Boy, was I pissed off last night.

After a hard day’s work, I walked into my local DVD shop to find absolute rubbish.

For the first time, I noticed an array of price stickers all over the DVDs, all the way up to 40 RMB (US$6). I asked the attendant what the hell was going on, knowing 10 RMB was standard for any flick previously.

Well, China just began cracking down on sales of pirated Hollywood movies in the run-up to the Olympics. The store now would have to sell legal copies.

To add insult to injury, the DVD shop replaced its hot new fake movie collection with pricier old movies.

When I asked if there were any cheaper (fake) DVDs available still, the attendant pulled out a pitifully small box of randomly organized movies. I did an about-face and walked out.

Friends have confirmed the pirated DVD crackdown is city-wide, with tales of being led through back doors and down alleys just to find the good stuff. Suddenly, us expats are looking more like junkies.

Could Beijing finally be putting an end to piracy?

It’s hard to say at this point, with just a month left until the Games.

The city desperately is trying to “clean” up its act, from ridding the skies of smog to cracking down on anything that would potentially botch Beijing’s chance at becoming world-renowned for a world-class Olympics welcome.

Months after the Games, with just us knowing expats left, the pirates could come back out of the closet. That seems increasingly unlikely, though, as China’s top brass is railing against piracy. Counterfeits in China soon are to be a thing of the past, if we are to believe a recent editorial in The Wall Street Journal by Wang Qishan, vice premier of China’s State Council.

There’s no doubt that a climate of piracy is bad for legitimate business, as it detracts from legitimate sales.

But generally, it’s not nearly one of the biggest business obstacles.

Of 324 companies surveyed in AmCham-China’s 2008 White Paper, only 3 percent of companies said intellectual property rights (IPR) infringement was the top challenge. Only 21 percent put it as a top 4-5 challenge. Management-level HR constrains, inconsistent regulatory interpretation, unclear regulations, lack of transparency and bureaucracy all were considered bigger challenges.

In fact, obtaining visas for Chinese citizens traveling to the U.S. (a seemingly wimpy challenge certainly undeserving of a Wharton course) was listed as the top business challenge for 6% of companies – double the percentage rate as the IPR challenge.

You would think Adidas would have a severe IPR problem. Its branded stripes easily are imitated by copycats, and readily are.

The company doesn’t seem to care much, having just opened its biggest store in the world in Sanlitun (Beijing), just steps away from Yashow, a huge market that sells the fake stuff.

According to the Wall Street Journal:

Counterfeit items aside, Adidas’s business in China is booming, its executives say. Christophe Bezu, who heads Adidas Asia, says China will be the company’s second-largest market by the end of this year, overtaking Japan and coming after the U.S. China is already Adidas’s most profitable market, having passed Japan and some other European markets at the end of 2007.

In the big China picture, piracy doesn’t matter. It’s better to have fakes chipping away at high-growth sales in China than plateauing sales without fake troubles in developed markets.

The video game industry also is biting the pirate bullet.

Nintendo representatives have plans to launch a localized Nintendo DS Lite console first in Taiwan and then in mainland China by year’s end.

Gamasutra.com reports:

Although both markets are notable for their piracy problems an iQue version of the Nintendo DS was released in China as long ago as 2005…. Sony is pursuing a similar tactic for its formats, sending staff to local educational institutions in Taiwan to help train developers working on the PlayStation 3 platform.

We repeat: In the big China picture, piracy doesn’t matter.

Of course, the Motion Picture Association of America (MPAA) still isn’t happy about mainland pirates. It just filed suit in the United States against China-based DVD player manufacturers Gowell Electronics and Nanjing Wanlida Technology, according to Businessofcinema.com. They manufacture and sell DVD players that, according to the lawsuit, lack appropriate security features used to prohibit the unlawful reproduction and distribution of motion pictures.

Businessofcinema adds that “the worldwide motion picture industry, including foreign and domestic producers, distributors, theaters, video stores and pay-per-view operators lost $18.2 billion in 2005 as a result of piracy –over $7 billion of which is attributed to Internet piracy and more than $11 billion attributed to hard goods piracy including bootlegging and illegal copying.”

As a result of this kind of industry experience, China is getting tougher on piracy – as evidenced by the recent DVD crackdown and other measures.

The AmCham white paper notes:

Since December 2006, the Chinese government has expanded the ‘100-Day Campaign on Piracy’ into a program called ‘Fight Piracy Every Day.’ The goal of the program is to intensify the crackdown on the piracy of audio and video products as well as computer software.

Expats and Chinese alike are experiencing the effects of such efforts now.

Frustrated, and deprived of my usual booty, I know that pirates have lost a big battle in their losing war.

    Channel: Vital News     |