- The Washington Times - Sunday, April 10, 2005

The huge Communist Chinese mainland, government and people, is guilty of committing grand larceny on a scale only comparable in contemporary history to the expropriation of private property during the Nazi and Bolshevik revolutions.

Communist China’s expropriation policy is based on counterfeiting Western products — Christian Dior sunglasses, Gucci and Prada handbags, Louis Vuitton luggage, among others — and shipping these cheap copies as brand-name goods to foreign markets at prices far below those of the victimized original products.

Reporting from Shanghai to the Toronto National Post, Peter Goodspeed notes one of the mainstays of today’s burgeoning Chinese economy is copyright piracy with an estimated worth of $50 billion. And according to the U.S. Chamber of Commerce, intellectual property theft costs 750,000 jobs a year. And here’s a staggering finding:

More than 90 percent of all CDs and DVDs and computer software sold in China are pirated. Pirated copies of popular films are sold on the streets in huge quantities even before the movies are publicly released.

Mr. Goodspeed reports: “The situation is so bad that it has virtually destroyed China’s film and music industries.” And movie theatres as well. Why pay admission at the movie theater when you can see the same movie in the comfort of home for a few pennies? In other words, by normal moral standards, a large number of Chinese receive stolen goods and thus behave criminally, a behavior supported by their totalitarian party government. And there is no sign of any significant Chinese disapproval of the larceny. A business advisory from the U.S. Commerce Department says:

“On average, 20 percent of all consumer products in the Chinese market are counterfeit. If a product sells, it is likely to be illegally duplicated. China continues to be a haven for counterfeiters and pirates. According to one copyright industry association, the piracy rate [in China] remains one of the highest in the world.”

Were counterfeiting and piracy confined to commercial consumer products it would be bad enough but, unfortunately, it is not. Basic foods are being tinkered with as well. Thirteen children died and 200 others were seriously incapacitated in a town near Fuyang, 180 miles from Shanghai, because their parents had unknowingly fed their babies fake baby formula: a mixture of starch, sugar and dry milk powder without protein, fats and essential vitamins.

Investigation by the local media uncovered an unbelievable scandal: More than 40 companies in 10 provinces manufactured and distributed fake formula. Officials also found discarded toxic chemicals sold as table salt.

Everything is a target for the Chinese exporting counterfeiters. Cigarettes with pirated brand names are a favorite export. British customs say 15 percent of the British cigarette market consists of smuggled Chinese cigarettes.

Mr. Goodspeed writes: “A unique form of Chinese piracy is to use a product name that sounds like a trademark but is written with different characters to the registered name.”

For example, a chain of Shanghai coffeehouses goes by the name “Starsbuck.” Honda won a court case against a Chinese company building and exporting “Hongda” brand motorcycles, Honda lookalikes. General Motors is suing a Chinese auto manufacturer for producing a car with body structure, exterior design, interior design and key components identifical to a car GM builds and markets as the Chevrolet Spark.

The China-Britain Business Council writes:

“When a Chinese company manager sees something interesting at a trade show, his or her immediate thought may be, ‘Can I make the same thing more cheaply and sell it in China?,’ rather than ‘Is this protected by patents? And do I need to pay a license fee to the intellectual property owner?”

The gallows joke among U.S. businessmen is that research and development in China doesn’t stand for “research and development” but for “receive and duplicate.”

Piracy and counterfeiting could not have become so widespread in China without government turning a blind eye toward such larcenous activities. Local governments, says Mr. Goodspeed, are more concerned with protecting local jobs and industries than worrying about foreign copyrights.

So this violation of the norms of governmental behavior will go on and on. As an aside, were I a citizen of Taiwan would I want to live under the rule of a communist dictatorship that cheerfully tolerates grand larceny?

Arnold Beichman, a Hoover Institution research fellow, is a columnist for The Washington Times.

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