Fake, pirated or counterfeit items sold or made in China are found throughout China and the world. In the mid 2000s, it was estimated that 90 percent of the movies, music and software sold in China was pirated. The market value of pirated and counterfeit goods produced in China is estimated at between $19 billion and $24 billion a year in 2003. Trade groups say illegal Chinese copying of music, designer clothing and other goods costs legitimate producers billions of dollars a year in lost potential sales. By some estimates counterfeiting and piracy costs companies that produce the originals $16 billion in sales worldwide.
A study by the Business Software Alliance estimates that if software piracy was eliminated worldwide 2.4 million jobs, $400 billion in economic activity and $67 billion in tax revenues would be created. The study suggested that China could create 2.6 million new jobs in information technology if piracy was sharply reduced. A similar study by Organization of Economic (OECD) valued pirated products worldwide in 2006 at $176 billion, almost the same at the annual trade between Japan and the United States.
There is little understanding or respect for the idea of intellectual property. There is no stigma attached buying or seven selling pirated goods even with a phony brand names like Sone instead of Sony. The government quietly tolerates pirating and fake good manufacturing to some degree because they provide employment for large number of people laid from state-owned enterprises.
The Japanese went through a similar stage in their development—copying many American and European products. Japanese companies and the government cracked down on the practice when Japanese companies needed laws to protect their intellectual property rights. It is assumed that the same will happen in China as the country becomes more developed and its companies and business practices more mature.
Pirating may be a good way to make some quick profits but is damaging for future development. One reason is that firms won’t invest in research and development if the know whatever products they create will be ripped off.
In some cases among the largest buyers of fake goods in China are foreigners who load up on fake Rolexes, DVDs and electronics, Murray King of APCO Worldwide told the Washington Post, “Far too much has been made about the Chinese market and not enough about the foreign appetite” for fake goods. By some estimated two thirds of 15 million shoppers a year at Beijing Silk Street market are foreigners.
