Pirates vs. Innovation

This entry is about how pirating goods is actually a drain on China's
economy.

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I don’t know if you’ve seen the pictures of big trucks driving over and
crushing twenty-foot tall mounds of pirated DVD’s and CD’s in China. It
seems that the governments periodically gather as many fake discs as they can and mutilate them. But it hasn’t stopped the pervasive black-market
for fake discs. As far as I can tell, the crush campaigns haven’t even
impacted the Chinese consciousness. It is still harder to find real DVD’s
than it is to find fake ones. In fact, in all my time shopping here in Beijing, I have yet to see a real DVD for sale.

In an article I recently read, “Getting China jazzed on copyrights,” an
American executive, John Chen, said, “One way to get enforcement is
through rules and regulations, indictments and shutting down factories.”
But, he added: “There's another way that's more effective over time,
which is to educate people.” That’s the idea behind a program that is
sending 20 Chinese officials to UC-Berkeley to study American intellectual
property laws and practice. The officials will then spend time as interns in
U.S. courts and law firms.

I don’t know how much difference twenty officials will make in the massive nation, but I do think that, if the program is continued, sets of twenty over
the years will be able to influence those they work with and share what they learned with their colleagues.

One of the lessons that the organizers of the program hope to get across to
the Chinese officials is this: pirating hurts your own industry as well. There are assertions that, “There's more money lost for the domestic [Chinese]
industry.” That is possible, seeing the losses that Chinese companies lose when their products are pirated, or how much Chinese companies lose when they compete with the pirated copies of Western products.

But I think that there is another downside to Chinese black-marketing. It
hampers Chinese creativity. I have spoken with a Westerner who was put
in charge of Chinese software-design team. He was thoroughly frustrated because he could not get his team to create anything. All they could or would do was find a previously produced program and reverse-engineer it. At the
time I thought it was strange, why wouldn’t the Chinese software
designers create their own products. At the time, I chalked it up to the
Chinese rote-memorization educational system. I thought all their creativity was pummeled out of them by the never-ending memorization and lectures.

But I have met plenty of creative Chinese. In fact, some of the ways that
Chinese pirate things is incredibly inventive. I don’t think the problem is a lack of creativity. It is a lack of protection for creativity. Just as Westerners are afraid to bring their products into China, the Chinese are afraid to
invent things in their own country. Both parties rightfully expect their
inventions to be stolen and produced on the black market. Why invent
something if someone else is going to steal all the profits?

I believe that black-market products are losing money for Chinese
manufacturers. But I think the fact that the lack of protection is
discouraging innovation is an even larger setback for China. A nation that
is always a step behind in technology (because they have to find and
reverse-engineer everyone else’s’ technology) will always be behind the
curve.

Most people in China haven’t considered this. I didn’t think of it until just recently. Letting people know the real effects of a lack of respect for
intellectual property is, in my mind, the best way to stop pirating and
promote innovation.



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