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 current global economic order is faltering. What does this mean for Germany and the EU? We have developed various scenarios for the future global economy for the vbw.
The EU Commission commissioned Prognos, Idea Consult and the nova-Institute to research and promote the transition to a bioeconomy in the European Union.
What impact do global crises have on regional labour markets? The 15th issue of TerritoriALL magazine reports on the OVERLAP project carried out by Prognos.
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.
Prognos is supporting the North Rhine-Westphalian Ministry of the Environment in organising, implementing and establishing the world's first trade exhibition for the climate adaptation industry.
The Public Sector Loan Facility is an EU financial instrument to ensure a socially just transition to climate neutrality in the regions. Prognos and t33 srl evaluated the instrument.
German industry is heavily dependent on raw materials and intermediate products from abroad, especially from China. Prognos analysed supply chains and developed recommendations for action.
How can innovations be implemented in practice? This is where the BMBF's ‘Innovative University’ funding initiative comes in. Prognos and Fraunhofer ISI are evaluating the programme.
On behalf of the BMWK, we evaluate the impact of the BEG in the funding period 2021 – 2025 together with ifeu, ITG, and FIW.
Specialists waste a lot of time on tiresome routine tasks. 3D planning tools or digital twins can help. Our analysis for the Fraunhofer IGD shows which professional groups benefit directly from their digital technologies.
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.