(ABC) - A Perth company has begun trials on secure labelling technology that uses a microchip to protect against counterfeit scams.

The technology involves embedding labels with a small microchip that holds secure information about a product's history.

The microchip in the label can then be read using a smartphone app, which could allow food or wine products to be tested for authenticity along the supply chain.

Grant Shaw, the managing director of tech company G World, has been developing the microchip and smartphone reader technology for more than 15 years.

Mr Shaw and his business partner Andrew Vlahov have promoted the technology as a tool in the fight against product imitation and counterfeit scams involving Australian food and wine products in export markets.

Mr Shaw said the Chinese wholesale market had been recognised as susceptible to counterfeit scams.

"The microchips are basically a super smart barcode," he said.

"And what the phone actually becomes is the reader that transmits the messages to the world through that chip."

The tech company began a trial with West Australian winery Ferngrove to test the effectiveness of the technology in China.

Mr Shaw said if a wine bottle was labelled with the microchip, the customer could get a detailed summary of the wine from vineyard history to the credentials of the winemaker.

He said the label would ensure the product was authentic and its provenance could be tracked.

"The chain of [this chip] getting all the way to that retailer has been connected through the wholesaler, the shipper, the manufacturer," Mr Shaw said.

"All that data comes together to create a life of that item."

Adding microchips to wine bottles to track the supply chain

The chips must be visible and embedded into the label, so design and branding needs to be changed to fit the technology.

Ferngrove Wines managing director Anthony Wilkes said his winery was trialling the application of the microchip labels to the wine.

He said the winery was taking into account what the "efficiencies are" to applying the labels.

"How much time is it taking to apply this thin film technology to a bottle," Mr Wilkes said.

"And I guess we'll have a lot more transparency over the costings and the broader application as to who else would want to take up this technology."

Mr Shaw said the cost of applying labels to a product produced in large quantities, like wine, would "come down to a few cents in time".

Mr Wilkes said his winery would assess the long-term cost benefit of the model.

But he said there were many reasons to protect product authenticity in export markets, particularly in China.

"You've got to make sure that the consumer can trust what's inside a box or a bottle," Mr Wilkes said.

"It's a case of how can we guarantee [products] in a market that has had counterfeit issues in the past."

Counterfeit and food safety a growing issue

Imitation products and the counterfeit industry is said to be worth more than $1 trillion.

Fraudulent products detected in Chinese markets have included anything from wine, to beef, and even prescription medication.