ECONOMIC RESULT

OF COUNTERFEITING
What is Product counterfeiting ?

Product counterfeiting is a form of consumer

fraud: a product is sold, purporting to be
something that it is not.
What exactly is product counterfeit?
Unauthorized Market Definitions

Black economy
Underground market
Shadow economy
Underdog economy
Parallel economy
Grey market
Illegal market
 BLACK vs GREY
• A black market is one where the buying and selling of products and services take
place in an illegal manner. For instancewhere the regular taxation rules and norms
of trade are not adhered to. A black market is known by several names, including
black economy, underground market, shadow economy, underdog economy... The
variety of goods traded in this market is enormous and the most commonly traded
black market items are:
• weapons 
• currency 
• electronics and watches 
• fashion goods (perfumes, jewelry and bags) 
• clothes and accessories 
• pirated media (CDs and DVDs for music, films and software) 
• drugs
• alcohol
• tobacco
• cars, human & organs, wild animals & organs...
BLACK vs GREY
• A black market may also be called a parallel economy because of its disregard for
the rules and regulations that ‘white’ businesses follow. Goods sold in the black
market can be illegal (such as weapons, drugs or stolen goods). On the other hand,
legal goods can be sold illegally (goods sold without proper license and without
paying any kind of taxes).
• In the black market goods and services are purchased and sold violating all
restrictions like rationing or price controls. So, the transactions that take place in
this market in most of cases are “ in cash ” and / or “under the table” transactions,
which occur outside government-sanctioned channels.
BLACK vs GREY
• A grey market involves the buying and selling of goods and services that are not
illegal, but the channels used in their distribution are either unauthorized or
unofficial. A good example is the trading of crude oil by an individual. The grey
market includes services that are typically unregistered to evade taxes. Perfectly
legitimate occupations, such as domestic help, babysitters, part time beauticians
and freelancers, may not be registered. Not only is it difficult to detect such
defaulters, the punishment is usually mild.
Another point of view
What is Piracy ?

Piracy: the crime of copyright violation, which

involves the unauthorized transfer of licensed
material, such as the sharing of music or video
files electronically
TOP 10 movie Piracy Nov 2019
Trade in counterfeit and pirated goods has risen
steadily in the last few years – even as overall
trade volumes stagnated
Scope of Global Counterfeiting
• Organization for Economic Cooperation and Development
(OECD) concluded in a 2016 study that still about 5-7% of
world trade, with a value of about 600 billion USD, is
counterfeit and piracy. Exact numbers can be higher or lower-
depends of product type
• This number exceeds the Gross National Product (GNP) of
– Argentina (173 billion USD),
– Ireland (167 billion USD),
– Israel (129 billion USD)
– Venezuela (128 billion USD) etc
Counterfeit Goods
The spread of counterfeit goods has become
global especially during last financial crisis and
the range of goods subject to fraud has
increased significantly.

Apparel and accessories accounted around 50

percent of the counterfeit goods seized by
Customs and Border Control around the World
Impacts
• Economic impacts
– On rights holders as sale volumes and
royalties, prices, brand value and
reputation, costs and scope of operations
may be affected
– On governments as tax revenues are
reduced and need to finance activities to
combat counterfeiting
Impacts

• Counterfeiting may well have a negative effect

on innovation, levels of foreign direct
investment, economic growth and
employment, and also redirect resources into
organized criminal networks
Impacts

• Consumers may find that the quality of

counterfeit goods is substandard and also be
presented with serious health and safety risks
– the use of counterfeit products can be
extremely dangerous
Impacts
•  Social and economic impacts on displaced
economic activity, investment, public fiscal
losses and criminal enforcement, concluding
that these costs could reach $1.9 trillion by
2022. Taken together, the negative impacts of
counterfeiting and piracy are projected to
drain $4.2 trillion from the global economy
and put 5.4 million legitimate jobs at risk by
2022.
Examples of counterfeits per sector
Estimations
2013 2022 (forecast)
Total international trade in counterfeit $461 billion $991 billion
goods
Total domestic production and $249 billion-$456 billion $524 billion-$959 billion
consumption of counterfeit goods
Digital piracy in movies, music and $213 billion $384 billion-$856 billion
software
Total value of counterfeit and pirated goods $923 billion-$1.13 $1.9 trillion-$2.33
trillion trillion
Wider economic and social costs
  Displacement of legitimate economic $470 billion-$597 billion $980 billion-$1.244
activity trillion
  Estimated reduction in foreign direct $111 billion $231 billion
investment
  Estimated fiscal losses $96 billion-$130 billion $199 billion-$270 billion
  Estimated costs of crime $60 billion $125 billion
Total wider economic and social costs $737 billion-$898 billion $1.55 trillion-$1.87
trillion
Estimated employment losses 2 million to 2.6 million 4.2 million to 5.4 million
Foregone economic growth in OECD 2017 $30 billion-$54 billion
COPYING….COUNTERFEITING….DUMPING….
“Copy” Tool”
Beijing Auto Show
Beijing Auto Show
Beijing Auto Show
Q&A + Discussion

• What are the factors that support Black Markets?

• Possible measures in fighting against counterfeits?
• Have you ever been exposed to counterfeit or trade fraud
exidents?
• Could unauthorized economy/market have positive effect /
aspect?
• What kind of goods / services could be severely exposed to
counterfeit during and after recent COVID-19 crisis?