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Identifying Fake Chisco

Buying network hardware through secondary resellers is not a risky endeavor as long as you buy from a qualified reseller.

By Joshua Levitt, e-commerce sales and marketing manager, UsedCisco.com
Reprinted from : Electronics Supply & Manufacturing
(09/04/2007 3:47 PM EST)

The relaxed attitude by China towards intellectual-property rights and often state-sanctioned piracy and counterfeiting facilities has become increasingly worrisome. The inability to discern between authentic and counterfeit products is a narrowing margin at best. Sophisticated counterfeit products have placed a real threat on the economy, specifically for secondary market electronic equipment dealers.

A perfect example is counterfeit Cisco equipment, collectively referred to in the industry as "Chisco" (counterfeit Cisco equipment originating in China). These high-tech and high-priced networking appliances are being counterfeited through Chinese channels at an alarming rate.

According to a white paper by AGMA and consulting company KPMG, counterfeit products account for nearly 10% of the overall IT products market. That's $100 billion in fake memory sticks, drives, monitors, networking gear and other IT products floating around. "The vast majority is still being purchased from gray market, uncertified resellers that unload their goods on eBay at extremely low prices," said Scott Augenbaum, supervisory special agent for the FBI Cybercrime Fraud unit in Washington, D.C.

Network managers have grown aware of the "Chisco" problem and have grown fearful of acquiring counterfeit network hardware. Their company's networks cannot afford to fail on account of a faulty switch or router. Worse, their jobs could be compromised as a result of a poor purchasing decision.

Here are several visual tips on how to spot fake Cisco products:

How to protect yourself

Let's face it, some of us with budgetary constraints count on the secondary market to purchase our network hardware. With switches and routers costing upwards of $30,000 and often significantly more, we have no choice but to source through legit pre-owned product channels. Buying secondary network hardware is not a risky endeavor for the educated buyer.

Here are a few tips you need to help locate a qualified reseller. Be vigilant about who you purchase from. Make sure you use a reputable reseller — this includes getting the company's history in business, references and warranty replacement policies. It helps to look for global quality assurance certifications such as ISO 9001:2000.

As long as you stay away from eBay, and deal directly with resellers who have a long standing history in the industry, a written replacement policy guaranteeing the authenticity of their products and a clean supply chain, there is no problem.

Why bother?

Because, contrary to popular belief, refurbished or reconditioned secondary market technology presents no greater risk than new equipment. Quality control programs and warranties or maintenance initiatives offered by most providers mitigate the risk.

"Smart secondary market shoppers save an average of 65% to 95% off list price and usually receive a minimum warranty of 1-2 years on their purchases," said Joe Asady, president and CEO of Digital Warehouse Inc. (Long Island City, N.Y.).

Using reconditioned or refurbished IT equipment is a viable means of waste prevention and reduction. Extending the useful lives of existing products leads to "reuse" and reduces the solid waste stream. EPA recognizes the use of remanufactured instead of new equipment as a means of reducing electronic waste. In short, secondary market shoppers reduce waste, increase the useful life of IT equipment and significantly stretch their budgets.

Check out the comprehensive guide for identifying counterfeit Cisco equipment.

Guide background data

This guide is a collaboration of several years of Cisco purchasing experience as well as many articles written on the subject of counterfeit equipment. The information provided above was an internal document that has been closely guarded at UsedCisco.com for the past four years. This exclusive information was kept proprietary for fear of tipping off the counterfeiters and assisting them in perfecting their efforts.

"We hoped by publishing these secrets and through the collective contribution of others we can help put the counterfeiters out of business," said Stephen Dale, web systems director at UsedCisco.com.

The content of this guide is rapidly changing as counterfeiters become more and more sophisticated. It is broken down into six separate categories: Packaging and labeling discrepancies, clues in the manual, visible interior and exterior flaws, how to choose a sourcing channel, and pricing identifiers.

It is recommended that you print and display this guide for anyone in your organization that comes in contact with your inventory. Relevant departments include purchasing, sales, warehouse operations, fulfillment and all management personnel.

Remember, with all the changes, the best indicator of a fake is going to consistently be "price". A 65% to 95% discount off list price is standard in the secondary market. However, if you are getting quoted a discount in the neighborhood of 40% to 55% off list for a brand new item in a sealed box it can be a red flag.

Standard discounts usually range from 15% to 25% off list price on new/sealed hardware (not including schools and government accounts). Make sure you are being quoted a fair and realistic price. Expect a reasonable discount, but too big of a discount is a sure sign of trouble. Remember the old adage, "If it seems too good to be true, it often is."