Shanghai at Night
In many parts of the world, rampant pirating of products takes its toll on businesses costing billions of dollars of lost sales and value. While countries like Iran violate rampantly with no signs of improvement, others are slowly making changes.
China is one of the countries under the spotlight because it is growing incredibly fast and so many manufacturing jobs have fled to the country and in return, many there aren’t paying the originators for software, movies, music and various other products.
The US has complained to China for years and although there hasn’t been much progress, there has at least been the promise of progress from the country’s leaders. This is why I called the Apple App Store the OPEC of the West in June of last year. My thinking was, even though I am not a fan of closed app stores, at least Apple is ensuring people get paid for their hard work. And there is at least $53B worth of pirated software in use according tot he BSA and IDC. Of course jailbreaking takes away this protection but the majority of users don’t seem to be jailbreaking their iOS devices.
But now Chinese authorities are getting into the act of protecting intellectual property (the other IP ). Recently they announced 3,001 people have been arrested for rampant product piracy and seized fake or counterfeit medicines, liquor, mobile phones and other goods.
This is an important move for a country slowly embracing capitalism as the American Chamber of Commerce in China says 70 percent of its member companies consider Beijing’s enforcement of patents, trademarks and copyrights ineffective.
Of course the move by Chinese authorities has more to do with self-interest than listening to what the west has to say. In fact the reason for the recent enforcement efforts have to do with Chinese companies themselves who aren’t able to make a living producing new brands, products and software because there is significant infrastructure in place to copy and illegally distribute virtually anything.
And Chinese authorities are not content to just be the manufacturing arm of brands invented elsewhere. The want to move up the chain and gain an even larger piece of the revenue associated with product sales.
Although this is a small step in the right direction, if it continues, we could see many more sales being made legitimately. And for the world’s brands from luxury purses to movies and smartphones, this could mean potentially hundreds of billions of dollars of additional revenue if not more over time.