Counterfeiting in the Current Economic Context: A Report by the Rome Business School

Our associates at the Rome Business School Research Centre have been investigating over the last several months counterfeiting. In accordance with the UN’s TOCTA 2010 report (‘The Globalization of Crime: A Transnational Organized Crime Threat Assessment’), product counterfeiting comprises a form of consumer fraud: the sold product is purporting to be something that it is not. This multi-billion-dollar concern the world over is strongly associated with transnational organized crime, with the United Nations Office on Drugs and Crime having produced a campaign highlighting this nexus. Counterfeit products, moreover, have an annual turnover in Italy alone of over 30 billion euro and this is very much a global trend. According to the World Economic Forum, counterfeiters are taking advantage of the pandemic. It is time we paid counterfeiting and the global challenges to block illicit products our full attention. 

The research was led by Valerio Mancini, Director of the Research Center of the Rome Business School and Fabio Guglietta, CEO of BiT256.          

Below, we present the main results of the research.

The report looked into the characteristics of the phenomenon especially in the sectors most affected, highlighting an exponential growth in the market for drugs and illicit medical supplies, especially following the Covid-19 pandemic.

Based on the counterfeiting report, it appears that turnover in Italy exceeds 30 billion euros and with Covid-19 the market for counterfeit medicines is growing. According to the report, these represent fake objects seized and misleadingly intended for consumers, creating economic damage equal to 100% of the value of the original goods. The report also highlights the tendency of counterfeiters to enter the primary market (products that are misleadingly aimed at consumers) to achieve a more effective ROI.

Specifically, the numbers show an increase in the following products:

  • 48% for clothing (which remains the most exposed sector with a production value of € 2.2 billion, equal to 32.5% of the total);
  • 307% for footwear;
  • Over 90% for electrical and IT equipment (with a production value of 1 billion euros). 

The Italian “fakes” are mainly produced in Campania (clothing and raw materials), Tuscany, Lazio and Marche (leather products), in the North-East and North-West regions (watches). The main poles of criminal activities related to counterfeiting are represented by Lombardy, Campania, Lazio and Liguria.

“Italian companies suffer incredibly from the loss of turnover due to counterfeit goods that are sold abroad regardless of where they are produced“, says Valerio Mancini.

Leather goods and bags are among counterfeit and imported goods with 16% of fakes, followed by games and toys with 14.9%.

“There’s a huge damage if we consider that in Italy one in 3 jobs (about 31.5%) is in industries that make intensive use of trademarks and patents, contributing to half of the Italian GDP”.

The study proposes that the main global challenges following the COVID-19 pandemic are: 

  • The movement of drugs and illicit medical supplies across borders has increased exponentially. “Amazon has banned more than a million products that claim to protect against coronavirus – or even cure it” 
  • Less than 2 months from the start of the control activities, OLAF (the European Anti-Fraud Office) has identified over 340 companies acting as intermediaries or traders of counterfeit or non-compliant products with pandemic standards”.   

All this seems to influence the forecasts of the global anti-counterfeiting market, given that the value of the counterfeiting market is approaching 4% of the total world market value (OECD data), considering the stress on the markets caused by Sars-Cov-2 and first data on seizure activities, the CAGR (Compound Annual Growth Rate) in the anti-counterfeiting packaging market alone, which in the pre-pandemic era was around 5%, will grow to 11.98% to reach 169.847 billion dollars by 2025.      

For more info about the original report, please visit: https://bit.ly/3f7yLBW.       

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