Philip Morris
2022
The problem of counterfeit products and brand piracy for industrialised economies is an often underestimated one. The production, import, and sale of (illegal) products reduce the turnover and profits of legally operating companies in competition. Job losses and a loss to tax revenue are two further negative macroeconomic consequences.
Economic losses not only occur in Germany but also along the value chain of legally manufactured products that is generally organised globally. Against this background, on the basis of data from the OECD, we calculated the global loss of value added through the illegal sale of counterfeit products in Germany. Three product categories were considered – clothing and (personal) accessories, medicines, and personal care products.
The study, commissioned by Philip Morris, consists of several topics, with Prognos authors contributing the calculations of the economic loss caused by product piracy. Another part of the study was contributed by Kantar.
Data from German customs and information from the relevant literature are used to estimate the economic loss caused by counterfeits sold in Germany. This estimated economic loss caused by counterfeits sold in Germany is then distributed globally using data on value-added links. The basic assumption here is that for every product sold illegally, a regularly manufactured product is displaced.
The calculations show that counterfeits in the three product groups cost Germany 1.9 billion euros a year in value added. In Europe, the products that have been squeezed out of the market and thus not produced lead to a loss in value of around two thirds or almost 1.3 billion euros. In Asia, some 500 million euros of value added is lost due to brand and product counterfeiting and piracy.
Global job losses from the sale of counterfeit goods in Germany are also significant. As Asian and African countries are particularly involved in labour-intensive production, a decline in production levels due to displaced value added has a much greater impact on employment there than is the case in Europe or America. Counterfeit products and brands sold in Germany are thus contributing to a decline in employment, particularly in Asia and Africa. In addition to global value-added losses, the sale of counterfeits leads to tax revenue reductions due to lost VAT/sales tax revenues and income tax revenues. In addition, unpaid customs duties on imported legally manufactured goods are added, resulting in a reduction in EU revenues.
Summary of the study in german (smokersplanet.de)
Project team: Dr Andreas Sachs, Dr Michael Böhmer, Eva Willer
Latest update: 26.09.2022
Managing Partner | Chief Economist
Project Manager
Consultant
On behalf of the Federal Ministry of Education, Science and Research and the Federal Government Commissioner for Culture and the Media, Prognos and partner analysed the economic and social situation of self-employed solo artists in creative professions.
A shrinking workforce, digitalisation and decarbonisation: Prognos examines the specific effects of global trends on regional labour markets.
Higher numbers of care-dependent persons and increasing costs - our aging population is putting long-term care insurance to the test. A new analysis shows what the future financial require-ments will be.
How effectively do the federal states utilise ERDF funding? Prognos supports various federal states with the evaluation of their ERDF programmes.
How effective is EU support for small and medium-sized enterprises (SMEs) through the European Regional Development Fund (ERDF)? On behalf of the European Commission, Prognos evaluates together with CSIL the ERDF funding in the period from 2014 to 2020.
The skilled-worker shortage is only due to get worse in the future. Our Potential Index shows: Increased digitalisation can help to cushion the negative consequences of the skilled-worker shortage in Germany.
On behalf of the Federal Ministry for Economic Affairs and Climate Action, we calculated the investments that will be required to restructure capital stock in the course of the envisaged net zero transition.
A race to catch up - this is what Europe needs if it is not to be left behind by the USA and China. In the SPIEGEL guest article, Christian Böllhoff calls for a new match plan with clear priorities for the new EU legislative period.
In uncertain times, there is a growing demand for orientation. PEO® delivers independent figures. Based on our wolrd economy model we project the developments until 2045.
Growth in the German economy benefits the whole of Europe. Our study for the vbw shows that this is due to the size of the economy and its strong foreign trade networks.
Prognos is one of the oldest economic research centres in Europe. Founded at the University of Basel, Prognos experts have been conducting research for a wide range of clients from the public and private sectors since 1959 – politically independent, scientifically sound.