In a struggling economy like South Africa’s, purchasing legitimate – and often expensive – goods is a luxury not all can afford. Many in Cape Town, at least, know of someone or someplace that stocks counterfeit goods and often, very secretively, purchase from these distributors. However, many overlook the economic implications of the counterfeit industry on South Africa and fail to recognise how these implications take their toll on the functioning of the local economy – in many ways arguably exacerbating poor economic conditions.
Earlier this week, the International Law Enforcement Intellectual Property Crime Conference took place, addressing the issue of counterfeit goods among others. In August this year, R15 million worth of counterfeit clothing was confiscated in the Johannesburg CBD while an additional R9 million worth of counterfeit goods were confiscated in Johannesburg later in October. Police Minister Bheki Cele opened the international crime conference on Tuesday and declared war against counterfeit goods in South Africa.
“One thing we have looked at is why we find these items in Johannesburg when they clearly come via ships … so we are increasing our awareness along the big ports, which include Cape Town, Port Elizabeth, Durban and Richards Bay,” Cele told the conference.
Spoor & Fisher law firm partner Jarred West explained that the economic impact of counterfeit goods is significant because of the effect of the lack of taxes and duties being exacerbated by the laundering of income generated back out of the country. He said the sale of counterfeit goods serves no significant benefit to the South African economy.
“South Africa, as a whole, loses when counterfeits are running rampant in normal retail outlets. People must start realising that it’s not a simple issue of a couple of garments, hats and belts,” said West.
“There’s a loss of income generated by SARS because counterfeits are imported in millions of rands worth, but no VAT, taxes or duties are paid.”
West said once you trace the counterfeit goods back to their source, you often find a larger community of criminal activity, including drug smuggling, weapon smuggling, forced labour and sweatshops. These counterfeit retailers are often limbs of organised crime, according to West.
The more obvious side-effect of the counterfeit industry is that shops who sell – and brands who produce – genuine goods struggle to compete with the prices offered by counterfeit stockists. This, according to West, deters legitimate businesses from the South African economy.
The counterfeit industry also poses a health and safety risk to consumers. West indicated that there is not an industry in the modern economy that is untouched by counterfeit production and that anything from pharmaceuticals to perfumes to vehicle and aeroplane parts is counterfeited at the risk of the consumer.
“It’s up to every consumer to make a concerted effort and stand up to it…it’s a civil duty on each resident in South Africa,” said West.