OECD Study reports China, India as Biggest Producers of Counterfeit Goods

OECD Study reports China

According to a new report jointly released by the Organisation for Economic Cooperation and Development and the European Union Intellectual Property Office, most of the world’s counterfeit goods are produced in China in comparison to any other country and India leads in counterfeit pharmaceuticals.

OECD said while releasing the report that trade in counterfeit and pirated goods is a vital threat for modern, innovation-driven economies, a worldwide phenomenon that grows in scope and magnitude. It further stated that counterfeiters ship infringing products via complex routes, with many intermediary points, which poses a substantial challenge to efficient enforcement.

A lot of corporate executives and general counsels have agreed on the complexity of the issue and too agree that the problem of counterfeiting is growing at super-sonic speed, thanks to the incredible growth of e-commerce in the last 10 years and the consolidation of manufacturing in Asian countries. It is seen that many e-commerce companies are taking actions to tackle the problem of counterfeiting but more companies needs to move towards a more systematic and effective protection of their intellectual property.

OECD in its 159 page report said China and Hong Kong are a significant part of the problem. They were identified as origin of 80 percent of the counterfeit products seized by authorities. They also lead as producers in nine out of the 10 top counterfeit categories, which are: electronics, jewellery, optical / photographic / medical equipment, pharmaceuticals, leather and handbags footwear, foodstuff, clothing and textiles, toys and games, and perfume.

The OECD also showed that counterfeit goods produced in Asia travel to the West mainly through ports in Hong Kong, Macao or Singapore and in countries of Eastern Europe (Ukraine, Albania), North Africa (Morocco, Egypt) and the Middle East (United Arab Emirates, Kuwait, Saudi Arabia or Yemen). Goods often travel through Panama to reach United States. Counterfeit pharmaceutical products were mainly sent to countries of sub-Saharan Africa, while developed countries were the main destination for electronic products.

The report also stated that transit points are very important points for harbouring illegal distribution centres allowing goods to be re-labelled, re-packaged or re-distributed in containers with legal cargo. The data has also showed that an average of almost 62 percent of seizures worldwide involved postal shipments, while air transport followed at 20 percent, sea shipments at 9 percent, and vehicles at 7 percent were seized between 2011 and 2013.

The report has recommended a more in-depth analysis of the problem of small postal items and of the role of “free trade zones” established by many countries to stimulate trade. These zones are lightly regulated and are beyond the control of customs authorities and therefore being used by counterfeiters to hide the origin of the cargo and to re-package or re-distribute counterfeit goods.