Counterfeiting on the rise in mechanical engineering sector

Europe’s mechanical and plant engineering sector lost an estimated €7.6bn to product privacy and counterfeiting last year, according to industry body VDMA.

That is a €300m increase on the previous report for 2018, says the organisation, which represents around 3,300 member companies – mainly small- and medium-sized enterprises – across the mechanical and systems engineering industry in Germany and Europe. The average damage to affected companies was 4.9 per cent of annual sales.

The report (in German) notes that a 74 per cent of companies in the German mechanical and plant engineering sector – a new all-time high – are affected by product or brand piracy. For companies with more than 500 employees, the rate is around 90 per cent.

A turnover of E€7.6bn would secure almost 35,000 jobs for the industry, it estimates.

There is also a sense among its member companies that counterfeiting is on the increase, with 52 per cent of its members reporting that they feel more threatened by product piracy than in previous years.

“The reproduction of individual product components and design imitations are the most common forms of counterfeiting, says the VDMA, which is also concerned about the risks posed by inadvertent use of falsified products.

“Product piracy does not only cost sales and cause damage to companies,” it says. “Plagiarism demonstrably represents a safety risk,” for example through the use of counterfeit fittings that do not guarantee a clean drinking water supply.

“According to the survey, 36 per cent of companies said they had seen counterfeits that posed a risk to operators or users of machinery, and a shocking 57 per cent said they would compromise the safe operation of a system.

The reproduction of individual product components and design imitations were the most common forms of counterfeiting reported by respondents.

All told, 61 per cent of counterfeits originated in China, with Germany the source of 19 per cent and another 12 per cent coming from Russia, according to the report.

Only 45 per cent of the companies thank that the legal avenues for fighting this type of activity are for purpose, and that is reflected in an unwillingness to start legal proceedings against transgressors.

Only 26 per cent of respondents take to the courts to fight the illicit trade, down 13 per cent on the prior year. 49 per cent take no action whatsoever, rising to two-thirds of all SMEs surveyed.