Fake goods are as profitable as illegal drugs in Asia

The sale of counterfeit goods and medicines has become an important profit-machine for Asian crime syndicates, according to a United Nations report.

The sale of counterfeit goods and medicines has become an important profit-machine for Asian crime syndicates, accounting for about one-third of the value of transnational organized crime flows, according to a report released Tuesday by the United Nations' Office on Drugs and Crime.

The UNODC report, which examines how criminal enterprises have developed alongside a boom in legitimate commerce in the East Asia and Pacific region, found fake goods are as profitable as the sale of illegal drugs to organized crime. For example, the photo above shows a few of 1,500 counterfeit Hermes listed trademark bags seized in February by the U.S. Customs and Border Patrol. The seized handbags had an estimated manufacturer's suggested retail price of $14.1 million, the CBP said.

In total, contraband markets in the region are valued at about $90 billion and are broken down into four categories: human trafficking and smuggling of migrants, illicit drugs, specifically heroin and methamphetamine, resources and pollution crime, and counterfeit goods and fraudulent medicines.

About $24.4 billion of the total contraband market is related to counterfeit goods and another $5 billion to fraudulent medicines. High levels of demand for counterfeit products throughout the world, coupled with Asia's growing economy and ability to meet this demand has driven the growth of counterfeiting, said UNODC. Well-known brand names are often targeted. Remember the fake Apple stores found in China?

The UNODC notes that trade in counterfeit goods is often viewed as a soft form of crime. However, it can have dangerous consequences for public and safety.

For example, fraudulent medicine is particularly problematic and its use can help the growth of treatment-resistant pathogens, the organization said. Testing has revealed poor countries receive the bulk of fraudulent medicines with the highest rates being detected in Africa and Southeast Asia.

The trade in fake consumer goods also perpetuates exploitative working conditions and promotes corruption.

China produces a significant share of the world's manufactured goods as well the majority of fake consumer products. About 75 percent of the counterfeit products seized worldwide from 2008 to 2010 were made in East Asia, primarily China, according to the World Customs Organization.

Resource-related crimes, including illegal harvesting of wildlife and timber as well as dumping of e-waste and the trade of ozone-depleting substances totaled more than $23 billion. Illegal harvesting and trafficking of wood-based products generated $17 billion, by far the largest share of resource-related profits.

Photo: CBP/Jaime Ruiz; Graphic: UNODC

This post was originally published on Smartplanet.com