Why Counterfeits Cost More Than You Think

If consumers knew the dark side, they might think again about buying those cheap knockoffs.

Sep 2 2021, 10:15am

Contact lenses that have to be surgically removed from your eyes. Brake calipers that can’t actually stop a car. Pesticides that devastate both crops and land. These are among the $500 billion in fake goods that are manufactured and sold globally every year. 

It’s a problem that affects every country, whether it serves as a destination, a producer, or a transit point for counterfeit goods, according to Piotr Stryszowski, senior economist at the Organization for Economic Co-operation and Development. This ubiquity makes counterfeiting a uniquely difficult challenge to confront. “Counterfeiting... has many faces, many facades. There is no one hub of counterfeiting that can really be attacked to solve this problem.”

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But Stryszowski’s data confirms where most counterfeits originate: China. “It has the global infrastructure for manufacturing... it’s easily transferable to also make illegitimate goods,” explains Candace Li Uzoigwe, senior vice president of the International Anti-Counterfeiting Committee.

China also has a built-in network of smugglers responsible for taking orders and shipping fake goods. Says one China-based smuggler, “Local people have been in this line of work a long time. We have friends or relatives who are in this industry. We guide each other in.” According to Giorgios Antonopoulas, a professor and criminologist at England’s Teesside University, “the business has a very low entry threshold...almost anyone with a small amount of startup capital can get involved.”

But counterfeiting isn’t just a “mom and pop” business. Uzoigwe points out that sophisticated criminal networks are also involved in counterfeiting, using it to fund even more nefarious activites, like human trafficking. One example she points to is the 2015 Charlie Hebdo terrorist shooting in Paris, in which two brothers killed 12 staffers and injured 11 others at a satirical French newspaper. One of the brothers involved sold counterfeit apparel and shoes in the weeks leading up to the shooting, using the profits to fund the brothers’ activities, including buying weapons.

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For its part, China, seen as the epicenter of the counterfeiting economy, has begun to tackle the problem. “I’ve seen the Chinese government...take a lot of steps to address brand protection and intellectual property protection,” says Ugoizwe. But, she adds, these measures have yet to slow the flow of fakes. “We’re still seeing a lot of counterfeits circulating worldwide.” 

And who may ultimately be footing the bill? According to Uzoigwe, the public does—in the form of more expensive goods and, potentially, smaller paychecks. “If [consumers] knew the ramifications... the harm it causes small businesses, the tax revenue that is lost by governments that could be put to public services, the involvement of counterfeiting in organized crime, that might change their perception.” 

Consumer awareness ultimately may be a key tool in the fight, Stryszowski adds. “The money you spend, you spend for bad behavior, you pay criminals.”


Tagged:

china, Charlie Hebdo, illicit trade, counterfeits

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