China in Denial About Addiction to IP Theft

Beijing’s denials of rampant IP theft ignore the basic reality behind China’s rapid development.

By Tyler Roney

February 20, 2014

China’s first response to the United States’ Notorious Market List—a release by the Office of the U.S. Trade Representative—came from China Ministry of Commerce spokesperson Shen Danyang, who said, “The results are merely based on very vague sources,” further alleging that the report lacked real proof.

Upon reading this, I made a bet with myself that, without rolling the wheels on my desk chair in my office in Beijing, I could find proof of IP theft in China. It took less than 20 seconds to locate a “Blu-ray” (actually a camcorder recording) of a Star Trek: Into Darkness DVD hidden away next to some manila folders. Of course, if I were thinking more clearly, I would have realized that half my wardrobe, also bought here in China, is undoubtedly fake and that the editing software I had open on my laptop (installed by a previous company) is also fake.

There are varying opinions on IP theft—some think it has the power to crush economies, others that it’s harmless acquisition—but China’s unqualified aptitude for stealing, manufacturing, and selling is unparalleled in human history. In the end, it does very little direct harm, but China’s vociferous denials of IP theft in China runs almost into the comical.

For example, rather than looking at the spelling on the “Noklia” and “iPones” sold at the budget market near my home and admitting China may have a bit of a kleptomania problem, the Global Times, the Chinese government’s pit bull tabloid, said in a recent editorial that allegations of IP theft are possibly an example of American trade protectionism: “Many believe Washington’s accusation is a cover for trade protection.” The editorial went on to state: “Inefficient management on this issue is a common problem in most developing countries, which are still dedicated to giving much of their priority to creating wealth instead of safeguarding intellectual property.”

Inefficient management is hardly the issue. It’s more aptly described as one part of an endemic presence the government—any government—is incapable of controlling, even if it wanted to do so.

In May of 2013, a report published on the behalf of the Commission on the Theft of American Intellectual Property claimed that China was behind 50 percent of the IP theft cases and was “80 percent of the problem.” It concluded that the U.S. lost out on a potential $300 billion annually because of China’s IP theft addiction, Thereport noted that “A core component of China’s successful growth strategy is acquiring science and technology. It does this in part by legal means—imports, foreign domestic investment, licensing, and joint ventures—but also by means that are illegal. National industrial policy goals in China encourage IP theft.”

The IP Commission Report was far more damning than the Notorious Market List, which listed individual websites and stores, including Kuaibo.com, Xunlei.com, Aiseesoft.com, Garment Wholesale Center, Buynow PC Malls, Luohu Commercial Center, Silk Market and Zengcheng International Jeans Market. To be able to call this list the tip of the iceberg, the ‘iceberg’ in question would need to be connected to the Arctic. America stands to lose a lot through IP theft, but the interesting thing is that there is almost no downside for China.

However, the problem for the Chinese government in particular is that the prevalence of IP theft changes the official narrative, which is stated in the previously mentioned GT editorial: “Growing to be the second largest economy, China became a miracle of development in 35 years. Its economic success is applauded around the globe, not only because it can inject vitality to the world economy, but also as it was achieved almost from scratch.”

Yes, China doesn’t stand on the shoulders of giants, it built the shoulders from scratch—disregarding the fact that the plans were hoisted from the USA Giant Shoulder Corporation. Jokes aside, China’s modern miracle would not have been possible without rampant theft of intellectual property; perhaps China will choose to—instead of ignoring it—embrace it.