South East Asia and the Global Counterfeit Economy
Mark Barrett
Senior Customer Success Manager | 10+ Years in Brand Protection | Thought Leader
For many brand owners China has historically been the largest market for both the production and sale of counterfeit goods. The country’s population and economic significance mean it’s unlikely to loose that title anytime soon but the combined role of several smaller countries in South East Asia are fast outpacing China to create what could become one of the new global epicentres in the counterfeit economy in a few decades.
Whilst SEA countries are slowly becoming a growing source of counterfeits, shipments from China currently account for a significant share of fakes sold on many popular SEA online marketplaces such as Tokopedia and Bukalapak. This includes Chinese sellers who use SEA platforms to market their products but also goods imported into SEA from China. In comparison to their much larger neighbour, many SEA countries lack the same level of infrastructure for preventing counterfeit goods from leaving their borders with very minimal or non-existent IP border protection systems in most cases. The comparatively low number of seizures make many SEA countries an attractive option from which counterfeiters can ship internationally. But what about the longer term? As global trade patterns continue to evolve, spurred on by ever growing geopolitical tensions between the US and China, it’s not hard to see SEA playing an even bigger role in the global manufacturing sector over the next few decades. Many Western firms have already started to look beyond China for manufacturing simply due to the growing labour costs in the country — $8.31 per hour compared to $3 in many of its SEA neighbours. With many of the most counterfeited brands residing in the Western world we could be looking at a future where a shift in manufacturing to SEA helps create the ideal environment for the production of high-quality counterfeits as has been the case in China since the 1980s. The formation of the Association of Southeast Asian Nations (ASEAN) in the 1960s has played a major role in developing the region economically over the last several decades and drive international trade and exports. The ASEAN members collectively now account for approximately 8% of global exports placing them on par with the USA. As many developed nations in the Western world have seen a decline in their share of exports over the last 30 years, the ASEAN members have, alongside China, plugged that gap.
Fortunately the growing dominance of the region in the counterfeit world hasn’t gone entirely unnoticed by many of the major online platforms. Lazada, part of the Alibaba Group, kickstarted the region’s first e-commerce anti-counterfeiting consortium in 2022 in partnership with several Western brands. The SeCA Working Group is intended to facilitate an open dialogue and information exchange between online platforms and IPR owners. There are also hopes it will be able to educate the public on IPR matters in the online environment. Social media e-commerce has become an increasingly popular channel for counterfeiters in recent years. Meta entered social media e-commerce arena in 2016 with Facebook Marketplace and ByteDance, the parent company of TikTok and Douyin, are one of the latest social media networks to follow suit. Indonesia was one of the first adopters of the new TikTok Shop in 2021 and became one of it’s largest markets. However, in a bid to protect small business from competition the Indonesian government passed new legislation banning TikTok Shop in the country and there are signs that Malaysia could adopt similar legislation. Whilst not intended specifically to curb the sales of counterfeits, Indonesian officials commented that e-commerce can be a force for good but only in a well-regulated environment. As many consumers start to look towards social media e-commerce as a preferred shopping destination it’s hard to deny that Indonesia’s new regulation could be a positive move for restricting the sale of counterfeits in the region.
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For over 10 years China has dominated so much of the discussion around anti-counterfeiting and brand protection that it can feel as though SEA has been quietly growing in its shadow. For most brands China remains the largest market for counterfeits and it’s likely there will never be a country in SEA that will challenge that. However, the economic integration in the region and its growing trade flows with China mean that SEA is no longer a market brand owners can afford to ignore. Registering the necessary IPR in the relevant territories should be a key part of future brand protection and IP strategy. Proactive monitoring and enforcement of SEA online platforms in addition to offline enforcement will be crucial in containing the counterfeit problem as the region continues to grow domestically and through its trade with its well-known neighbour.