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  1. Financial Losses to Counterfeit Electronic Parts $169 Billion

Counterfeit Electronics

News and statistics about fake technology products and fake electronic goods. Data about the counterfeit electronics are collected from criminal justice programs, security agencies, safety officials and other public information sources.

According to the International Chamber of Commerce and the Federation of Indian Chambers of Commerce and Industry, the sales of counterfeits and smuggling of fake goods into India caused sales losses of $11.9 Billion in 2012. This amount represented 21.7 percent of sales losses to companies.

Some of the consumer sectors that are impacted by counterfeits in India are the auto parts, alcohol, computer hardware, foods, mobile phone and tobacco industries.

(Counterfeit Goods Markets by Countries.)

Source: “2014 Special 301 Report,” Office of the United States Trade Representative, April 2014.

A report by the Mobile Manufacturers Forum reported that 125 million substandard and counterfeit mobile phones were sold around the world in 2011. In 2012, the number of counterfeit phones sold increased to 148 million units.

The estimated amount for 2013 was projected to be 1.86 million units. Thus, up to 8 percent of all mobile devices sold worldwide in 2013 were substandard or counterfeits.

Over 20 percent of mobile phones sold in India is estimated to be counterfeits, according to the report.Many of the counterfeit phones sold in the India that were made in China were found to have high levels of lead. This is similar to a study conducted by researchers in Brazil who found that the five counterfeit phones that they tested all had lead and cadmium levels that were higher than EU regulations.

In Libya, up to 80 percent of the mobile phones for sale in the country were smuggled into the country and sold on the black market.

Source:  Rachel Feltman, “That fake iPhone is probably full of lead,” Quartz, February 6, 2014.

Customs Officials in Saudi Arabia reported that is seized around 40 million counterfeit goods within Saudi Arabia in 2013. In addition to the number of fake goods seized, security services also stopped and prevented over 124 million counterfeits from entering the country in 2013.

One of the main fake and substandard product that was seized by the authorities were 30,000 air conditioners that were counterfeited and not made to government standards.

(More counterfeit goods statistics here.)

Source: Hazem Al-Shraqawi, “Fake items decline 45%,” Arab News, January 29, 2014.

Security officers with the National Bureau of Investigation (NBI) and the Bureau of Customs (BOC) in the Philippines seized counterfeit goods worth a total of $174 Million (7.76 Billion Philippine Pesos) in 2013. The value of the fake goods seized in 2013 was higher than the $118 Million (5.27 Billion Pesos) seized in 2012.

Among the counterfeit items seized by criminal justice departments were replica handbagsclothing and counterfeit electronics.

Source:  Louella Desiderio, “Gov’t seizes 47% more fake items this year,” Philippine Star, December 22, 2013.

Beats by Dr. Dre as high-end headphones that make up almost 70 percent of the market. On its website, the top line Beats headphones retail for $400.

In China, counterfeit manufacturers offer the headphones for a wholesale price of $70. In an interview with CNN, a woman who runs a manufacturing plant that produces fake Beats headphones showed that she had sales to customers in Italy, the United States, Canada and Russia. One customer from the United Kingdom bought an order of fake Beats for $50,000 and flew the order back to the UK by jet, where he sold them as legitimate copies.

The price of $70 is for the highest-quality of counterfeit Beats by Dr. Dre. Medium quality headphones are sold for $45, and the lowest quality fakes are sold for $30. An order of 100 units for counterfeit headphones can be filled in one day, with orders of 1,000 taking up to a week.

The in-ear version of Beats by Dr. Dre are sold for even less. On the streets of Shenzhen, the price of fake in-ear Beats earphones were selling for $1. On the company website, the legitimate version of in-ear Beats sell for $100.

Source:  Johan Nylander, “Chinese fakes cash in on Dr. Dre’s Beats headphones bonanza,” CNN, October 14, 2013.

Between 2008 and 2012, information technology company Hewlett Packard conducted over 4,600 anti-counterfeiting investigations across 88 countries. The investigations resulted in over 36 million counterfeit cartridges and components. 25 million of the counterfeit parts were seized in the Asia Pacific region.

Source:  Amanullah Khan, “HP detects 36480 fraudulent products in Pakistan,” Pakistan Observer, August 13, 2013.

In the first 7 months of 2013, police in China conducted over 19,000 anti-counterfeiting cases throughout the country. The Ministry of Public Security reported that the counterfeit products seized and destroyed by the Chinese security service included:

Source:  “China police crack down on counterfeit goods,” Channel News Asia, August 10, 2013.

The smuggling and sales of counterfeit goods in 7 major industries in India leads to a tax loss of $4.5 Billion (261 Billion Indian Rupees) to the government, according to a study by Ficci Cascade (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy).

The seven industries that were covered in the study included counterfeit auto parts, counterfeit tobacco and alcohol, and fake electronics.

Source:  “Smuggling, tax evasion cost `26k cr,” Statesman, June 5, 2013.

According to the Imaging Supplies Coalition, manufactures and businesses involved in copiers and other imaging materials lose over $3 Billion a year around the world to counterfeit equipment.

In raids conducted in 2013, Xerox reported seizing over 55,000 boxes of counterfeit Xerox parts in China and Dubai.

Source:  “Xerox combats counterfeit supplies and parts; offers simple ways to validate authenticity,” Press Release, Al Bawaba, June 3, 2013.

In 2012, Border officials in the United Kingdom seized $23.8 Million (£15.7 Million) worth of counterfeit electrical products in the country. The amount seized in 2012 was 6 times higher than the $3.9 Million (£2.6 Million) seized in 2009.

One of the most seized goods in 2012 was counterfeit designer headphones, such as Beats by Dr. Dre. In 2009, authorities seized $303,000 worth of fake headphones. Coinciding with the rise in popularity in headphones, $22.7 Million (£15 Million) in counterfeit headphones were seized in 2012.

It was previously reported that legitimate Beats headphones are sold for $531 (£350) in London, while fake Beats headphones are sold for $15 (£10).

Source:  Rebecca Smithers, “UK sees sixfold increase in seizure of counterfeit electrical goods,” Guardian, March 28, 2013.

Price source: “£15million of fake goods, including Beats headphones, seized,” Metro, December 12, 2012.