Transnational Crime and the Developing World

and pirated goods come from China. 197 The Chinese government has taken steps to crack down on
counterfeiting, however it is still far from meeting the demands of affected companies and countries.
Counterfeiting is essentially an industry in itself in China, and there are hundreds of thousands of people
employed in the trade. A serious effort by the Chinese government to significantly curtail counterfeiting
could lead to a huge increase in unemployment and a major impact on the economy.
Counterfeit and pirated goods are not just financial crimes; they also pose significant health and safety
risks to the public. Pharmaceutical counterfeiting is an opportunistic crime, and weak regulation in some
countries has made it easier for illicit actors to insert the counterfeits into the supply chain (See the Box
2. Pharmaceutical Crime). This is why counterfeits are showing up in both formal and informal settings:
hospitals, pharmacies, as well as street vendors. It is estimated that counterfeits represent 10 to 30
percent of available pharmaceuticals in developing countries, compared to approximately one percent in
most developed countries. 198
Food counterfeiting, also known as food fraud or food crime, is more prevalent than consumers would
believe, impacting both their pocketbooks and their health. Extra virgin olive oil is one of the most
widely counterfeited food items; 199 criminals sell lesser-quality olive oil in its place, adulterate it with
other refined vegetable oils, or mislabel from where it comes. Up to 50 percent of olive oil in Italy may
be fraudulent, a figure which increases to 75 to 80 percent in the United States. 200 Meat can also be
adulterated: in 2013, a food scandal rocked Europe when horsemeat was found in beef and beef
products in seven different countries. 201
Counterfeiting is not just limited to the product; another aspect of the counterfeit industry is packaging.
Some counterfeit manufacturers put great effort into production and packaging in order to facilitate
market penetration and directly compete with legitimate products. Companies are employing
increasingly stronger product security, but criminals keep pace with these changes. Criminals have
purchased fake safety certificates, security features, logos, packaging, and have even gone so far as to
set up fake stores to sell illicit products. 202
As mentioned earlier in the chapter, the production of counterfeit and pirated goods closely follows the
demand of equivalent goods in the legal market. Thus, if there is a strong demand for an item or brand
in the legal market, criminals will follow with illegal copies. Table P shows the top counterfeited items (A.)
and brands (B.) as indicated by global seizures. 203
197
United Nations Office on Drugs and Crime, Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment (Vienna: United Nations
Office on Drugs and Crime, 2013), 123, https://www.unodc.org/documents/data-and-analysis/Studies/TOCTA_EAP_web.pdf; Geoff D’Eon and
Jay Dahl, Counterfeit Culture, Doc Zone (CBC, 2013), http://www.cbc.ca/doczone/counterfeit-culture.
198
“The Illicit Trafficking of Counterfeit Goods and Transnational Organized Crime” (United Nations Office on Drugs and Crime, 2013), https://www.
unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf.
199
Extra virgin olive oil is produced solely by mechanical means (i.e., pressing), and has not been refined by any means involving chemicals or heat.
200
“Don’t Fall Victim to Olive Oil Fraud,” accessed December 21, 2016, http://www.cbsnews.com/news/60-minutes-overtime-how-to-buy-olive-oil/;
Erik Sherman, “That Olive Oil You’re Cooking With? It’s Probably Fake,” Time, May 12, 2016, http://time.com/money/4326354/fake-olive-oil-foodfraud/.
201
Felicity Lawrence, “Horsemeat Scandal: The Essential Guide,” The Guardian, February 15, 2013, https://www.theguardian.com/uk/2013/feb/15/
horsemeat-scandal-the-essential-guide.
202
Loretta Chao and Sue Feng, “Fake Apple Store Clerk Speaks Out,” Wall Street Journal, July 21, 2011, http://blogs.wsj.com/chinarealtime/2011/07/21/china-fake-apple-store-clerk-speaks-out/.
203
Items and brands are listed in no particular order. World Customs Organization, Illicit Trade Report 2014, 62-63.
Transnational Crime and the Developing World 45