportunity to trace the fate of the product, starting from the material. And if something went wrong — so that you can fix it and find the culprit. But we have it in practice that the entrepreneur who sells the product becomes the culprit, and he does not even know who to turn to.”

The introduction of clothing labelling has not caused serious problems yet, Zarubin noted, but entrepreneurs should remember right now: if there was an inspection and the inspectors found violations related to labelling, and you feel innocent, you should not rush to agree with the punishment:

“While the system is not established one hundred percent, let entrepreneurs contact the Commissioner, and we will try to work out such situations as quickly as possible!” Zarubin urged entrepreneurs. “After all, if, for example, the system failed, the entrepreneur should not be to blame.

At the same time, unlike entrepreneurs who were interviewed by Realnoe Vremya, the representative of the business ombudsman expressed confidence that mandatory labelling will definitely reduce the amount of counterfeit goods on the shelves. And it turns out that entrepreneurs can pay for it “jointly” it to save money:

“The legislation has not restricted the sharing of labelling equipment. Labelling codes must be purchased by each organisation, but they can mark the product on any equipment.

“There was enough time”

Zarubin also has no doubt that all entrepreneurs and enterprises will have time to enter information about labelling in the Honest Sign system, if they want it:

“I didn't have time' is an excuse akin to 'the dog ate the homework'! Everyone was warned, there was enough time.”

“Can it happen that a bona fide entrepreneur receives a counterfeit product, wants to mark it, and the system will not accept this product as counterfeit?"

“Of course, it can. But he still has enough time, and the final decision will be made by the court, which will take all the circumstances into account.

But Zarubin said: if the origin of the goods will not be found out, but it'll end up meeting all requirements and safety standards (and this may set the examination), the entrepreneur can label it, but if not — the item will have to be destroyed and to pay not only the penalty but also the disposal of counterfeit goods. And an entrepreneur today should think about that he should buy goods at legal enterprises.

“This, by the way, is a reason for counterfeit manufacturers to come out of the shadows and legalise themselves. Now it can be done in 30-40 minutes directly online. And if someone does not know how to do this, you can contact us. I urge everyone — while there is time, there is no need to argue on labelling issues — we must do everything that is necessary.”

Waiting for inspectors

First of all, Rostpotrebnadzor can and should check counters and warehouses for the presence of unmarked products, says Filipp Zarubin, but other authorities can also check if they are instructed to do so. As part of a criminal investigation, for example, this is also possible.

“Can Rospotrebnadzor come with mass inspections right from February 1?" Realnoe Vremya asked.

“In the case of a scheduled inspection, it is legally informed in advance. An unscheduled check should have a basis, for example, they can come with a check after a complaint. And if you understand that the grounds for verification are far-fetched, then you need to contact us, and we can take part in the verification.”

Realnoe Vremya requested Rospotrebnadzor of Tatarstan for clarification on the procedure for future audits, but at the same time asked how many inspections have been conducted by the ministry in Tatarstan and in Kazan earlier in connection with the introduction of mandatory labelling of shoes, how many violations have been identified, what amount of fines collected. In order to find out where the most counterfeit goods are located, we clarified where products without labelling were most often detected — in markets, wholesale warehouses, in stores or other places?

The agency's response was not received at the time of publication, but we are ready to publish it upon receipt.

By Inna Serova