HONG KONG/THE HAGUE: China and Hong Kong are by a wide margin the largest shipment centres for counterfeit goods sold around the world, according to a new report from the European Union.

The 2017 Situation Report on Counterfeiting and Piracy in the European Union was released at the end of last week by the European Union Intellectual Property Office (EUIPO) and Europol, the EU's law enforcement agency.

And it revealed Hong Kong and mainland China "were the provenance of 86% of global counterfeiting and US$396.5bn worth of counterfeit goods", the Straits Times reported.

"China remains the key country of provenance for counterfeit goods, and Hong Kong acts as a transit point for goods originally manufactured in China, but other countries also have specific trading characteristics," the report noted, in a reference to Turkey, Thailand, Singapore and other countries of concern.

Singapore was found to be a significant contributor to the German, Belgian and Italian caseload statistics in 2015, particularly regarding mobile phones, while Thailand was described as a "notable country of provenance" with specific links to the UK and Germany.

However, China and Hong Kong stood out in the report because of the sheer volumes produced and transported from the two territories.

"China has long been recognised as the engine of the global counterfeiting industry. Counterfeit goods are estimated to amount to approximately 12.5 % of China's total exports and over 1.5 % of its GDP," the report said.

"This results in estimations that 72% of counterfeit goods currently in circulation in three of the world's largest markets for such products, namely the EU, Japan and the USA, have been exported from China."

It added that Hong Kong, while not a leading counterfeit manufacturing hub in its own right, nonetheless appeared to play "a major role in handling illegal exports destined for locations outside of Asia".

Hong Kong's airport was said to play a significant role in the "illegal supply chain for IPR-infringing goods destined for the EU" and, furthermore, the report expressed concern about shadow Hong Kong companies operating in mainland China.

"Hong Kong shadow companies are increasingly being used to engage in counterfeiting and other infringing activities in China," the report said.

"These companies do not generally conduct business in Hong Kong, but carry out counterfeiting and other illegal activities in mainland China under the Hong Kong company name, with the intention of misleading consumers and avoiding legal liabilities in mainland China."

Data sourced from EUIPO, Europol, Straits Times; additional content by WARC staff