By Diego Ottaviano, Business Development Manager at Pointer Brand Protection
Perhaps more than any other nation, Italy is synonymous with luxury brands. The fashion capitals of Milan, Rome, and Florence have been recognized for decades as leading centers for the creation of high-quality goods, and many of the famous fashion houses that flourished after the Second World War remain the most coveted labels in the world today.
As a result, fashion’s prominence has had a huge impact on Italy’s exposure to counterfeiting as the in-demand craftsmanship of these expensive brands has caused endless quantities of cheap copies. However, Italy’s economy is more diverse than just the immaculate bags and shoes of the quadrilatero della moda in Milan, and so its problems with counterfeiting also run much deeper. Here, we delve into some of the detail around the Italian industries and brands currently being targeted by counterfeiters and IP criminals (for more information on luxury goods though, please check our previous article on Super Fakes).
The Italian Economy and Counterfeits
With a GDP of €1.7 trillion, the Italian economy is the ninth largest in the world and the fourth largest in the EU. On the whole, Italy’s economy has struggled to recover from the financial crisis of 2007, and although GDP is relatively stable, the unemployment rate is one of the highest in Europe.
One of Italy’s biggest challenges lies in balancing the spread of industries in its domestic economy. Although the service sector is by far the largest single area, there is also a heavy reliance on manufacturing, chiefly through specialist businesses who produce high-quality automotive, clothing, pharmaceutical, agri-business, and electronics goods. One of the distorting effects of having so many high-profile global brands has been that the public image of Italy is that its economy is dominated by a small number of key players. In the manufacturing sector, however, production is overwhelmingly done by small and medium-sized enterprises (SMEs). In fact, 99.9% of all Italian businesses are SMEs.
This heavy focus on smaller enterprises and specialist production has meant that Italy has an exceptional reputation for high-quality craftsmanship, but that it has suffered from globalization. Cheap mass labour and automation in countries like China have undermined the ability of Italian manufacturers to make goods at competitive prices, which has led to GDP stagnation and unemployment.
Counterfeiting and IP Theft in Italy
The impacts of IP theft and counterfeiting are diverse and damaging for every country, but they’re especially harmful to the Italian economy because of the structure outlined above. So many Italian businesses are small-scale, specialized manufacturers (who are already suffering), that when they are targeted by counterfeiters their ability to survive is put in doubt – something which further impacts an already fragile economy.
This problem is further reinforced by an ageing population in all the developed economies where Italian goods are typically purchased. UN figures show that Italy’s domestic market, for example, had a median age of 45 in 2015 and is estimated to reach 51 by 2050. According to some studies, spending power and disposable income peak in the age range of 45-54, meaning that the people who will be at the center of Italy’s consumer behavior in the future are those who are currently in their early 20s. Studies of the buying patterns among Millennials and Gen Z consumers already show that this could lead to future problems for Italian brands.
Why might today’s young adults mean future problems for Italian brands?
First, e-commerce and m-commerce will become even more prevalent for shoppers, with some studies predicting global growth to continue at 20% for online retail sales. As younger shoppers already gravitate more strongly towards online shopping, this means potential dangers for Italian brands who fail to combat the growing number of IP infringing listings and websites already online.
Secondly, as this target consumer ages, the products they buy also change, typically going from more disposable goods towards high-end purchases including vehicles, electronic devices, cosmetics, and gourmet food and drink; all of which are products which Italy specializes in. So, when we put these things together in the Italian context, we predict a volatile mix where the country’s businesses become even more susceptible to counterfeits.
By 2050, we are likely to have an ageing population who want to buy Italian goods, but who are doing so almost exclusively in the context of an increasingly fragmented e-marketplace full of fakes, and against a background where Italian businesses (due in part to the smaller size of many of them) have already been weakened and may have had to raise prices to offset economic damage.
This is a clear case where, in order to protect their own survival, Italian businesses must look to the future and consider now how best to protect themselves in the future.
The Italian Industries Most Affected by Counterfeits
Statistics about Italian counterfeits already show that the country is deeply affected by fakes. According to the OECD, 88,000 Italian jobs have already been lost, thus contributing to rising unemployment levels. Additionally, in 2016, tax revenues of €4.3 billion were lost from the general retail market, while corporate taxes of €6 billion were also subsequently not paid by Italian businesses who had lost sales. Further proof that counterfeiting disproportionately affects Italian companies can be seen in the global Customs seizures figures from between 2014-2016. Of the almost 465,000 Customs seizures for that period, a massive 15.1% of all seizures made were related to brands headquartered in Italy.
In contrast to the image that only fashion labels are targeted by counterfeiters, global seizures of Italian brands between 2014-2016 cover a wide range of industries. In addition to clothing and jewelry, the highest at-risk categories included cosmetics, medical apparatus, toys and games, electrical machinery and electronics, food and drink, automotive, and industrial machinery.
Italian automotive brands including Dainese, Beta, and the Piaggio Group are among those regularly targeted on Asian wholesale and manufacturer websites. Examples of motorcycle parts and safety equipment are rife on these platforms and seizures of counterfeit items have been made across the world.
On the Indonesian website Tokopedia, where there are in excess of 8,000 listings for Dainese, you can buy a motorcycle jacket that should be over €400 for just €44. Which do you think is the fake?
For the Piaggio Group, in addition to the 15,122 listings for ‘Vespa’ on Aliexpress, their iconic scooter brand remains the most imitated motorcycle of all time. There was even a famous case in 2013 when Italian police seized 11 fake Vespas from seven different Chinese exhibitors at the International Motorcycle Exhibition.
One area which ties together numerous industries that Italian brands are renowned for is the crossover between homewares, foodstuffs, and packaging. Bialetti, famous for its Moka coffee pot, is one brand whose product design is widely copied throughout the world. Although many listings on wholesale websites do not feature the company’s trademarks, there are still many which do, and which currently offer production capacity of up to 1,000 units.
To go with the coffee pot, the rise of counterfeit coffee and packaging is also a concern. One of the key findings of the OECD’s report into Italian counterfeits in 2018 was a growing trend for the importation of packaging rather than finished products. By importing stickers and labels, counterfeiters in Italy can then assemble fake products without having to ship bulkier branded products and negotiate potential detention at Customs. This is true in the case of packaging for the coffee manufacturer Lavazza, for whom empty, branded capsules are available in the thousands.
How Can Italian Brands Stop Counterfeits?
The issues raised above are specific to Italy, and so any brand protection strategy for an Italian business must be similarly tailored. When considering whether to partner with a brand protection service provider, brands may want to focus on a number of questions:
- Does the provider have a range of clients across all the industries affected in Italy –
especially electronics, homewares, automotive, and FMCG?
- Do they understand the current and future problems which may change as the Italian economy and consumer base changes?
- Do they have direct links to the marketplaces where Italian counterfeits are sold?
- Do they have the expertise and the technology to ensure enforcement and, where necessary, offline investigations?
- Are they able to defend smaller, specialist brands? (Our articles on start-ups and specialist brands may give some tips here.)
At Pointer, we believe that we can help you with all of the above. Please contact us today and say arrivederci to IP theft.
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