The total value of counterfeits in the UAE and resultant loss in revenues for four major sectors in 2006 is estimated to be in the range of $670-696 million.

The study, commissioned by the Brand Owners Protection Group (BPG) and conducted by the world renowned KPMG, included product categories covering FMCGs (tobacco, F&B, household products), automobile spare parts, cosmetics and pharmaceuticals.

Among the studied sectors, automobile spare parts seem most affected by counterfeits at 12.5 per cent, while pharmaceuticals is the least affected by 0.15 per cent of the total market size of $3,814.7 million and $ 1,300 million respectively.

While the highest per centage of counterfeits as products went to automobile spare parts at 68.5 per cent, FMCG – tobacco at 22.2 per cent, cosmetics at 5.9 per cent, FMCG – food and beverage at 2.5 per cent, FMCG – household products at 0.6 per cent and pharmaceuticals at 0.2 per cent, the study reveals.

The impact of counterfeiting on these industries lies mainly in reduced sales and profits as a result in the loss of market share. While, the impact on the economy is represented in the loss of trade revenues through hurting the industries, loss of custom duties through smuggling, and reduction of non-oil GDP, and employment levels.

Consumers on the other hand, are deceived into buying lower quality and inferior products which might pose serious health and safety risks.

The report also finds that if more efforts had been done towards curbing trade in counterfeits the selected sectors as a whole, during the years 1996-2005, would have resulted in non-oil GDP rise by $1,726.9 million, tax collection by over $110 million, and employment would have rose by around 31,000.

“This report shows where we stand in our fight against counterfeit products, our quest to fight illegal trade continues and we need the support of all bodies. We are looking forward to seeing a real partnership and joint effort with the public sectors which includes all law enforcement agencies and authorities through the execution of governmental legislations, full implementation of the maximum penalties in the Intellectual Property laws and regulations. Private sector support is also required in addition to strong consumer awareness,” said chairman of BPG and the Regional Intellectual Property advisor for Nestlé Middle East Omar Shteiwi.
According to the report, counterfeiting does have a negative impact on the UAE’s overall economy, industry and consumer. However counterfeits in the UAE are lower than in other international markets, yet the presence of such activities could deter the entry of new players in the local market.

As a result the “shopping capital” image of the country can be affected. The UAE has been active in the investigation and curbing of IP violations but brand owners consider penalties in the country to be light, the report added.

Improving enforcement, raising public awareness, and the close engagement of all stakeholders to combat counterfeiting are recommended, as per the study.

The BPG is a not-for-profit organisation set up to fight illegal replication of genuine goods and other forms of illicit trade and strengthen the enforcement of intellectual property rights.

BPG members involved in the study were BAT, Beiersdorf, BMW, Daimler, Estee lauder, GM, GSK, Johnson & Johnson, Kao Brands, Kraft, Nestle, Philip Morris, P&G, and Unilever, in addition to a large number of local economists and industry experts who have all worked very closely with KPMG in terms of providing insights and gathering of information and statistics. – TradeArabia News Service