China’s Poor Intellectual Property Rights Spur Europe’s Counterfeit Industry
Despite advances in the adoption of formal Intellectual Property Rights (IPR) protection, the enforcement of IPR regulations remains an unsolved problem in China.
Recently, intellectual property rights infringements have come into the forefront. The Financial Times reported that between 2019 and 2020, the Chinese government made amendments to its IP-related regulations, such as decreasing “the burden of proof” for defendants for patent law and increasing damages for copyright law infringements. The number of IP-related court cases tripled from 2016 to 2020.
According to the International Property Rights Index China’s (intellectual) property rights index score is the lowest in the region. Reflecting this dire reality, the U.S. Trade Representative’s report notes most seizures of counterfeit goods – including counterfeit pharmaceuticals – entering the United Stated originated in China. In regard to online and broadcast piracy, the report claims optical disc counterfeiting, illegal rebroadcasting via illicit streaming devices, and camcordering or live recordings of copyrighted material mainly derive from China as well. What is more, China is deemed to have weak trade secret protection and enforcement, “largely lack[ing] effective tools to combat widespread bad faith trademark applications.
The United States isn’t alone in highlighting China as a main source for global IP infringement. An analysis conducted by the Organization for Economic Cooperation and Development (OECD) and the European Union Intellectual Property Office (EUIPO) found that close to 85% of all seized counterfeit goods derive from China. The total trade of counterfeit and illegal goods accounts for 2.5% of global trade, and 6.8% of EU imports. Remarkably, illicit trade has grown 10,000% since 2000.
Europol claimed in 2022 that there is a stark rise in the amount of counterfeit goods being produced in the EU. Chinese organised criminal groups selling counterfeit goods are mobile. Those operating in Italy have ties to the Camorra and team up to import counterfeits. Chinese diaspora communities across Europe are vast – with businesses in several Italian provinces that are linked to the textile and fashion industries. Parts of Madrid are also permeated by Chinese organised crime groups operating across Europe, mobilising their counterfeit products via legitimate businesses. They have oiled in networks with money transfer agencies, facilitating money laundering and money transfers to China.
Illicit trade in fake goods is a significant and growing threat in today’s globalised and innovation-driven economy. Its detrimental impact on economic growth, innovation, and the rule of law is not an understatement. Counterfeits support the wider black market, and they rarely function in isolation, but with a vast criminal network. Counterfeiting leads to a loss in revenue for the government and loss of employment with 750,000 jobs being lost each year in Europe alone.
This article originally appeared in The Brussels Report, see link: