On the Money: China applies effective if chilling solution to rising software piracy

By Michael Coote

Friday 14th June 2002

Commercial software piracy is on the rise, according to a report from technology website Cnet.com.

A story this week by David Becker quotes from a survey by computer piracy watchdog the Business Software Alliance. According to the BSA, estimated piracy in businesses grew to 40% in 2001, up from 37% in 2000 and 36% in 1999. The figures show an uptrend after years of decline, although monetary loss to software providers is thought to have fallen nonetheless.

The cause is said to be economic. In the downturn since the tech wreck many companies have cut back on IT budgets, making it more tempting to use unauthorised copies of software. Loss of sales must be bad news for listed software producers trying to make a stockmarket recovery.

In some countries piracy is worse than in others. The BSA reckons in China and Vietnam the piracy rate is 90%, whereas in Russia the rate is thought to be 87%.

Use of pirated software in such countries represents a subsidy to their businesses that applies on top of cheap labour costs to give them a competitive advantage. From the point of view of a developing country, such a subsidy is no doubt desirable and can be put in the context of payback to the imperialist west.

But it does mean that all other things being equal a firm using pirated software is better off than one using the same licensed version because of lower costs. Accordingly, putting a stop to the practice will not be easy where economies are built on competing on prices.

China at least is trying to clean up its act, at least while the West is watching.

I recollect that on my first visit to China in 1995 my party's tour guide proudly took us to a thriving flea market in Guangzhou where he said normally anything we wanted could be bought in a pirated version.

However, he continued, the police had unfortunately raided the market a week beforehand to seize fake goods.

As a result the items on display would regrettably be genuine but at least we would get the feel of the place. The market was teeming, although I noticed that Chinese patrons were not buying much of the real thing.

At least officially, Chinese authorities like to assure western visitors that they are on the case of pirates. To be caught out can be a misfortune if there is a publicised drive on to tidy up things.

Cnet's Michael Kanellos reports from a visit to China in May this year that authorities in Shanghai have cracked down on software piracy so effectively that hardly any counterfeits can be found.

The reason was explained to him by Jian Daning, director of Shanghai's Waigaoqiao Free Trade Zone: "When we find [piracy rings], we confiscate the products and the equipment they use to make them and execute the persons or organisations involved."

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