Global Counterfeit, Fakes Goods Market– Destroys Brands, Endangers Life: Consumer Complicity, Enforcement, Internet…

Counterfeiters of goods are global pirates of 21st Century; global trade in counterfeit or fake goods (i.e., knock-offs, phonies, copies…) is booming big business. And it continues to expand from relatively innocuous items like; shoes, handbags, watches… to things, like; medicines, pesticides, auto parts, electronics… that can carry serious health and  safety issues…

Counterfeiting goods is growing, and increasingly it’s a dangerous global problem of epidemic proportions... According to International Chamber of Commerce (ICC); when factoring in counterfeit goods markets within countries, plus value of pirated digital material, it’s estimated that counterfeits are worth over $650 billion/year, possible in trillions of dollars…

Counterfeit goods make-up 5 to 7% of world trade, and costs estimated 2.5 million jobs, worldwide… A United Nations report found that almost 70% of counterfeits goods seized come from China… although other popular spots for manufacturing knock-offs are; India, Brazil, Japan, Philippines, South Korea, Vietnam…

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According to Jeffrey Hardy; fake goods trade is exploding and it goes much beyond– music, Gucci bags, Rolex watches… Although apparel and fashion accessories still make-up the largest share of counterfeit goods, worldwide… but increasingly fake goods, such as; consumer electronics, chemicals, pharmaceuticals… are entering the market. Also, counterfeit pharmaceuticals are particularly problematic; not only do they undermine intellectual property laws, but they can be lethal for people using them…

According to Ted Leggett; there are counterfeit drugs in circulation that are ‘ineffective’; they have insufficient levels of medicine, e.g.; toxic cough syrup in Panama, tainted baby formula in China, fake teething powder in Nigeria… It may be hard to get people worked-up over the economic costs, e.g.; illegally downloading music… but when the toy that you thought was from Disney contains ‘lead’ paint, then you might care more…

In the article Global Growth of Counterfeit Goods Trade by Springer writes: Major forces that drive global growth of counterfeit goods trade, include; open-markets, globalization; consumer demand, complicity; lack of global enforcement– it’s a low-risk market strategy. The rapid growth of world trade coupled with reduction of barriers to financial and merchandise flows has certainly opened opportunities for fakes goods…

The sheer volume of imports in many countries makes it almost impossible for customs services to interdict phony goods… According to Deutsche Bank; over 25 million ‘containers’ flowed through each of ports of Shanghai and Singapore, over ten million through Rotterdam, over five million through Los Angeles… worldwide movement of goods is ubiquitous…

Also, the advent of trade agreement, such as; NAFTA… and EU’s open borders… means fewer checks on goods flowing across borders… Also, free-trade zones can serve as safe havens for counterfeiters– there are over 3,000 free-trade zones in about 135 countries… But without consumers demand, there is no market– consumers are complicit, they are enablers of demand, key driving force for ‘fakes’– consumer can buy just about anything through the Internet and on-line auction websites, and many consumers are ‘suckers’ for the ‘great’ bargain… and the perception that counterfeits are comparable to the ‘real’ item, when in fact most of these great buys are just cheap knock-offs…

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In the article Counterfeit Goods Industry Is Horrible for Fashion by Chavie Lieber writes: The logo-mania of the late ’80s and early ’90s has played big role in the ascent of these knock-offs… According to Ariele Elia; brand logos drive purchase, it gives people the perception of ‘status’– it’s a symbol that they are special, that they have– latest, greatest, e.g.; fashions… Most shoppers purchase counterfeit goods as a way to– stay on top of trends, keeping-up with or ahead of friends– it’s a social thing… while also avoiding paying steep prices. According to Valerie Salembier; consumers might change their behavior if they knew that buying cheap knock-off is probably supporting sweatshops, and many of which have– deplorable working conditions, very low pay, and often use child labor…

In the article Surprising Facts About Global Counterfeiting Goods Market by redpoints writes: Counterfeiting ‘brand’ goods is big business but, it’s illegal, it’s theft– that’s the good news… but, only a small fraction of violations are ever caught– that’s the bad news. Some interesting facts:

    • Counterfeit goods traded annually is greater than the GDP of 150 of the world’s countries! An International Chamber of Commerce report estimates the total value of counterfeit and pirated goods globally could be as high as $1.77 Trillion in 2015. To put it in perspective, that value is roughly equal to annual nominal GDP of Canada– 11th biggest economy in the world!
    • Counterfeits goods market has seen an increasing high growth rates over past two decades… Based on trade & customs seizures data, OCED estimates that the global market for ‘counterfeit and pirated’ goods has been growing at between 15%-22% annually since 2008…
    • Losses from counterfeit pharmaceuticals is 10 times greater than clothes and shoes! According to Havacscope; consumers are much more likely to buy counterfeit drugs, rather than buy counterfeit– clothes, shoes, bags… In fact the estimated losses from counterfeit pharmaceuticals exceeds $200 billion vs. a paltry $24 billion for fashion products…

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In the article Fake and Counterfeit Goods Are No Bargain by Lawyers.com writes: Most of people have seen it, either; at flea markets, tent sales in parking lots, even on-line… Big brand names, high quality goods– being offered at prices that are drastically lower than what is paid in stores… The most common form of fake or counterfeit goods are low-grade items that are altered to make them appear as high-quality, name brand goods, e.g.; athletic shoes, electronics, perfumes, sunglasses, watches, pharmaceuticals…

The typical practice involves applying pirated version of– well-known brand labels, logos… and putting them on fakes goods made in illegal factories… There are numerous federal and international laws against counterfeiting goods– although very few laws are actually enforced, e.g.; U.S. Code § 2320 – Trafficking in Counterfeit Goods or Services… says:

  • Offenses: Whoever intentionally– (1) traffics in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services… (2) traffics in labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, packaging of any type or nature, knowing that a counterfeit mark has been applied thereto, the use of which is likely to cause confusion, to cause mistake, to deceive… (3) traffics in counterfeit drugs…
  • Penalties: Whoever commits these offense intentionally: (A) if an individual, shall be fined not more than $2,000,000 or imprisoned not more than 10 years, or both, and, if other than an individual, shall be fined not more than $5,000,000… (B) for a second or more offense, if an individual, shall be fined not more than $5,000,000 or imprisoned not more than 20 years, or both, and if other than an individual, shall be fined not more than $15,000,000…

What a bargain! Wait ‘til you see the deal I got! This is too good to be true! All too common expressions from shoppers who thought they bought a $700 designer handbag for $100… Then there are those who remark: Yes, I know it’s a fake, but ‘everyone’ buys them! According to Adele R. Meyer; welcome to the world of counterfeit goods! Whether you label them– fakes, replicas, look-alikes, reproductions, knock-offs… they are counterfeit and it’s ‘big’ business.

According to Lyn S. Amine, Peter Magnusson; the ‘fakes’ goods industry is a paradox; most initiatives to thwart counterfeiting fail– because consumers’ believe that it’s governments responsibility to protect them against dangers from counterfeit– medicines, car parts, shoes, bags… and these same consumers defend their right to choose between; genuine brand-name goods, or counterfeits version of same brand-name goods…

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Most consumers view– counterfeits goods or knock-offs… as a source of enjoyment, especially in case of– fashion items, which are knowingly purchased at a lower price regardless of quality… Such consumer attitudes are at odds with issues of– legality, moral values, and even the consumers’ own well-being… Even if consumers suspect that there are potentially negative consequences, the desire to be fashionable, keep-up with friends and peers lead them to ignore the warnings…

Success in fighting counterfeits requires– proactive, targeted actions involving all stakeholders on both– supply and demand sides… Consumers must understand that quality brand goods at low-bargain-price do not exist… Law enforcement must be more proactive in disrupting the supply-chain, both at production and distributions ends… The  ‘brand’ companies must be more diligent in identifying and managing weak links in their manufacturing and distribution activities…

However, there seems to be another side to counterfeit goods trade issues. According to an European Union-funded report; buying designer goods can benefit consumers and the companies whose brands are being knocked-off… The report rejects the complaints of brand companies, claiming that losses as a result of counterfeiting are vastly exaggerated, because most of those who buy fakes would never pay for the ‘real’ thing, and finding that knock-off goods can actually promote the brands…

Others say; this may be true for goods such as; fashions… but it’s problematic for items like; pesticides, pharmaceutical, auto part… these are a clear danger to health, life…