Damage of 22 Trillion Won to Korean Companies Due to 'Jjaktung'... "Government Must Actively Crack Down" (Comprehensive)

Counterfeit Spread in Pharmaceuticals and Food Products

[Asia Economy Reporter Kim Jin-ho] It has been revealed that the damage to South Korean companies caused by the distribution of counterfeit goods amounts to 22 trillion won. The so-called "jjaktung" products, which were 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 nation's property but also to 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. Compared to $109.9 billion (approximately 128 trillion won) in 2000, this represents a 4.2-fold increase over ten years. 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 increased from 1.85% to 2.5% during the same period.

In South Korea's case, the decrease in sales due to counterfeit goods during domestic production, sales, and overseas export processes is estimated at 22 trillion won. Job losses resulting from reduced sales reached 31,753, and the decrease in corporate and individual income taxes amounted to approximately 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 since the damage estimate is based only on goods seized by customs, the actual damage scale is likely larger.

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

The report pointed out that the diversification of items is concerning because more commonly consumed general products are being distributed as counterfeit goods compared to the past. This means 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 online has also increased significantly. In fact, according to customs seizures in the European Union (EU), 56% of counterfeit goods detected were through online e-commerce, higher than the 44% traded through non-electronic commerce methods.

The report emphasized the need for government support to block the distribution of counterfeit goods by domestic companies, noting that the damage to South Korean companies is 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, stated, "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 larger," adding, "This acts as a burden on our economy."

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

Meanwhile, among counterfeit goods seized by customs between 2017 and 2019, 54% originated from China, the highest proportion. Hong Kong (23%), Turkey (10%), Singapore (2%), and the UAE (1%) followed. According to the report, although mainly Asian countries accounted for most counterfeit goods origins, recently European and American countries have also appeared as sources of counterfeit goods.

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