The European Commission released a new report on the detection of counterfeits at EU customs borders last September. Each year, this report gives insight into emerging trends and a better vision on the issue of counterfeits that enter the European Union.
In 2018, EU customs seized €738 million worth of articles, an increase of €156 million, representing a 21.27% raise compared to last year. There has been a rise in the detection of luxury goods this year. However, cheaper products such as foodstuffs and body care articles are still high, reaching 36.8% of the total amount of detained articles. The health and safety problem with this type of counterfeit is still a major concern for brands and consumers alike.
The retail value of products seized has increased since last year. However the quantity of articles seized has decreased by 15%; going from 40 million in 2017 down to 26 million in 2018. Although this could be attributed to better collaboration between brands and EU customs, it's unlikely that there are fewer counterfeits entering the EU. It seems more likely that counterfeiters are either getting better at getting past customs and to their customers’ doorstep, or simply centering their focus on products that generate more revenue.
There is less disparity among article categories compared to last year
Cigarettes and toys remain the top two most detained articles at EU borders in terms of quantity. The toys category only came a close second, with a 1% difference.
There is less disparity among categories this year. In 2017, there was a 15% difference between cigarettes and the second-highest category.
However, categories that sell for higher prices are on the rise at customs borders. The total value of seizures in toys amounted to over 25 million, which is 5 million more than the worth of the cigarettes seized.
Fashion fakes found were highest in terms of value
The standard value metric for reporting by EU member states is the domestic retail value. This represents the retail price at which the goods would have been sold on the country’s market, had the products been genuine. When the retail value is considered instead of the volume of the product type seized, the values change completely.
Counterfeit goods are sold at an increasingly similar price to the original product version. It’s a flourishing industry. Consumers are opting for fakes that are considered of good enough quality and price over originals.
Fakes in fashion have become increasingly acceptable today, especially in younger generations. This has translated into fashion items being the top categories that were seized in 2018 in terms of value.
The highest seized value of items were bags, wallets and purses, with 19% of the total value seized at EU borders. This figure has doubled since last year. In our latest market research on counterfeit handbags, over half of the consumers that were surveyed said they would consider buying a handbag via social media. And it’s of no mystery that it’s where counterfeiters selling handbags especially thrive on today.
Watches, which were in first position of this category last year have decreased by 10% this year. The total seized value of watches is of 15%. With the widespread availability of watches on the gray market online, it could be why it has decreased in value at EU customs.
The third highest value of counterfeits is clothing, at 15%. This value has doubled since last year. It is a clear indicator for brands that counterfeiters are not stepping down on the wave of success they’re surfing on.
Fashion brands have perhaps provided EU customs with more telltale signs and cooperation to help them with identifying the knockoffs. However, this is just one of the factors that can help fashion brands in eliminating their copycats. The fact is that the way goods are transported to customers is changing, so the items that get intercepted are getting harder to spot as a result.
Individual packages: the new challenge for EU customs officials
In 2018, 67% of cases recorded had arrived in the EU from the post. It is not the highest volume recorded (shipping still is the highest in terms of volume). This percentage represents goods that are confirmed IP infringing goods. These are cases that have been confirmed by brands and eventually escalated to the court of justice.
Sending products through the post has been an emerging source of counterfeits in recent years. Smaller packages are sent directly to consumers. The middle man has been cut out from the equation; Formerly, a reseller would receive the contents of a large container and redistribute it to either consumers or resellers. Today, counterfeit products are sent individually and directly from their source.
It is simply impossible to detect the same amount of counterfeits that are packaged individually, from others that are mass-shipped through containers. There’s a big focus on this type of individual package, as it seems to yield the most results for counterfeiters.
A package that goes undelivered is not even a lost customer, they simply just try again to slip through the hands of EU customs and arrive later than expected to their customer’s doorstep.
The two other most registered cases by means of transport were by air (which has decreased since last year) and through express courier. The cases registered that had been sent by express courier has almost doubled, reaching the ten thousand mark.
Of course, the mode of transport that ranked highest in terms of value seized is still on goods arriving by sea. If customs officials locate the right container, they find the same product in big quantities. However in terms of registered cases of IP infringement, what is found arriving by sea is quite insignificant when compared to the three modes of transport mentioned above.
Provenance of goods
China is still the most prevalent country in all types of seized goods suspected of IP infringement. Even more so than last year, with an increase of 9%, which puts it at 50% of the total quantity of goods seized at EU customs. In terms of value seized, China is also in first position, with 62% of the total worth of goods seized.
The second country of provenance in suspected IP infringing goods this year is Bosnia Herzegovina. Although it wasn't on the charts last year, it accounts for 9.5% of the total quantity this year. According to the report, it was packaging materials suspected of IP infringement that were being sent into Europe.
As for how much was seized from China in terms of worth, fashion items were the top categories. The first was bags, wallets, purses (28%), then sunglasses and other eyeglasses (14%), watches (12%), sports shoes (10%) and clothing (7%).
The good news is that brands can give the right documentation to customs officials to help them distinguish specific products more easily. EU customs enforcement is constantly improving their methodology to brands’ benefits. Each region has specific guidelines, and some need to be renewed yearly. Make sure you have all the information necessary.
Of course, it’s impossible for customs to detect all counterfeits from the flood of small packages entering the EU. In most cases, these small packages are sent directly from their source to the consumer, meaning it has been ordered online.
A brands’ brand protection strategy must begin at the root of the problem, which starts with an online detection strategy. Tech-based solutions are able to give brands all the tools they need to take down counterfeits before making it to EU customs.