COMBATTING ILLICIT TRADE. Country Spotlight: United Kingdom

Transcription

1 COMBATTING ILLICIT TRADE Country Spotlight: United Kingdom

2 Quality assurance key to reducing illicit trade British stakeholders executives, policy-makers and law enforcement estimate illicit trade to be close to the European average but growing fast over the last three years, with a 5% increase for all products and a 9% jump in medicines. British consumers view illicit trade similarly to their European counterparts. They estimate roughly of all goods bought are illicit (compared with 11% for all of Europe). But they express significantly less doubt than the region overall that the goods they have purchased might possibly be illicit (16% compared with 27% for all of Europe). British consumers are composed of fewer Opportunists* (34%) and significantly more Activists (23%) and Bargain Hunters (15%) than the European average. For Opportunists, improving quality assurance and reducing the cost of products would have the greatest likelihood of steering shoppers away from illicit channels these also ranked highest for Bargain Hunters. For both Critics and Activists, an increased chance of prosecution would deter them from seeking illicit goods in addition to raising fines and penalties and clarifying that the merchandise is legitimate. Over the next three years, executives plan to focus on collecting intelligence about illicit patterns and collaborating with others (both 47%). And 46% plan to use digital technologies to authenticate products. Policy officials will provide business guidance and discussion forums (56%); they will also coordinate policy with other departments, and update legislation and legal frameworks (both 47%). British law enforcers will concentrate on collaborating with policy-makers and public-sector officials (51%), and e-commerce suppliers, couriers and depots, as well as training law enforcement officers about the latest developments (both ). * Note: See definition of consumer segments on slide 10. 2

3 Illicit trade growth is highest for medicines 16% In your country, how much of total consumption do you estimate is illicit? How much has illicit trade in your country increased in the last three years? United Kingdom, stakeholders 14% 12% 8% 6% 13% 13% 12% 14% 13% 12% 4% 9% 2% 5% 2% 3% 3% 6% 0% Total products Cigarettes Alcohol Films Clothing Medicines Total consumption estimated as illicit today Increase in illicit trade in the last 3 years Source: Oxford Economics stakeholder survey, British business executives, law enforcement, and policy officials respondents, n=228 3

4 Possibly illicit sales are below European averages 60% How likely are some of the products that you ve purchased been illicit? All countries vs. the United Kingdom, consumers 50% 19% 11% 30% 20% 11% 27% 16% 13% 21% 16% 15% 9% 24% 6% 12% 35% 16% 20% 34% 9% 19% 8% 23% 8% 14% 0% All countries UK All countries UK All countries UK All countries UK All countries UK All countries UK Total products Cigarettes Alcohol Films Clothing Medicines Possibly illicit Illicit Source: Oxford Economics consumer survey, British respondents, n=1,018 4

5 Motivation / outlook COUNTRY SPOTLIGHT: UNITED KINGDOM To change consumer behaviour, focus on quality assurance Critics Activists 28% 23% Increase chance of prosecution 57% Clarify goods are legit 71% Clarify goods are legit 57% Raise fines and penalties 70% Raise fines and penalties 55% Track illicit goods 68% Product Social Opportunists Bargain Hunters 34% 15% Assure quality 71% Assure quality 80% Reduce cost 69% Reduce cost 77% Increase availability 68% Remind illicit harms legit firms 68% Possibly illicit Complicity to buy illicit Illicit Source: Oxford Economics consumer survey, British responses, n=531 5

6 Business execs will target many activities to fight illicit trade 60% Which of the following initiatives aimed at reducing illicit trade have you carried out or do you plan to carry out? United Kingdom, business execs 50% 30% 20% 54% 30% 41% 42% 42% 41% 39% 38% 37% 39% 42% 47% 46% 47% 32% 31% 30% 0% Change product design Product advertising & promotion Supply chain tracking, monitoring & reporting Change Change the manufacture or price, quality, or packaging service Supply-chain contractual controls Collect intelligence about consumer attitudes Share info with others Collaborate with others Product authentication using digital technology Collect intelligence about illicit trade patterns Consumer awareness campaign Implemented over last 3 years Plan to implement over next 3 years Source: Oxford Economics stakeholder survey, British business executives respondents, n=151 6

7 Policy officials will focus on providing guidance 60% Which of the following initiatives aimed at reducing illicit trade have you carried out or do you plan to carry out? United Kingdom, policy officials 50% 30% 20% 53% 31% 47% 34% 47% 47% 31% 31% 25% 56% 47% 41% 41% 31% 31% 38% 0% Collect information on illicit trade patterns Coordinate policy with other departments Collaborate with international organizations Update legislation and/or legal frameworks Change penalties for businesses Consumer awareness campaign Business guidance and/or discussion forums Update penalties for criminals Change penalties for consumers Change penalties for retailers Implemented over last 3 years Plan to implement over next 3 years Source: Oxford Economics stakeholder survey, British policy officials respondents, n=32 Note: Findings are indicative because of low sample size. 7

8 For law enforcement, collecting information was key 70% Which of the following initiatives aimed at reducing illicit trade have you carried out or do you plan to carry out? United Kingdom, law enforcement officers (1/2) 60% 50% 30% 62% 20% 33% 51% 47% 38% 33% 51% 22% 0% Automate manual customs procedures Collaborate with e- commerce suppliers, couriers and depots Collaborate with international organizations on joint initiatives Collaborate with others in your industry/trade associations Collaborate with others to identify high-risk imports Collaborate with policy makers & public sector officials Collect information on illicit trade patterns Data analytics to target enforcement Implemented over last 3 years Plan to implement over next 3 years Source: Oxford Economics stakeholder survey, British law enforcement respondents, n=45 Note: Findings are indicative because of low sample size. 8

9 but future efforts will focus on enforcement and tracking 70% Which of the following initiatives aimed at reducing illicit trade have you carried out or do you plan to carry out? United Kingdom, law enforcement officers (2/2) 60% 50% 30% 20% 47% 47% 53% 58% 33% 31% 29% 47% 0% Improve compliance with existing policies and procedures Increase random searches at new locations Launch anti-corruption initiatives Measure effectiveness of enforcement initiatives Monitor & track shipments Product authentication using processes or tech Train law enforcement officers about latest developments Implemented over last 3 years Plan to implement over next 3 years Source: Oxford Economics stakeholder survey, British law enforcement respondents, n=45 Note: Findings are indicative because of low sample size. 9

10 How do we define consumer segments? GLOSSARY OF TERMS Critics 32% Activists 14% Critics buy goods illicitly because of societal factors such as believing there is nothing wrong with illicit sources, no chance of being caught, and that others do it. They have experienced faulty and inferior illicit products more than any other group, perhaps explaining why they don t actively seek to purchase through illicit channels. Activists are strongly opinionated about social factors. They perceive illicit trade is a victimless crime, so decisively choose to purchase illegitimately. The low chance of detection and view that lots of people engage with illicit across society may embolden Activists to pursue illicit avenues. What is the matrix? The consumer matrix analyses total illicit purchases across the five product categories. A consumer may appear in the matrix more than once, as they can buy multiple products. What will most influence consumers to change their behaviour? Strategies to modify behaviour Assure quality Reduce cost Increase availability Clarify goods are legit Track illicit goods Opportunists Bargain Hunters 14% Opportunists are motivated to purchase illicit by product factors such as price, quality and accessibility. They may buy illicit goods as opportunities present themselves, rather than actively seeking them out. This group, more than any other, finds that illicit goods are available at lower prices than legitimate alternatives. Raise fines and penalties Communicate wider implications Increase chance of prosecution Publish names involved in illicit Remind illicit harms legit firms Description Bargain Hunters prioritise pursuing better deals, resulting in their engagement with illicit products. Quality, availability and price are their main drivers, which Bargain Hunters state are just as accessible in illegitimate markets. In fact, more than any other group, they insist that illicit markets offer identical products and significantly lower costs. Note: Figures above reflect the European averages for all countries combined. Only consumers who said they had likely or possibly purchased goods illicitly are included in this segmentation. What do we mean by illicit trade? By illicit trade we mean products or services that are not authentic and/or not bought through official distribution channels. Consumers total illicit purchases include both known illicit and possibly illicit purchases. Providing quality assurance, warranty, reward schemes and after-sales service of legitimate goods Reducing the cost of the legitimate good (e.g., reducing the tax) Increasing the availability of legitimate products (e.g., quicker, better distribution) Clarifying that goods are legitimate (e.g., supplier, website, and product authentication or certification) Knowing that retailers and/or law enforcement can track and identify illicit products Raising fines and penalties for buying illicit products Understanding consequences of buying illicit goods (e.g., health risks, funding organised crime/terrorism) Increasing the likelihood of being punished for buying illicit goods Publishing the names of those caught distributing and purchasing illicit goods in local media Making clear how buying illicit goods hurts law-abiding companies and their workers

11 ABOUT THIS STUDY Combatting Illicit Trade: Understanding perspectives and strategies is a study produced by Oxford Economics and financed by PMI IMPACT, a global grant initiative by Philip Morris International to support projects dedicated to fighting illegal trade and related crimes. Our research explores the reasons for the growth of illicit trade in the following sectors: cigarettes and tobacco; alcoholic beverages; films, music, and games; clothing, footwear and accessories; and medicines and pharmaceutical healthcare products. Importantly, the study s key goal was to identify effective ways to reduce illicit trade, by looking at the issue from four different perspectives: the motivations of consumers, the strategies of business executives, the decisions by policy-makers and the efforts of enforcement agencies. To explore these issues, we carried out two large-scale surveys across 37 European countries, with more than 45,000 respondents in our final data set. The survey was conducted between November 2017 and February 2018, over the telephone in the respondent s native language or online. In addition, we conducted 15 one-on-one interviews with business executives, policy-makers, academic experts and law enforcement officials. We thank all who participated for their time and insight. The full results of our study s findings, including a White Paper, 37 country analysis slideshows, the final dataset (in Excel format), an interactive dashboard and the study s methodology, can be accessed on Oxford Economics website by clicking the following link: About Oxford Economics Oxford Economics is one of the world s foremost independent global advisory firms, providing reports, forecasts and analytical tools on 200 countries, 100 industrial sectors and over 3,000 cities. It employs more than 150 professional economists, industry experts and business editors one of the largest teams of macroeconomists and thought leadership specialists. 11

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