A cover of the “Illicit Trade and the Korean Economy” (Image courtesy of the Korean Intellectual Property Office)
SEOUL, Jul. 5 (Korea Bizwire) – A recent report from the Organization for Economic Cooperation and Development (OECD) has disclosed that counterfeit products violating the intellectual property rights of South Korean firms total $9.7 billion each year, a staggering 1.5% of the nation’s overall exports.
The study, commissioned by the Korean Intellectual Property Office (KIPO) and titled “Illicit Trade and the Korean Economy,” marks the first time the OECD has analyzed the economic impact of counterfeit goods on South Korean businesses.
According to the report, one in every two counterfeit items of South Korean origin circulating globally is an electronics product. The breakdown of affected sectors for 2020 and 2021 shows electronics leading at 51%, followed by textiles and clothing (20%), cosmetics (15%), accessories (6%), and toys and games (5%).
The primary sources of these counterfeit goods were identified as Hong Kong (69%) and China (17%), highlighting the challenges faced by South Korean companies in protecting their intellectual property in key manufacturing hubs.
The OECD report acknowledges South Korea’s high level of innovation and global integration, noting that these factors have been crucial in driving the country’s productivity and competitiveness. However, it also points out that this deep integration into global value chains makes South Korean firms particularly vulnerable to intellectual property theft and counterfeiting.
The economic impact of this illicit trade is substantial. The OECD estimates that South Korean companies lose $6.1 billion in domestic and international sales due to counterfeits, accounting for 0.6% of total manufacturing sales. The electronics and automotive sectors are the hardest hit, with losses of $3.6 billion and $1.8 billion respectively.
Moreover, the report suggests that counterfeiting led to the loss of 13,855 manufacturing jobs in South Korea in 2021, representing 0.7% of the sector’s workforce. The government is also affected, with an estimated $1.57 billion in lost tax revenue for the same year.
KIPO commissioner Kim Wan-ki emphasized the severity of the issue, stating, “The distribution of counterfeit goods not only damages individual company brands but also significantly impacts our national economy through lost sales, jobs, and tax revenue.” He pledged to strengthen support for South Korean companies to minimize intellectual property infringement abroad based on the findings of this OECD study.
Ashley Song (ashley@koreabizwire.com)
