Smart label helping beat counterfeiters

"We have a banking-like level of security. Every label has an RFID [radio-frequency identification] chip inside which has a certain re-writeable memory, and with every consumer scan - when the consumer uses the mobile phone to scan the label by just touching it for a second or two - the data on the chip is changing," WaliMai co-founder Alexander Busarov told Reuters.

When it comes to making fake goods, China is the counterfeit capital of the world. Here counterfeit and knock-off products can range from cosmetic items to food products, medicines and even cars.

China-based company WaliMai has developed RFID-based anti-counterfeit labels that are fixed to a product to let consumers know for certain that it is genuine.

"We have a banking-like level of security. Every label has an RFID [radio-frequency identification] chip inside which has a certain re-writeable memory, and with every consumer scan - when the consumer uses the mobile phone to scan the label by just touching it for a second or two - the data on the chip is changing," WaliMai co-founder Alexander Busarov told Reuters.

"With every scan the system updates itself, it becomes nearly impossible for the counterfeiter to even theoretically make a fake and put it into the supply chain," he added.

Chinese officials have unearthed a series of recent food health scandals, including rice contaminated with heavy metals, the use of recycled "gutter oil" in restaurants as well as the sale of baby formula containing lethal amounts of the industrial chemical melamine in 2008.

Consumers wary of made-in-China milk products have caused a surge in the popularity of foreign brands, with the import of items such as baby formula from Western countries with more stringent regulations. This has made it a prime target for counterfeiters.

WaliMai have now started affixing imports of European brands of infant formula with RFID labels into China. Their tubs of milk powder are fitted with the labels, with parents able to scan the label using the WaliMai app to securely check its authenticity and where it's come from.

"The consumer comes to the shop and touch the label with their mobile phone. It takes about two seconds for the confirmation and re-writing of the codes. Then the first piece of information they get is that it's actually authentic," said Busarov.

He added: "Then there's all the information on the logistic supply chain so they can see where the product was produced, where it was packed, where it entered the country that they're in - in our case it's China - when it was checked in our warehouse, and also they can see their own scan. Every scan that they make is also tracked by our system, so we track the locations as an additional layer of security."

Each WaliMai label is single-use; an antenna connected to the RFID chip is broken when the product - currently the lid of the baby formula - is opened. Busarov said that any counterfeiters would "basically need a lab" in order to even attempt to fix the broken label. He added that the cost to the consumer of the WaliMai label is about 20 percent on top of the regular price of the baby formula.

China has been trying to step up a crackdown on fakes, with authorities opening more than 170,000 intellectual property infringement and counterfeit product cases last year and arresting nearly 20,000 suspects.

The WaliMai label will soon be used on bottles of alcohol - another sector battling Chinese knock offs. They're also looking at using it in the cosmetics industry.

Ultimately, Busarov said he would like to see Walimai help tackle the huge problem of counterfeit pharmaceuticals, not only in China but globally.

"Globally we see a lot of problems with pharma. We've been reading statistics that there's a big share - I'm talking 30, 40, 50 percent of [counterfeit] pharmaceuticals in some African countries," he said. - Reuters