Counterfeit Goods Shaving Billions From Italian Economy

The equivalent of up to 2% of Italy’s gross domestic product is being siphoned off in the illicit trade of counterfeit luxury Italian goods, a new report reveals.

According to the report Trade in Counterfeit Goods and the Italian Economy, by the Organization for Economic Cooperation and Development, fakes of Italian products such as luxury handbags, watches, foodstuffs, clothing, perfumes and cosmetics generated an estimated global market worth more than €35 billion ($40.84 billion) in 2013, equivalent to 4.9% of global Italian manufacturing sales, Securingindustry reported.

This resulted in more than €25 billion in lost sales by Italian companies, taking a bite out of Italy’s economy equivalent to around 1-2% of GDP. In 2013, Italy’s GDP was €1.6 trillion.  

The OECD described Italy’s high-quality goods as “especially vulnerable” to the threat from counterfeits. “The Italian economy is innovative and rich in intellectual property, with nearly every industry either producing or using IP and Italian IP-intensive industries are very well integrated in the global economy, through active participation in global value chains,” the OECD said.

“At the same time, the threats of counterfeiting and piracy are growing… US, Italian and French brands are among the hardest hit, and with an economy that thrives on producing high-value products, protected by intellectual property rights and trademarks, Italy is especially vulnerable.”

According to the report–which measures the economic effects of counterfeiting on Italy’s consumers, retail and manufacturing industry and government–the knock-offs infringing Italian IP are mainly manufactured in Turkey, China and Hong Kong.

More than half of the Italian fakes traded worldwide were sold to unsuspecting consumers who believed they were buying genuine goods, the report noted. For food this reached 85%.

Besides looking at the scale and effects of global trade in counterfeit goods that infringe on Italian IP, the report also examined the impact of fake good imports on the country.

The report found that in 2013, fakes imported to Italy were worth more than €10 billion, accounting for 3% of imports into the country, which resulted in foregone domestic sales by Italian wholesalers and retail outlets of around €7 billion.

Information and communications technology, in absolute terms, were the most counterfeited type of goods smuggled into the country, with an estimated value of €2.3 billion.