China’s Product Piracy Rate Highest in the World


2005-05-19
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Customers look at fake cd's of local and Asian artists at a music store in Beijing Photo: AFP

WASHINGTON—Trademark and copyright piracy in China is still surging, and little is being done to bring the problem under control, experts said.

Speaking at a Congressional-Executive Commission on China discussion, Eric Smith—president of the International Intellectual Property Alliance—called product piracy rates in China “the highest in the world.”

In movies, music, and software, Smith said, pirated products account for 90 percent of the market. “That means,” Smith said, “nine out of 10 [product] copies available in China are pirated.”

Smith, who represents some 1,300 companies producing and distributing copyrighted materials, cited what he called inadequate efforts by China’s government to enforce intellectual property rights.

“We have been, and the U.S. has been, asking now for 15 years, really, for the Chinese to undertake an enforcement program that has deterrent penalties, and we have yet to really see it.”

Counterfeiting aids local economies

International trade law expert Daniel Chow said Beijing shows no political will to crack down on violators, possibly because counterfeiting supports local economies.

“Shutting down counterfeiting will mean in many instances shutting down entire towns and municipalities, which causes problems of unemployment, dislocation, and social chaos—which is something that the Chinese government fears more than anything else,” Chow told the Commission.

Shutting down counterfeiting will mean in many instances shutting down entire towns and municipalities, which causes problems of unemployment, dislocation, and social chaos—which is something that the Chinese government fears more than anything else.

Retailers now come to wholesale markets near China’s major cities, buy counterfeit goods, and take them back to street kiosks, stalls, and small retail stores where they are purchased by consumers, Chow said.

Chow also said U.S. industries doing business in China estimate annual losses to counterfeiting in the billions to tens of billions of dollars.

“The [Chinese] government itself estimates that the counterfeit trade in China is between $19 billion and $24 billion per year,” Chow said, “and [accounts for] about 8 percent of its gross national product.”

Chinese exports of counterfeit products may now rise, he added, because in 2004, China scrapped the export monopoly of state-owned trading companies in accordance with WTO rules.

'We have to be optimistic'

Before this, Chow said, counterfeiters had to seek the cooperation of state trading companies in order to export counterfeit goods.

James Zimmerman, who runs the Beijing office of the U.S. law firm Squire, Sanders & Dempsey LLP, said China has taken steps to stop piracy.

Zimmerman, whose firm represents multinational clients in China, said Beijing has rewritten laws, amended regulations, adopted rules and standards, and improved its court system.

Poor coordination among Chinese agencies responsible for enforcement is a problem, though, Zimmerman said, adding that China must dedicate “more resources” to the issue.

“We have applied or petitioned on behalf of clients to invalidate infringing trademarks, and we have been told by [China’s] trademark staff that they have over 20,000 cases that they are still dealing with—cases that were filed in 1999," Zimmerman said.

Zimmerman said that Chinese government officials have given assurances that they take the problem seriously. “I’m optimistic,” Zimmerman said. “We have to be optimistic.”

Original reporting by Richard Finney in Washington. Produced for the Web by Sarah Jackson-Han.

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