Friday, June 13, 2008

Now it's their ox that's being gored

China has a history of taking a, well, somewhat casual approach to intellectual-property law, particularly when it comes to counterfeit foreign goods. Sometimes they're so obviously fake as to be laughable (you'll occasionally see a hilariously-mangled brand turn up on, sometimes they're actually rather good.

There's nothing new in this, of course. The United States didn't recognize any foreign copyrights or patents while it was a developing economy. It wasn't until we had more to gain by enforcing our own than by ignoring everyone else's that "intellectual property" became a serious concern. The Chinese are developing their economy, and copyrights, an artificial, government-imposed monopoly, are economically inefficient.

Until, of course, there's more profit to be made by enforcing it than ignoring it.

For years, China has been known as the leading exporter of fake goods, from Louis Vuitton handbags and Patek Philippe watches to auto and jet engine parts. The underground economy, which according to U.S. trade officials costs American companies $3 billion to $4 billion annually, has been allowed to flourish by a Chinese government that seldom prosecutes intellectual property violations.

But the Olympics have mobilized China's piracy police like never before. Beijing, the host city, stands to receive up to 15 percent of all revenue from Olympic merchandise, a figure expected to easily top the $62 million raised in Athens four years ago. Aside from the mascots, China is also reportedly collecting up to $120 million each from Coca-Cola, McDonald's, Adidas and other companies that have qualified as the highest-level Olympic sponsors.


With the world's gaze on China in the run-up to the Aug. 8-24 Games, officials have moved to make sure counterfeit goods don't reflect poorly on the festivities. Fake Adidas clothing that was widely available at popular Beijing markets a year ago is now hard to find.

Officially, of course, it's about protecting China's image and putting their best foot forward for the Games. Unofficially?
"They have moved some of the market more underground than they have before, but that hasn't stopped the activity," said Marc S. Ganis, chief executive of Chicago-based Sportscorp Ltd., a sports marketing firm. "It proves that China can do something about the problem when its own interests are aligned with the crackdown. . . . The reality is, just like in the U.S., people are going to do what they're going to do, which is make money."
And with the government getting its cut of royalty payments, it's suddenly in the government's interest to enforce the laws.

It's also nice to see that in some ways, the Chinese government isn't that different from our own:
"The Chinese government usually only manages during a crisis," [an import-export trader] said. "When things reach a peak and they have to deal with it, they will."

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