Counterfeit capital: but Beijing may get tougher on piracy as China’s own inventors demand better protection

The counterfeit market used to be a furtive business. It was typified by dodgy street hawkers who claimed their stash fell off the back of a truck. The fast-talking vendors would peddle fashionable brands of handbags, sunglasses and watches – although the discerning buyer would easily identify them as fakes.

Now, however, the market has become a multi-billion-euro black economy. The fake luxury brands are sold alongside fake DVDs and CDs, fake cigarettes, fake toys, fake food and drinks, fake medicines, fake electrical appliances, fake car parts, and even fake money. They are often produced so slickly – right down to brand identifiers, like special hologram labels – that even savvy shoppers are duped. And where once they were only found on street corners and flea markets, they are now widely available in supermarkets, pharmacies and, of course, on the internet.

It is not just that there is more phony stuff out there. It is also better-made, easier to get, and takes a bigger bite out of legitimate business.

These myriad factors explain why the EU’s response to the rise in piracy and counterfeiting covers a broad range of different policy areas, yet is still inconsistent. Counterfeiting is no longer just a legal problem for top name brands. It is a threat to the wider European economy, which depends heavily on its creative businesses. It is a global phenomenon, requiring diplomatic initiatives with the countries that copy. It is a health and safety issue that can expose people to dangerous products. And if Europe is to shun the fakes, it needs not just vigilance, but educated, conscientious consumers.

The latest EU figures on seizures of fake goods hint at what the authorities are up against. Customs officials across the 27 member states seized 178 million fake items in 2008, up 125 percent from 2007, the European Commission said in July. But these are just what the EU catches; it is a fraction of overall trade in fakes. The World Customs Organisation puts the size of counterfeit sales globally at around €500 billion, or up to 10 percent of all trade – a figure that is expected to rise further as the recession gnaws into our wallets.

The EU figures also reveal the changing nature of counterfeit trade: despite the surge in illegal downloads, pirate DVDs and CDs were the most prevalent fake goods – 44 percent of all items. Th......