New study reveals costly impact of counterfeit smartphones

shutterstock_400240357_600x310The effect of counterfeiting on smartphone sales worldwide is estimated at 184 million units, valued at 45.3 billion EUR or 12.9% of total sales, according to a new report from the European Union Intellectual Property Office (EUIPO), in collaboration with ITU.

The study, which aimed to estimate the economic impact of counterfeiting in the legitimate sector, analysed the number of smartphones sold in 90 countries in every region in the world, based on point-of-sale tracking of consumer purchases.

In the European Union alone, 14 million fewer smartphones were sold by the legitimate industry than would have been the case in the absence of counterfeiting. This translates to approximately 4.2 billion EUR lost due to the presence of counterfeit smartphones, according to the report.

Globally, according to available data, 12.9% of legitimate sales were lost due to counterfeiting.

counterfiet tale 1.PNG

The bar indicates the impact of counterfeiting on the legitimate sector’s sales, expressed as a percentage of sales, while the diamonds indicate the 95% confidence interval of that estimate.

Reading the data

China accounts for 36% of sales lost worldwide.

In absolute terms, lost sales in North America and Latin America are quite similar although in relative terms, the losses in Latin America are almost three times higher.

The five biggest EU Member States (France, Germany, Italy, Spain, UK) account for EUR 2.9 billion lost due to counterfeiting, nearly 70% of total lost sales in the EU.

Non-economic effects

However, this is not only an economic issue.

“Counterfeiting affects economic growth as well as consumers’ health,” says ITU Telecommunication Development Bureau Director, Brahima Sanou. Counterfeit smartphones represents a significant health risk as hazardous substances may be present in the manufacturing of the device.

Cybersecurity is another issue, especially given that smartphones are rapidly becoming the primary way to access to the Internet. With the rising use of digital financial services such as MPesa, the risks of cybersecurity-related threats such as malware or other security breaches pose a significant risk to consumer privacy.

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