Counterfeits cost the clothing industry in the European Union (EU) close to €12 billion in annual sales in 2018–21, which corresponds to 5.2% of the sector’s overall turnover.
- This has been uncovered in a study by the European Union Intellectual Property Office (EUIPO) which has revealed the deep economic impact of fake products on the clothing, cosmetics and toy industries in the EU and the serious health and safety issues they pose to consumers.
- The study, drawing on data from 2018–21, found that counterfeit goods not only affect sales but also lead to significant job losses. The clothing sector alone faced an estimated reduction of 160,000 jobs, with the cosmetics and toy sectors losing 32,000 and 3,600 jobs, respectively.
- The report, Economic impact of counterfeiting in the clothing, cosmetics, and toy sectors in the EU, was prepared by Carolina Arias Burgos, Economist in the Observatory Department at the EUIPO, with the assistance of Nathan Wajsman, Chief Economist of the EUIPO.
The findings: The average sales lost in the clothing sector in 2018–21 as a consequence of the presence of fake goods in the internal market is estimated at 5.2% of total sales (at market prices), or almost €12 billion.
- The impact in the 27 EU members states (MS) ranges from 10.8% in Cyprus to 3.8% in Spain.
- Although the present estimates are not completely comparable with those of previous EUIPO reports due to the availability of new sources of data, there are signals that confirm the lower impact of counterfeiting in the clothing sector: namely a lower share of citizens acknowledging their purchase of fakes in the EUIPO IP Perception report 2020 compared with 2017, as well as increasing border detentions of clothing items.
- Only eight MS have lost sales below the EU average of 5.2%. This is because many large countries registered low ratios (with the exception of Germany and Poland), and the EU average is weighted by the value of clothing sales by country.
- The absolute sales losses due to counterfeiting stress the different sizes of the markets, with Germany representing almost one-fourth of total lost sales and the three larger MS constituting half of the total lost sales in all 27 EU MS.
- Sales lost due to counterfeiting also have an impact on reduced employment in the clothing sector. Although the impact of counterfeiting on sales is calculated based on the ratio for each MS, the impact on employment is not only explained by the presence of fake goods in that MS.
- The flow of goods among EU MS (intra-EU trade) must be considered in estimating employment loses in the producer country, regardless of the destination of the goods but limited to EU MS.
- The total employment lost in the EU due to counterfeiting in the clothing sector accounts for more than 160,000 people employed each year on average in 2018–21.
- Some producer countries, such as Poland, Portugal and Romania, rank higher in lost employment than lost sales. This is explained by their specialisation in the internal market, with more than 80% of their exports to other EU MS, compared with Italy, from which only 40 % of exports are destined for the internal market.
What they said:
Counterfeit goods have real costs—for consumers, for brands, and for our economies. This latest study shows the very real costs when it comes to lost sales and jobs in the EU. The findings on counterfeiting highlight the valuable work the EUIPO is conducting through the Observatory and the important collaboration we have with EUROPOL, the European Anti-Fraud Office OLAF and the European Commission to identify and stamp out fake goods in the EU.
— João Negrão
Executive Director
European Union Intellectual Property Office
