Back to the project overview

Impact of counterfeit products on global value added

Client

Philip Morris

Year

2022


Our mission

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.

Our approach

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.

Core results

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.

Project team: Dr Andreas Sachs, Dr Michael Böhmer, Eva Willer

 

Latest update: 26.09.2022

Do you have questions?

Your contact at Prognos

Dr Michael Böhmer

Chief Economist, Head of Corporate Solutions

View profile

Dr Andreas Sachs

Project Manager

View profile

Eva Willer

Consultant

View profile

Mehr Studien & Projekte zu diesem Thema

More studies & projects on this topic

Accelerated climate protection does pay off

2023
| Project

If the expansion of renewable energy and the implementation of efficiency measures are ac-celerated, electricity prices will fall more quickly, and the GDP will grow faster. These were the findings of our short study for the INSM.

DG REGIO – Evaluation of the European Green Deal

ongoing
| Project

How effective has the EU cohesion policy been in driving green change in Europe? This and other questions are being investigated jointly with COWI, Milieu, and CSIL, on behalf of the European Commission (DG REGIO).

Germany’s business model 2023

2023
| Project

Why politicians and companies need to act consistently - and how they can do so. Joint study with BayernLB.

Inflation – extra burden and relief for family households

2022
| Project

Calculations on inflation-related additional private household expenditure and the work of the Federal Government's relief package.

The effects of Chinese subsidies on Germany

2022
| Project

Prognos examined the potential impact of Chinese subsidy practices on Germany in three core sectors of the German economy.

Resilient supply chains in the EU

2022
| Project

What are possible solutions when supply chains are disrupted due to external shocks? A survey conducted for the European Commission as part of the European Cluster Collaboration Platform provides answers.

Innovation Index Germany

2022
| Project

How does the expansion of the digital infrastructure affect regional innovation strength? The IID.2022 provides clarification.

The world negotiates on climate

2022
| News

On Sunday, the 27th UN Climate Change Conference (COP27) begins. Various media sources have picked up on Prognos’ studies and expertise.

Change through trade? But with oomph!

2022
| News

The Communist Party in China meets for the 20th time, shortly after, Chancellor Olaf Scholz travels to Beijing for his inaugural visit. What a fitting opportunity to shake up German foreign trade policy. An appeal by Christian Böllhoff.

Disruption to gas supply – consequences for the brick industry

2022
| Project

A study of the production, value-added, and price effects on and through the brick and tile industry in Germany for the Federal Association of the German Brick and Tile Industry.

About us

Prognos – Providing Orientation.

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.

Learn more