22 Trillion Won Lost to Fake Goods Distribution in Korea... 2.5% of Global Trade Volume Is Counterfeit Products

Counterfeit Spread in Pharmaceuticals and Food
Need for Government-Level Crackdown Emerges

It has been revealed that the damage suffered by South Korean companies due to the distribution of ‘counterfeit goods’ amounts to 22 trillion won. While counterfeit products, mainly luxury goods in the past, have recently expanded into areas such as pharmaceuticals, cosmetics, and food. Since these can cause serious side effects not only to the public’s property but also to their health, there are calls for the government to take the lead in crackdowns and other measures.

On the 20th, the Korea Intellectual Property Research Institute analyzed the ‘Trade in Counterfeit Goods Report’ jointly published last year by the Organisation for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO), estimating that global damage from counterfeit goods was $464 billion (approximately 541 trillion won) as of 2019. This is a 4.2-fold increase compared to $109.9 billion (approximately 128 trillion won) in 2000. This figure is comparable to the GDP of some OECD countries as well as the global semiconductor market size ($412.3 billion as of 2019). The share of counterfeit goods in international trade also rose from 1.85% to 2.5% during the same period.

In South Korea’s case, the estimated loss in sales due to counterfeit goods during domestic production, sales, and overseas export processes is 22 trillion won. Job losses caused by the sales decline reached 31,753, and the reduction in corporate and individual income taxes amounted to about 416.9 billion won. South Korea ranks among the top 10 countries most affected by counterfeit goods. The Korea Intellectual Property Research Institute explained that the damage estimate only covers goods seized by customs, so the actual damage is likely to be greater.

The scope of counterfeit goods, which previously centered on luxury or high-end products, has recently expanded significantly to include pharmaceuticals, cosmetics, and food. Among 96 trade item codes, the number of codes in which counterfeit goods were found surged from 77 during 2011?2013 to 83 during 2017?2019.

The report pointed out that the diversification of counterfeit goods is concerning because it means that commonly consumed general products are being distributed as counterfeits compared to the past. This poses a real threat to consumers’ health, safety, and the environment. In particular, cases of counterfeit COVID-19 vaccines have recently been discovered.

With the advancement of internet technology and the impact of COVID-19, the distribution of counterfeit goods through online channels has also increased significantly. In fact, according to customs seizures in the European Union (EU), counterfeit goods detected through online e-commerce accounted for 56%, higher than the 44% of counterfeit goods traded through non-e-commerce methods.

The report emphasized the need for government support to block the distribution of counterfeit goods by domestic companies, as the damage to South Korean companies has become considerable due to the recent spread of counterfeit goods distribution.

Kim Si-yeol, head of the Dispute Research Team at the Korea Intellectual Property Research Institute, pointed out, “The scale of damage to South Korea shown in the OECD joint report is based only on goods seized by customs, so the actual damage to Korean companies from counterfeit goods is likely to be even greater,” adding, “This acts as a burden on our economy.”

He further suggested, “There is a need to approach the counterfeit goods issue from a national security perspective,” and “Efforts are needed to preemptively block the infiltration of counterfeit goods into the defense industry supply chain.”

This content was produced with the assistance of AI translation services.