With counterfeiters evading taxation, many countries are losing a great deal of revenue, including sales and value added taxes as well as various duties and associated government charges.
The security of intellectual property is also a major factor for a company in deciding whether to invest in a given country. Companies are understandably wary of investing in countries where their intellectual property is vulnerable.
Companies involved in manufacturing counterfeit and substandard devices are deliberately trying to stay out of sight, and as such, are unlikely to be properly registered with health and environmental authorities, and their by-products and waste are unlikely to be dealt with in the way that such materials should be.
Dangerous substances like lead and mercury are routinely found in fake electrical and electronic products, meaning that the factories manufacturing these products are dealing with highly toxic substances and probably putting their employees, neighbours and the local environment at grave risk.
Black market phones cost the mobile phone industry billions of dollars every year. According to some reports by Garnet (Feb 2011) counterfeit black market phones made up around 10 per cent of worldwide sales in 2010.
Genuine mobile phone manufacturers work hard to develop highly recognisable trusted brands. Infringement of copyright by counterfeit mobile phone manufacturers is illegal and can damage the image and value of a brand.
Servicing of fake phones
Many consumers unaware they have purchased a counterfeit phone, inevitably experience malfunctions with their product. Believing their product to be genuine, consumers often send in their phones to the genuine manufacturers for repair.
The poor quality of components results in the handset being less efficient than genuine devices and less capable of holding long calls.
As a result network operators loose revenue from reduced user service and suffer a loss of perceived network quality due to reduced service quality.
Before they can be sold, all models of genuine phones and phone batteries are tested to ensure they are safe for users, including testing to make sure they meet national and international standards for exposure to radiofrequency emissions.
Counterfeit and substandard mobile phones, batteries and chargers on the other hand are not subject to such comprehensive testing and therefore the safety of fake phones cannot be verified or guarenteed.
Fake phones, batteries and chargers are made from cheap substandard components and may contain chemicals, which are dangerous to the environment and your health.
Non-genuine phones often use inferior antennas, resulting in poor call reception. Testing has shown that counterfeit and substandard phones experience high levels of dropped calls and failed connections, and because of their cheap antennas, were not usable in many areas where a genuine phone was able to make the call.