Nearly All Global Physical Counterfeiting Is From China & Hong Kong, US Report Shows

A new analysis released this week by the United States Chamber of Commerce Global Intellectual Property Center (GIPC) shows that some 86 percent of all physical counterfeiting comes from China and Hong Kong. Companies locating manufacturing there may not be surprised to find counterfeit versions of their products on the market, and seizures are a small fraction of the goods getting into the global trade stream, the report says.

The report, Measuring the Magnitude of Global Counterfeiting, provides a breakdown of the share of physical counterfeiting for the 38 economies included in the US Chamber of Commerce International IP Index.

This counterfeit report provides a closer look at the role individual economies play in this growing, global concern,” GIPC Executive Vice President Mark Elliot said in a release. “It is apparent that we need increased focus in the China and Hong Kong markets to combat counterfeits.” Some 70 percent of the world’s counterfeits come from China alone.

“Building on the Chamber’s 38-economy Index, this report provides a tool to inform countries’ efforts to crack down on the global problem, and cut off counterfeits at the source. Our report indicates that the value of goods seized is only a small percentage of the total $461 billion in global trade-related counterfeiting. This signals the need for increased resources for more effective enforcement efforts,” he said.

The release states: “Similar to data recently released by the Organisation for Economic Co-operation and Development (OECD), GIPC’s report found that as much as 86 percent of all global counterfeits originate in China and Hong Kong’s markets, with the next largest share making up less than half a percent of global counterfeits. The report also suggests that customs authorities are only seizing as little as 2.5 percent of the value of total estimated counterfeits.”

The 38 economies analysed make up nearly 85 percent of global gross domestic product (GDP). The Index is based on 30 measurable criteria critical to innovation including patent, copyright and trademark protection; enforcement; and engagement in international treaties, the Chamber said.

The report “evaluates the propensity/likelihood of physical trade-related counterfeiting in a sample of 38 economies by creating a proprietary metric of three equally weighted factors using several datasets, and assign each economy with a percentage and monetary value share of global physical counterfeiting,” it says.

It includes sections on the basics of counterfeiting and what can be protected; health and safety dangers of counterfeiting; negative effect on economies; link to organised crime; and anti-counterfeiting strategies.

And the report highlights anti-counterfeiting legislative efforts, including the failed Anti-Counterfeiting Trade Agreement (ACTA), the agreed Trans-Pacific Partnership agreement (TPP) that is awaiting national-level approval, and a chart of recent measures taken in the US, European Union, Japan and Canada.

Meanwhile, the report acknowledges the difficulty in measuring counterfeiting activity.

But it also captures worldwide trends, including the rise of international trade and changes in country leadership.

It provides an interesting analysis of China’s rising control of numerous shipping ports around the world. And it finds that China’s prosecution of counterfeiters remains “inconsistent.”

And the problem is much worse than the data and seizures show.

In the summary it states: “Our analysis of seizure data from customs authorities shows that the dearth of seizures data is acute. Of the 38 economies examined in this study, only a third of the customs authorities publish some data. Moreover, only a small proportion of these publish reliable, consistent and detailed seizure statistics. Additionally, the data is often focused on intermittent seizures of varying scope and so does not necessarily reflect systematic efforts against counterfeiting.”