[Editor's Note: I'm honored to have been asked by IP Dragon to write that blog's first guest post. The result is the essay you see below. Focusing on China's intellectual property issues, IP Dragon is well-written and penetrating. Its author has chosen to remain anonymous. This only increases the allure!]
The world knows of China’s leadership in the business of counterfeiting. If it – Delco car battery, tiger claw, night-scan telescoping mast, Viagra, holy relic of Tibetan Buddhism – can be copied cheaply and sold for profit, some entrepreneur (thief?) will grab hold of the opportunity and shake vigorously.
Counterfeiting harms rights holders. That was an “duh, fer sure, dude” statement. But the 2004 testimony of Anthony Wayne, U.S. Assistant Secretary for Economic and Business Affairs, makes one want to holler “Oh, my God!” as if we’d personally discovered alien seed pods in Santa Mira. [See Invasion of the Body Snatchers.] It is “estimated that U.S. companies’ worldwide losses to counterfeiting and piracy range from $200 to $250 billion per year. Most counterfeit goods pass.” That sum exceeds the GDP of many nations.
And yet counterfeit products are rarely interdicted at the borders. China’s share? Daniel Chow, a law professor at Ohio State University, has testified that:
“In 2003, China accounted for 66% or over $62 million of the $94 million of all counterfeit and infringing goods seized by the US Customs Service at ports of entry into the United States. Mid-year figures in 2004 indicate that seizures are sharply higher with $64 million seized in the first half of 2004 alone.”
Extrapolating, Chinese counterfeits may account for US$150 billion of worldwide IP losses. No wonder it is estimated that counterfeiting produces as much as 8% of China’s GDP. Counterfeiting inevitably accompanies – and may very well benefit — the growth of infant economies. In the 18th century, using cobalt mined in Connecticut, American potters imitated the fabulously popular China blue and white porcelain. And remember that Japan in the 1950s and 60s was rife with fake goods. Or more recently, Taiwan.
So what is the attraction with fakes? Or is this another “duh, dude” question?
In the 1980s, my cousin did business in Taiwan. Being a profligate entertainer of major customers, he once decided to impress by holding an emperor’s banquet (????) at the Hilton in Hsi Men Ting (???), the older downtown section of Taipei (??). The centerpiece of the table was bear paw (??), a traditional delicacy in Chinese cuisine, favored by only the very wealthiest. In the Taipei of the 1980s, a prepared dish of bear paw cost a King’s Ransom of nearly US$750, equivalent to the monthly salary of an office worker. A raw paw was shown to the guests before it was cooked. If I remember correctly, his guests were enormously impressed.
Several years later, a lady who had worked as a waitress in that same restaurant told me there was but one real paw in the refrigerator. Whenever the dish was ordered, the paw was trotted out to show the beaming guests and then immediately returned to cold storage. The chef would proceed to cook whatever meat he might have lying around that was less common than beef – alligator, venison, elk – and far less expensive. !Profit! And with just a little sleight of hand it descends in sheets. The crux of the bear paw con is dual, requiring a customer who’s neither ever tasted bear nor sees the paw cut up and cooked.
Yes, counterfeiting is a classic con. It needs but a sure thing — a paying customer. An entrepreneur with energy, capital, nerve, imagination and a great product may still fail. The counterfeiting of an established brand requires similar elements, within a business environment favorable to the unimpeded trespass upon individual property rights, to allow the con to flourish. Bear paw is an established delicacy in Chinese cuisine.
Counterfeiters in China have established world-class CD duplication facilities (capital); harnessed the production power of entire villages (energy); threatened the lives of children with fake infant formula (nerve); built secret manufactories or factories in ship containers for mobility (imagination). But there’s virtually no economic risk. Someone else has built and crossed that bridge. The brand has already been established. The buyer is a certainty.
Even at a youthful age, I could not believe the premise of the movie, “The Sting,” (1973) the hit that starred my favorite pseudo-Oreo manufacturer, Paul Newman. Two good-natured gangsters (an oxymoron?) ante significant funds up front to replicate a bookie joint on the off chance they might score many times more dough from their mark. Several times, the scheme was nearly blown. The sucker could have simply walked away. Too much risk for a counterfeiter, don’t you think?
Despite two millennia of discourse and instruction on the Confucian ideal of ???? (usually translated as “the world is a commonwealth”) and its modern diminutive, the Communist slogan, ????? (“serve the people”), Chinese find impractical, to say the least, the integration of the individual and the family into a greater public “good.” [Is this simply a display of my western liberal arts education or a genuine preoccupation with a beneficial and unifying ideal?] It apparently mandates the sacrifice of individual benefits to complete strangers with whom no bond is valued. Most undesirable. The individual thinks, “Where is the value to me and mine?”
The novel concept of individual rights under the law, often seen written into a subtext of the phrase ????, has been received to a powerfully positive reception by P.R.C. Chinese. Everyone now, it seems, has some individual power. But the larger framework for these rights is barely constructed. The remnants of the old system do not suffice as its foundation. What can be built on detritus?
My strong impression from readings and discussions on this subject is that mainland Chinese view the law as but a tool – a means to an end – whereby individual gain can be gotten at the expense of a rival. They do not respect it as a particularized expression of an encompassing framework established to protect the welfare of the populace at large, despite sloganeering to the contrary. The law is for “me,” but not, more importantly, for “us.”
Until that conceptual foundation has been built – who knows when and if, despite the work by many brilliant intellectuals – the rights you hold in your intellectual property will be the object of stubborn disrespect and counterfeiting will continue to be a staple of the Chinese economy.
Well, dude, maybe that was just a bit too serious. Why don’t we turn to some hilarity for the nonce? Remember W.C. Fields’s epithet that one should “never give a sucker an even break?” [Translate that if you can!] Read this article for the story of a Chinese counterfeiter with a preposterous con who played upon the profundity of his wealthy collector-customer’s inexpertise. In doing so, he collected US$500 and the attention of the world’s media. Ah (deep breath), success!
The Translation Challenge: “Never Give a Sucker an Even Break” by AsiaBizBlog, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.