Germany : Product piracy continues to cause great damage in the mechanical engineering industry

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VDMA 2018 study: Another 7.3 billion euros in damages - China remains by far the biggest plagiarist - Counterfeits are a security risk.

Product piracy and know-how theft continue to cause considerable damage to German machine and plant manufacturers despite many defensive efforts. Counterfeits from China remain by far the biggest source of danger. "In spite of many announcements, nothing has really improved here in the past two years," said Steffen Zimmermann, Head of the VDMA* Competence Center Industrial Security, about the results of the study Product Piracy 2018, which the association presented at the Hanover Fair.

According to this survey, 71 percent of machine and plant manufacturers in Germany are affected by product or brand piracy. The estimated damage amounts to 7.3 billion euros per year.

Compared to the previous study of 2016, the absolute corporate loss has thus not changed. However, for 39 percent of those surveyed, the damage and threat to their companies from product piracy has further intensified in the past two years. Converted into jobs, a loss of 7.3 billion euros corresponds to almost 33,000 jobs. "In addition to the loss of sales and jobs, there are other consequences in the companies affected that are difficult to assess in monetary terms, such as loss of image, loss of market advantage or unjustified claims for recourse," explained Zimmermann.

Counterfeits are a security risk

The VDMA has conducted the study on product piracy every two years since 2003. For the first time this year there has been a change in counterfeit products: While previously the focus was on purely technical imitations, imitations of the external appearance or entire brands are now increasingly becoming a problem. Plagiarists want to profit from the good image of a company through optical imitation. Counterfeit products are a verifiable security risk, though: 36 percent of companies report counterfeits that pose a risk to operators or users or the environment. It is also worrying that the distribution of counterfeit products via B2B-platforms on the Internet has increased sharply - from 28 percent in 2016 to 40 percent now.

China remains the biggest plagiarist

The People's Republic of China remains the undisputed leader both in sales and especially in the production of counterfeit products. 82 percent of the companies surveyed named China as the place of origin of counterfeit products. The country is also the most frequently mentioned market (44 percent) for counterfeit products. German domestic competition follows the Chinese in this field by a clear margin. The theft of ideas in the neighborhood is declining - only 19 percent cited German companies as a source of plagiarism. In 2016, the figure was 24 percent. Italy follows closely behind (18 percent cited).

The Chinese counterfeit products are not only produced for local sales, but are also marketed worldwide. "VDMA members - even in Germany - often report to us about dealers and counterfeiters who resell their plagiarisms with only minor changes despite legally binding judgements or who are found undiminished at trade fairs even after numerous plagiarism cases," criticizes Zimmermann. "Local activities - i.e. in typical plagiarism countries - are not nearly sufficient to adequately support companies in the fight against plagiarism.

Two thirds of the companies are fighting back

In the case of plagiarism, the means of choice is to enforce the applicable rights at first out-of-court and then under civil law. However, more than a third of the companies concerned are not taking any measures. This is particularly true of small and medium-sized enterprises, but also depends on the knowledge of the specific counterfeiter. There is great disappointment among the companies surveyed about the support abroad. 85 percent of those affected complain about a lack of support from the respective authorities, 83 percent lack the necessary commitment of the local trade fair companies abroad. <

* The VDMA represents more than 3,200 member companies in the SME-dominated mechanical and systems engineering industry in Germany and Europe. VDMA was founded in November 1892 and is the most important voice for the mechanical engineering industry in Europe. In total, approximately 500 VDMA employees work for the members worldwide.

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The study Product Piracy 2018 was conducted by the Fraunhofer Institute for Applied and Integrated Security (AISEC) based on a survey of VDMA members in March/April 2018. Nearly 140 member companies from the mechanical engineering sector took part in the survey. A good half of these were companies with annual sales of up to 100 million euros.