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
The Single Market Programme promotes the EU internal market in order to strengthen it, standardise it and make it more competitive. Prognos was involved in the mid-term evaluation of the programme.
To facilitate the transition to a climate-neutral economy, Prognos is supporting the European Commission in implementing the European Fair Transition Observatory (EFTO).
How do refugees with disabilities live in Germany? And how can they find work? We are addressing these issues in a study for the German Red Cross.
Prognos developed a methodology for Eurostat for regular data collection for the European Environmental Goods and Services Sector (EGSS).
We conducted a mid-term evaluation of the Programme Interreg Bavaria-Czech Republic 2021-2027 on behalf of the Bavarian State Ministry of Economic Affairs, Regional Development and Energy.
The Peer2Peer communities are a network of representatives from regional and national authorities in all EU Member States. Prognos recently took over the management of the Circular Economy Community.
As part of the Net-Zero Industry Act, we are working with our partners to conceptualise Net-Zero Acceleration Valleys for the European Commission.
On average, women receive significantly lower pensions than men. Our study for the GDV shows how they can strengthen their retirement provision.
Does your region have a future? The new Prognos Zukunftsatlas has answers. Exclusively published in the Handelsblatt on July 4.
On behalf of the Federal Ministry for the Environment, Prognos compiled the Green Tech Atlas 2025. The atlas provides a comprehensive overview of the cross-sectional environmental tech-nology and resource efficiency industries.
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.