Sham shampoo: China’s market for impersonal care products; A 400ml bottle passing itself off as Procter & Gamble’s Pert shampoo sells for 10 yuan (US$1.60) per bottle while the genuine article sells for US$5.30

Sham shampoo: China’s market for impersonal care products

Staff Reporter

2013-05-15

The market for personal care products is a breeding ground for knockoffs in China, with manufacturers cashing in on the low costs and high returns involved, reports Shanghai’s First Financial Daily.

Rural areas in Henan, Guizhou and Anhui provinces have become the epicenter for cheap imitations of personal care products. Mo Lei (pseudonym), an Anhui-based entrepreneur who primarily trades in counterfeit goods, said that there are knockoff factories everywhere in China and there are also wholesale markets that primarily deal with fakes.

A 400ml bottle passing itself off as Procter & Gamble’s Pert shampoo sells for 10 yuan (US$1.60) per bottle at local retailers, while the genuine article sells for 32.80 yuan (US$5.30) for the same amount.Many consumers in rural areas find buying genuine brands too costly and would rather opt for knockoffs instead, a store owner told the paper.

Ping Jianjun, an industry analyst, said net profits for knockoffs in China may be as high as three to 10 times those of genuine items, with a counterfeit 400ml bottle of P&G’s Head & Shoulders shampoo, costing as little as 0.50 yuan (US$0.08) to produce.

The fake goods that currently flood the country’s market can be divided into three types: illegal imports that enter China through unauthorized channels; knockoffs that come with the same name and design as the authentic products, and clones that are branded with similar names and packaged like the original products, the First Financial Daily said.

Though cheaper, the use of fake personal care products can lead to significant health problems, warns Liang Yanhua, a professor at Southern Medical University’s Department of Dermatology in Guangzhou.

Knockoffs containing excessive levels of heavy metals may cause skin allergies and even neurological disorders such as insomnia and memory loss, Liang added.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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