MEXICO: Piracy, Contraband Account for Over Half of Sales in Many Industries

By IPS Correspondents Reprint | | Print |

Diego Cevallos

MEXICO CITY, Jan 3 2005 (IPS) - In Mexico, 58 percent of all clothing sold is contraband or pirated, as is 60 percent of sound recordings, 55 percent of software, 90 percent of cigars and 66 percent of sports shoes.

Earnings from smuggled and counterfeit goods amount to between six and 10 billion dollars a year in Mexico, where these illegal products are sold openly, even right below the noses of the police and other authorities.

“A lot of stuff is sold here, because people find affordable products,” Fabián, a street vendor hawking pirated CDs, told IPS.

Fabián’s stall is located less than 500 metres from the attorney-general’s office, which is in charge of cracking down on the smuggling, manufacturing and sale of illegal goods.

Mexico ranks third in the world, after Russia and China, in sales of pirate CDs, according to the International Federation of the Phonographic Industry (IFPI). Annual sales of bootleg CDs total around 400 million dollars in Mexico.

“They (the police) rarely bother me, but when they do come around, I just have to stay away for a while, until things calm down,” said Fabián, while the stereo in his stand blasts a popular song.

There are around 55,000 stalls like Fabián’s in Mexico, where 105 million pirated sound recordings are sold annually, 40 million more than the total number of legal copies.

A number of these stands are found in Tepito, which is located near the historic centre of the Mexican capital and is one of the world’s biggest markets for counterfeit products.

A wide range of pirated and smuggled goods, including drugs and high-powered weapons, can be found in this enormous street market, which never closes.

Such goods are also sold all over Mexico, where more than 10 million people, out of a total population of 102 million, work in the informal sector, and eight million sell contraband or counterfeit products.

Representatives of the attorney-general’s office say efforts to fight piracy and smuggling are ongoing and constant, but that the phenomenon is a broad one and extremely difficult to eradicate.

>From January to October 2004, the police seized and destroyed more than 76 million counterfeit products. But that is just a drop of water in the ocean.

Peddlers of pirated goods, most of whom hawk their wares at stands in markets like Tepito, are able to offer films, music, video games or software long before legal copies appear on the market in Mexico.

“The crude reality is that Mexico is flooded with contraband and pirated goods, which leads to the loss of hundreds of jobs and costs the state a great deal of money,” Tony Kuri, president of the National Chamber of the Apparel Industry, commented to IPS.

According to Kuri, the garment industry lost some 10 billion dollars last year to competition from illegal products as well as theft of merchandise.

The special unit on federal crimes, set up by the attorney-general’s office, reports that the sectors hit hardest by counterfeiting and smuggling are the music industry, video games, books, clothing, footwear, toys, watches and clocks, telecommunications and software.

In Mexico, 22 million legal copies of films are distributed annually every year, compared to nearly 30 million pirated copies, according to official statistics.

Business associations in the audiovisual industry estimate their annual losses due to counterfeiting and bootleg copies at one billion dollars.

With respect to the textile industry, 58 percent of garments sold in Mexico were either smuggled in or produced in the country as counterfeit brand-name products.

In terms of software, it is estimated that of every 100 products sold, 55 are illicit.

The Mexican Association of Cigar Manufacturers estimates that 90 percent of the cigars sold in Mexico are the product of contraband or piracy.

And Roberto Castañeda, the head of the Alliance Against Piracy, a non-governmental organisation, says that two out of three pairs of sports shoes sold in Mexico are fake brand-name products or came into the country as contraband.

The garment industry’s Kuri blames sales of counterfeit or smuggled goods on lax law enforcement, a lack of education and awareness on the part of consumers, and the economic difficulties faced by many Mexicans, half of whom live in poverty.

The price difference between legal products and bootleg copies can amount to more than 300 percent.

Laws were passed in October 1999 to make trade in counterfeit and contraband products a serious crime in Mexico, punishable by prison sentences instead of fines.

Also announced at that time was the start of infiltration by the police in criminal organisations involved in the illegal trade, while an aggressive media campaign was launched to fight piracy. But the problem has not let up, and there seems to be no end in sight, complained Kuri.

The Mexican Association of Studies for the Defence of the Consumer (AMEDC) says pirated products are harmful to both consumers and producers, and that the only way to fight the phenomenon is through stepped-up police enforcement and by providing consumers with more information, and affordable quality products.