Piracy, Counterfeiting, Patent Violation, The Price You Pay for Outsourcing China
Piracy, Counterfeiting and Patent violation
In this paper we will focus on piracy, counterfeiting and patent violation taking note of latest cases towards items such as in software, books, music and other related things. Here a huge emphasis will be given on China and how many different industries across the globe suffer losses due to the illegal practices carried out by Chinese manufacturers who tend to offer a copy of the original product at a relatively cheap price.
The meanings of terms piracy and counterfeit in today's age are relatively similar, i.e. To make an illegal copy of something. "Patent violation is a term which translates into any illegal practice which involves the usage or selling of any product without the permission of the patent holder who has the proper rights of that product." (Boyle 1997).
All of these above mentioned practices are known to cost tremendously to the firms who produce the original products, much of the pirated objects found today belong in the categories of software, songs, movies, digital equipments, books and so on. "Much of counterfeiting practice is carried out in the developing economies of the world" (Moody 2001) therefore in this paper we have chosen to mainly scrutinize China and assessing its role in this entire scenario. "Counterfeiting can be combated through the creation of tougher laws" (Proctor 2005). Let's have a look at this in more detail.
II. Counterfeiting and Pirating in China
Pirated, counterfeit or fake items made or sold in China are found easily everywhere in the mainland Chinese territory as well as in the rest of the world. During the mid 2000s some estimates taken by various sources pointed out that about ninety percent of the music, movies and various types of software being sold in China were not original. The total market value of counterfeit and pirated goods being produced in China was estimated to be worth somewhere between twenty two billion and thirty billion dollars in the year 2008." Counterfeiting phenomena is increasing drastically" (Lally 2002).
Many trade groups as well as analysts have acknowledged that the illegal Chinese copying of designer clothing, music, electronics and digital equipments such as watches or computers costs the legitimate producers of those products many billions of dollars on annual basis. However, there are many other estimates which counter this sum of losses and according to many other critics the industries which produce the original products do not suffer as much loss as is acknowledged by them. By many sources, it is though that a total of less than twenty billion dollars is lost in sales worldwide due to pirated copies of the original products.
A study carried out by Business Software Alliance estimated that if the practice of software piracy was completely eliminated throughout the world then it could result in the addition of about two and a half million jobs as well as an economic activity of four hundred billion dollars alongside sixty seven billion dollars in additional tax revenues. According to this study China was capable of creating about three million jobs in the sector of information technology if the practice of piracy was reduced sharply.
Another study of similar type was conducted by OECD, it valued the pirated products all across the globe to be worth one hundred and seventy six billion dollars in the year 2006. This amount is comparable to the trade between United States and Japan. It is also commonly observed that there exist little or no respect and understanding regarding the concept of intellectual property in many parts of the world. There isn't any sort of stigma attached to the selling or buying of pirated items even those which have fake but similar names related to the original products such as Nake instead of Nike. The Chinese government also seems to tolerate quietly this pirating and illegal goods manufacturing process to some degree since it provides employment to a huge number of people.
It has been observed that the Japanese went through a relatively similar position during their economic development i.e. copying many of the European and American products, later on the Japanese government and firms took a firm action regarding such practices when the Japanese firms required laws in order to protect their own intellectual property rights. Therefore it is assumed that this same process will occur to the Chinese as their economy, technology and manufacturing capabilities matures into a much more developed form where the firms and related businesses practice their dealings in a much more responsible manner.
"The practice of pirating may tend to provide an easy way to earn quick profits but for the future development it is deemed as very damaging." (Mowery 1996). A primary reason for this is that the companies will not be able to invest more in research and development processes if they know that whatever they will create would be copied. "Counterfeiting is a huge threat to the original product's R&D process" (Mihm 2007).
There are many cases where the biggest buyers of pirated items in China are foreigners, they tend to buy a cheap replica of the original product in a much cheaper price such as pirated DVDs, watches, electronic equipments or other things and then sell in their respective market at a nominal rate which attracts a lot of consumers since the price of offering is cheap as compared to the original product. "Low prices attract consumers of all types" (Hopkins 2003).
According to the Washington post, there is a lot of emphasis given on the Chinese market which produces these fake items but a lot less importance is given to those major buyers who buy these equipments and it is these foreign and local buyers which make this business running. "A business thrives because of its demand rather than supply power" (Vickers 2002).
According to some estimates about two thirds of the fifteen million shoppers per year at the Beijing Silk Street are composed of foreigners and the amount of interest the foreign buyers take in all of this activity is growing very fast since the consumers all across the globe especially in the Western world went through a financial crisis that resulted in severe job losses as well as decrement in their ability of buying. "Counterfeited objects thrives at sales in environments where the common person's ability to buy is weak" (Garnaut 2004).
Common fake products
The most commonly counterfeited products include computer software, CDs, watches, foreign cigarettes, medicines, Tibetan jewelry and even currency notes. Throughout the markets in Shanghai a person can easily get a fake bag of Louis Vuitton for the price of twenty five dollars, jackets of North Face for twenty six dollars, Cartier wallets for fifteen dollars, expensive golf clubs for around thirteen dollars and a tennis racket of Wilson for around ten dollars. "Pirated objects often last very little as compared to the original product" (Bell 2004).
If a customer does not find what it wishes to purchase then that person can also demand for the creation of a copy of the item which it desires to have and usually many foreign buyers tend to do their business this way. Many huge firms which operate and sell their original products in the same areas where the counterfeit items can be purchased are often seem to be very reluctant to advertise for their product since it can result in more sales for the pirated item rather than the original material. In China, the counterfeit banknotes are also very common therefore the cashiers operating in any business take a close look at every fifty and hundred Yuan notes which is equivalent to six and twelve dollars respectively. "Duplicating currency is regarded as a much serious crime as compared to duplicating other common commodities" (Ostergard 2003).
In many stores it is very easy to find oranges having fake Sunkist labels. Piracy is so common that the pirated version of collected works belonging to Deng Xiaoping can also be found. The provinces of Guangdong and Fujian are regarded as the main source for counterfeiting, forgery and pirating. Guangdong is the home to many thousands of firms which produce pirated goods and equipments, many other factories there also produce original items.
Fujian is widely regarded as the destination to go for forged documents, securities and gift certificates. There are many printing facilities present in Fujian which can copy expertly any sort of certificate, voucher or coupon even those which have unique sort of holograms given to them as the source of their unique identification. This makes it even more impossible to differentiate the fake from the original.
There are many towns which specialize in the counterfeiting of one line of items such as Taizhou which is expert in counterfeiting auto parts, Wengang for different varieties of pens and Chaozhou for cosmetics. Many of the popular trademark names of Japanese brewers have also been used in China without taking the permission…