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
Prognos has developed a tool for the Circular Cities and Regions Initiative (CCRI) that supports cities and regions in monitoring their circular economy activities.
Foreign trade, employment, investment and raw materials: ahead of the new US administration taking office, we analysed for the Süddeutsche Zeitung how dependent our economy is on the US and China.
How powerful is the green tech industry in Bavaria? What is its economic significance? We examined these questions on behalf of the vbw using our envigos model.
German industry can increase the resilience of its supply chains by sourcing its intermediate products from different countries. We have analyzed these new procurement markets.
How many laborers and skilled workers will Germany need for the green transformation of its economy? We examined this question on behalf of the German Chamber of Industry and Commerce.
Even if the global trade in goods is no longer growing, there are still promising markets for German business. We present 13 potential markets in Asia and Latin America.
The Public Sector Loan Facility is an EU financing instrument to ensure a socially just transition to climate neutrality in the regions. Prognos and partners are evaluating the instrument.
With the involvement of relevant stakeholders, Prognos and partners developed conclusions for the further development of European structural funding after 2027.
The Baden-Württemberg Agency for Environmental Technology (UTBW) supports companies based in Baden-Württemberg in the internationalisation and export of environmental technology. Prognos provided the market information.
With green finance, greenhouse gases in Austria can be reduced by up to four per cent by 2040 – in the bond market alone. This is the result of our study commissioned by the Ministry for Climate Action.
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.