MILAN — The attack on the offices of Charlie Hebdo, young girls working in a textile factory and treated as slaves and boys forced to sell drugs may not seem to be inter-connected. Yet those illicit activities spring from the same roots: the money used to feed them comes mainly from counterfeiting.
“Counterfeiting is the way terrorists and criminals finance themselves,” said Michael Ellis, Interpol assistant director at the sub-directorate of Trafficking in Illicit Goods and Counterfeiting.
Ellis took part in a summit here where speakers from the U.S., Europe and China discussed the problem of counterfeiting and international regulatory compliance, sustainability and responsible sourcing. The meeting was organized by UL, the international group specialized in security issues, and was aimed at involving the Italian fashion system in order to press companies to do more about counterfeiting and security in general.
The production of fake goods is one of the biggest concerns for fashion companies. It is “the 21st-century crime” and it is fueled by a growing demand for counterfeit products, stated Brian Monks, vice president of anticounterfeiting operations for UL. It is a “transnational crime,” which affects every country in the world and nearly all types of companies — even if the luxury industry is the hardest hit. But even if it is impossible to tell its real value and the damages counterfeiting causes worldwide, it is believed that a country such as Italy loses more than six billion euros, or $6.7 billion at current exchange rate, in sales every year, of which around 4.5 billion euros, or $5 billion, is in clothing and footwear.
As a result, more than 60,000 people lose their jobs. According to the Organization for Economic Co-operation and Development, sales of counterfeit goods globally total almost half a trillion dollars a year, or around 2.5 percent of global imports. Italian, American and French brands are the most affected.
But it’s not just a matter of damaging brands. The main problem with counterfeiting is its connection to organized crime. This is the reason why Interpol is working with institutions such as UL, companies and governments: The goal is to “Turn back crime,” as an Interpol short film says. Slavery and prostitution, human trafficking and drugs are strictly connected to counterfeiting. More and more criminals are entering this huge business for different reasons. As Monks said, fake products are easy to produce and their manufacturing costs are close to zero, which means they carry very high margins that then allow criminals to finance additional illicit activities, or terrorism.
There is another good reason why counterfeiting is flourishing: People do not see it as a crime — in most countries, consumers who buy fake goods are not prosecuted. It is estimated that more than 60 percent of Italians do not feel guilty when buying counterfeit goods. Moreover, those who sell counterfeits on the streets are often poor immigrants and consumers can feel like they are doing a good deed by buying something from them, Ellis remarked. The big mistake is forgetting that the money one spends on a fake product does not help immigrants but finances the criminal network behind them.
The Internet has emerged as a huge distribution channel for counterfeit products, especially in China, as can be seen in the controversy surrounding Chinese web giant Alibaba’s selling fakes on its platforms. Illicit goods are advertised on social networks and it is difficult for consumers to tell which one is a fake and which one is not. Both Ellis and Monks underlined the importance of “alerting the public” and they work closely with international agencies in order to make people aware of the risks connected with buying fake goods. “We are addressing children, too, through cartoons,” Monks said.
Representatives from Shanghai — where one of the city’s largest outdoor markets selling fakes was recently shut down — explained that there are numerous requirements needed to be met in order to access the Chinese market, where imports have grown from $4 billion in 2011 to $6.5 billion in 2015. Jiyuan Duan, deputy director of Shanghai CIQ detection technology center for industrial products and raw materials, showed that Italy has the highest number of nonconformed textile products, behind Bangladesh. That results in significant damage to Italian companies, which risk being caught in the trap of individuals or small groups who buy non-conformed goods to claim and obtain compensation, explained Yue Wang, operation center director of Tianjin Textile Fiber Inspection Institute.
Responsible sourcing and sustainability were two other topics discussed at the summit. Anne Bonhoff, global head of chemistry of UL consumer and retail services, showed the latest results of the Greenpeace Detox Campaign and the Zero Discharge of Hazardous Chemicals road map, which aims to eliminate all releases of hazardous chemicals from textile supply chains and products by 2020.
“Next August a new website will be launched,” revealed Bonhoff, noting it will list all the appropriate chemicals to be used in textile production. Today around 10 percent of international brands and retailers are committed to eliminate toxic chemicals from supply chains in order to achieve zero discharge by 2020.