The globalisation of deceit

A counterfeit, on a strict definition, is something that is forged, copied or imitated without the perpetrator having the right to do it, and with the purpose of deceiving or defrauding. Such rights are legally enshrined in patents (linked with inventions), copyright (which covers literary, musical and artistic works, and software), trademarks (which include words, pictures and symbols), industrial designs and other forms of intellectual-property protection.

Counterfeits come in many shapes and sizes. Mark Turnage, co-author of a new book* on counterfeiting, groups them into four broad categories, according to the quality of the product and the level of deception. They range from the cheap look-alike Rolex, bought knowingly by a happy customer, to the counterfeit, sub-standard brakes on an unsuspecting driver's car.

The international capital of counterfeiting is undoubtedly China. At least $16 billion-worth of goods sold each year inside the country are counterfeit, according to one conservative estimate. Procter & Gamble reckons that 10-15% of its revenues in China are lost each year to counterfeit products. The International Intellectual Property Alliance claims that 90% of musical recordings sold in the country are pirated.

Most of China's counterfeit bounty stays inside the country, but rising quantities are now destined for foreign markets—as recent customs seizures in America show (see chart). This international trade depends on sophisticated distribution networks. Increasingly run by organised-crime syndicates, these use many of the same routes that have been established for trade in narcotics.

China is by no means the only big exporter of counterfeits. In its annual “Special 301” review, published earlier this month, the office of the US trade representative (USTR) fingered more than 30 countries as counterfeiting and piracy hotspots. Ukraine, for example, is awash in bootleg optical discs; Russia is running on counterfeit software; while Paraguay is rolling in imitation cigarettes. The USTR reckons that American industries lose $200 billion-250 billion a year to counterfeiting.

Nor is such activity restricted to poor places. Milan is a leading producer of counterfeit luxury goods and Florida is an international haven for fake aircraft parts. The Counterfeiting Intelligence Bureau (CIB), part of the International Chamber of Commerce, estimates that 7-9% of all world trade is in counterfeits, their path smoothed by the opening up of markets. Given the clandestine nature of the business, such estimates can be no more than educated guesses. But there is no doubt that counterfeiting, like manufacturing, has gone global.

Date: 2015-01-12; view: 2057