Rupert Murdoch was the lastest Western corporate tycoon in Beijing, asking the Chinese authorities to crack down on fake products and the infringement of intellectual copyrights. Shaun Rein sets him straight and explains in Forbes why fake DVD’s and Gucci bags are not dissapearing from China’s markets.
First, China’s piracy problem is not a matter of morality. More than anything, it is a matter of poverty. Piracy was similarly rampant in Taiwan, Korea and even Japan until consumers there got wealthier and domestic forces emerged to press those countries’ governments to take action.
The Chinese won’t do much beyond the occasional high-profile crackdown to show it takes the issue seriously, except when there is serious domestic pressure, as there has been to root out fake medicine and milk powder, for instance.
On a local level, even if the central government wanted to tackle the issue seriously, bigger interest would stop them. Shaun Rein:
Second, you need to change your sales and pricing strategies for products like software and DVDs.Time Warner provides an example of how not to do it. It realized it needed to lower its prices, so it started selling DVDs for $3 apiece. The problem? Most pirated DVDs in China sell for less than a dollar.