According to a new study by the European Union Intellectual Property Office (EUIPO), counterfeit goods cost EU industries an estimated €16 billion in sales and nearly 200,000 jobs each year. The 44-page document, titled “Economic Impact of Countering in the Clothing, Cosmetics, and Toy Sectors in the EU,” reveals the economic impact of fake products on these three sectors as well as the health and safety issues they pose to consumers. The legitimate clothing industry, including footwear, pays the highest price, says the report.
The legitimate clothing industry lost an estimated €12 billion of revenues as an annual average in 2018-2021, representing 5.2 percent of clothing sales (at market prices) in the EU. As a result of counterfeiting, the clothing industry also lost 160.000 jobs each year in the same period. Germany and Italy were the most affected markets. Germany alone represented almost one-fourth of total lost sales.
The cosmetics market lost an estimated €3 billion in sales, representing 4.8 percent of total sales, and 32,000 jobs. France’s cosmetics industry was the most affected in absolute terms, with €800,000 in annual lost revenues. The European toy sector, which is the smallest of the three sectors under examination for the purposes of the study, suffered the highest ratio of sales lost due to counterfeiting: €1 billion in lost sales, representing 8.7 percent of total sales for the sector, and 3,600 jobs. The German toy industry suffered one third of sales lost due to counterfeiting.
The analysis of sales in 2018-2021 also highlighted the impact of the Covid-19 pandemic on sales of both legitimate and fake goods. The greatest relative decrease in sales in 2020, that is the year that saw the most remarkable fall due to the pandemic, was registered in the clothing sector (-20 percent annual rate).
The low quality of counterfeit products can be a risk to the consumers’ health and safety, especially in the cosmetics and toy sectors, said the report. In addition to its negative economic impact, counterfeiting also fuels organized crime and negatively affects the environment.
The paper was prepared by Carolina Arias Burgos, an economist in the EUIPO’s Observatory Department, with the assistance of Nathan Wajsman, Chief Economist of the EUIPO. The full report is available for download from EUIPO’s website.
