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A Losing Battle Against Chinese Piracy .
Tuesday, April 10, 2007
By BILL POWELL/SHANGHAI 
Zhou Fu-kuan, a cheerful 32-year-old, just smiled when I told him that the United States was filing suit against China at the World Trade Organization (WTO) over intellectual property infringement. I've known Zhou for nearly two years. He runs the DVD stand across the street from the apartment building I used to live in here in Shanghai, and over that time I've literally bought a couple of hundred pirated movies from him. "I hadn't heard that," he said of the U.S.'s WTO suit, "but this sort of thing happens a lot — the government says they'll crack down on [piracy]. It usually lasts a few days and then ... " He didn't need to finish the sentence. And then, nothing. China is always claiming it is going to crack down on the country's rampant intellectual property abuse. In fact, the government declared this past March 15 anti-piracy day, and there are still big billboards downtown urging everyone to fight against IPR theft. Not surprisingly, Chinese officials threw a rhetorical fit Monday when first hearing the news of the U.S. intention, on behalf of the American music and film industries, to bring a case to the WTO. "Many countries are facing the same challenges in their anti-piracy campaigns," said Chen Zhaokuan, deputy director of China's Copyright Society. "For China, we are a latecomer in this area, and it's natural that the sense of copyright protection among the Chinese people is not that strong. Considering how much work we have done to promote the copyrights protection and to fight against piracy in the past 10 years, we already have made many achievements." When it comes to computer software, pharmaceuticals and a handful of other areas, Chen is right. The Chinese actually have made some progress on IP protection over the years — and that's why companies like Microsoft and Merck want no part of the WTO complaint. But for the film and music business, the claim that there has been progress is simply a joke. Ask Zhou, or any of the other street vendors in Shanghai, Beijing or anywhere else in China. "Competition has never been tougher," Li Haihua told me as he did a brisk business selling brand new American-made films for five RMB apiece (the equivalent of about 60 cents) on Huaihai Street in central Shanghai, not five minutes from one of the big anti-piracy billboards. He cast his eyes up and down the street. "There are more [sellers] than ever before, and the price has come down. It used to be you could sell a new DVD for eight RMB. Not anymore. There's too much competition." His message doesn't bode well for any kind of crackdown. There is more supply — much more, according to four different street vendors I talked to EM] of pirated movies, TV shows and music CDs available on the streets of Shanghai these days than there was just a few years ago. Prices have fallen sharply because of that. If the government had made any progress drying up the supply of counterfeit movies and music, prices would have gone up, not down. The guys on the retail end of the business don't like this at all. As more and more people have piled into the business, their margins have come down. After paying his "middleman" for a new supply of DVDs about once every two weeks — he has about 1000 titles for sale at any one time — Zhou says he earns less than one RMB per disc sold. "It's definitely a volume business," he says wearily. When I press him on where his middleman gets his product — that is, who's actually making these pirated DVDs — Zhou smiles and plays dumb. He knows I'm a journalist and there are things he's not going to tell me. "I think they're made somewhere here in Shanghai," he says, "but I'm not really sure; I just deal with my supplier." For a consumer, these deals are hard to beat. About two months ago, I bought a DVD that had the first half of the current season of 24 on it. Twelve one-hour episodes. You can download each on iTunes for $1.99 a piece. I paid five RMB — again, about 60 cents — for all of them. Granted, quality is sometimes an issue (though the pirated 24 disc was perfect.) A lot of the DVDs available are so-called "coat movies," the kind of low-rent pirating famously (and hilariously) depicted in an episode of Seinfeld in which Kramer agrees to smuggle a hand-held camera into a theater in order to illegally tape a movie. In a coat movie you can literally hear people coughing and half the time someone will stand up right in front of the camera. And sometimes language is an issue. I had to buy three copies of Casino Royale until I got one in English. One evening my wife was happily enjoying The Holiday (a chick flick if there ever was one) when halfway through it Cameron Diaz, Jude Law, et al., started speaking Ukrainian. China could, in theory, crack down on this business — not so much by going after street vendors like Zhou, but by going after the source and thoroughly rooting out and shutting down the small, makeshift factories that churn out copies of these pirated discs. There are periodic raids, to be sure, but it would take a lot more effort — much more than the government is currently expending — to really put an end to it, and I find it difficult to believe the Chinese leadership cares that much. Maybe, in time, a WTO case will change that, but Zhou, for one, doesn't believe it. "Don't worry, I'll still be here," he says, and with a smile asks if I had The Last King of Scotland. Actually, I hadn't. "Five RMB," he said. Sold. 
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