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Wednesday, January 12, 2005

Manufaketure: Chinese Counterfeiting and Pirating

Manufaketure is the name of a recent story in The NY Times Magazine by Ted C. Fishman that analyzes the dangers of the Chinese government's sanctioned counterfeiting and pirating of Western intellectual property.

Chinese pirating and counterfeiting has the potential to cripple many US industries including: pharmaceuticals, software, commercial aircraft, entertainment, etc. The bottomline result could be radically weakened large and small American companies.

The U.S Department of Commerce estimates that American companies currently lose between $20 billion and $24 billion to counterfeiters and pirates annually.

The Japanese lose around $34 billion and the European Union loses $22 billion to $26 billion. Total: $80 billion.


Counterfeiting and pirating (that is, making knockoffs of what developed nations have created) are at the heart of the Chinese economic boom. As unethical or illegal as it might be, the Chinese government is not about to stop it.

A U.S. consular official in China...''Nothing has a higher priority in our trade policy than the fight to protect American intellectual property. It is every bit as important an effort for us as the war against weapons of mass destruction.''

China's failure to police industry and to protect intellectual property acts, in effect, like one of the greatest industrial subsidies in the world. Chinese manufactures and industries freely exploit foreign ideas and technologies....

For the most part, China fears no repercussions from its actions because the size and potential of its markets give China and undiminished (for now) power to lure the world's most advanced technology to its shores.

Unless it comes up with a remedy that forces China to change, the United States will have to find its own solution.

Manufaketure [NY Times Magazine, Jan. 9, 2005]

Of PlayStations, pirates and prisoners [A story about Chinese Prisoners Counterfeiting Playstation 2, Star-techcentral.com]
Sony catches PlayStation pirates ... in prison [TheAustralian.com, Dec. 23, 2004]
Evans Says More China Copyright, Patent Pirates Must Be Jailed [Bloomberg, Jan. 13, 2005]

update Jan. 14, 2005: CBS Marketwatch.com and the Wall Street Journal among others are reporting:
U.S. Commerce Secretary Donald Evans publicly backed General Motors Corp's claims that Chinese automaker Chery is using stolen design information to build a rival car, according to a published report.

In a speech to U.S. and Chinese officials and business executives Thursday, Evans said Chery Automobile Co's QQ minicar is virtually a twin of the Chevrolet Spark developed by a GM (GM: news, chart, profile) unit in South Korea, GM Daewoo Automotive & Technology Co., the Asian Wall Street Journal reported Friday...

Mathematical formulas and other design information "were simply stolen from GM Daewoo," the newspaper quoted Evans as saying. "This is an incident that defies any kind of innocent explanation."

U.S.' Evans backs GM Daewoo claim -Says China's Chery copied GM unit's car design -report [CBSMarketWatch.com, Jan. 14, 2005]
U.S. Steps Up Public Campaign Against China's Pirated Products [WSJ, Jan. 14, 2005]

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