By Jan Maarten Laurijssen
Despite repeated stories of transnational crime gangs growing rich off the proceeds of fake fashions and illicit tobacco, large sections of the public have become immune to the dangers of buying counterfeit goods. A new report from the United Nations, however, has once again demonstrated the links between counterfeiting and organized crime in Southeast Asia, and the results demand serious attention for people interested in protecting the human rights of vulnerable populations around the world.
Although counterfeiting is often characterized as a “victimless crime,” Southeast Asia’s $35 billion annual black market affects more than company profits and brand reputations. Even among those consumers who recognize that there may be safety issues and economic harms, there is a lack of awareness about the wider issues caused by the trade. However, the United Nations Office on Drugs and Crime’s (UNODC) Transnational Organized Crime in Southeast Asia paper reveals specific details about the relationships between crime and counterfeiting in a way that makes this connection impossible to ignore.
Until recently, claims that counterfeiting and organized crime were interdependent have provoked some skepticism, with the public often more concerned about getting a bargain than having anxieties over how the product reached them. In the last few years, however, reports such as the UNODC’s have been pushing the proof from the anecdotal to the evidential.
In Europe, it has been known for decades that Italian groups such as the Camorra, the Ndrangheta, and the Cosa Nostra control everything from counterfeit power tools to luxury fashions, but it is only in recent years that the publicization of pan-European enforcement actions has shown concrete evidence.
In July 2018, Europol, Interpol, and the Spanish and Georgian police forces concluded a two-year investigation into a crime network spread throughout Europe. The unprecedented operation resulted in the arrest of 129 people and the seizure of cash, weapons, and illicit tobacco. Likewise, in what is possibly the most high-profile evidence of the danger presented by counterfeiting, the 2015 terrorist attacks on the Parisian offices of Charlie Hebdo were partially funded by the sale of fake footwear.
As the UNODC highlights, however, the growth of these transnational crime patterns in Southeast Asia points to the worrying globalization of organized criminal networks. The report outlines specific problems in Myanmar, Vietnam, Thailand, and Indonesia, where the links between illegal drug manufacturing, human trafficking, and counterfeiting are on the rise.
Aided by the ease of frictionless international trade and the increasing trend towards e-commerce and small parcel shipments, the report suggests that counterfeiting has moved from being a “low-risk, high-profit, cross-border crime into an even lower-risk and higher-profit borderless one.”
Knowing that they can earn easy money (and thus fund other illicit activities) by pushing fake consumer goods, pharmaceuticals, and industrial products through the region, criminal gangs have centered their attention on Southeast Asia as a new hub.
The report shows that in recent years, countries in the ASEAN region have been targeted by organized criminals for several reasons, some of which are connected directly to counterfeiting, and which further illustrate this dangerous link. Crime syndicates in near-by China and Singapore have been joined by groups from Europe, Africa, and even by motorcycle gangs from Oceania, in exploiting the people and the trade routes in the region. One 2015 report by the French agency, Unifab, even established that the Al-Qaeda terrorist, Mokhtar Belmokhtar, was known as “Mr Marlboro” due to his connection with illicit tobacco. That the bulk of counterfeit cigarette manufacture now takes place in Vietnam, Cambodia, and Malaysia gives a further indication of this regionalized black market.
Throughout Southeast Asia, law enforcement practices and priorities are uneven, and there are numerous states where border management is less stringent, and corruption more common. Likewise, intellectual property is poorly recognized in some Southeast Asian countries (Indonesia in particular), enabling an environment that allows for the importation of raw materials, the manufacture of fake products, and the exportation of counterfeits.
The geographical presence of China also casts a shadow over the Southeast Asian black market. In terms of counterfeit production, China remains the dominant origin point, with European Union figures from 2016 suggesting that as much as 80% of counterfeit goods seized at EU borders originated there.
In recent years, driven by their own desire to generate manufacturing and tech scenes as part of the Made in China 2025 program, the Chinese state has become more serious about intellectual property protection. President Xi Jinping stated that “only if we own our own intellectual property and core technologies, then can we produce products with core competitiveness.” It’s a view that has led to a recent tightening of control against counterfeiters.
It has also, however, led to effective outsourcing of illegality from China (and to some degree from India) into countries where IP regimes are less high profile. This is particularly true for the pharmaceutical industry.
The production and trade of counterfeits in the identified markets is as multifarious as can be imagined. Blank items of Chinese clothing are illicitly labeled in Vietnam and then shipped to Europe by freight – popular Asian ports include Manila and Jakarta. But there are also falsified medicines repackaged in Myanmar (along with “unfathomable quantities of high-profit methamphetamine”) and airmailed. Many of the routes also stay in Asia, with local consumption of illicit tobacco fuelled by routes hacked through the Yunnan-Laos border jungles. The same paths are also trodden by smuggled migrants, heroin-bearing couriers, and middlemen who trade in endangered wildlife products and illegal timber.
It’s clear that these activities are not taking place solely at a “victimless” level because their occurrence relies on the transnational scale, financial misdirections, and logistical systems common to large criminal networks. It’s even been documented that some organizations engage in intra-gang trading of counterfeit goods for drugs, or other illegal services, in order to lessen their own exposure to detection.
What’s also clear is that at a global level the activities of organized crime gangs have a very specific effect on the most vulnerable members of societies. According to Niall Hamilton-Smith, Senior Lecturer in Criminology at the University of Stirling, “crime flourishes in communities that remain vulnerable, disadvantaged and fractured.” When organized crime gangs are allowed to grow in importance, poorer regions become “feeding grounds,” and “mental health, drug addiction, debt, family dysfunction, and troubled childhoods are all vulnerabilities to be milked for profit.”
This report recognizes that in Southeast Asia, those legions of drivers, factory bosses, corrupt pharmacists, poachers, and many others besides those who take part in these and other criminal acts are linked to one another and to consumers in a way that causes humanitarian harm to individuals and groups. It’s time that nation-states, the media, and especially the general public, also recognized these links and worked collectively to end counterfeiting and its attendant ills.