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A New Approach to U.S. Copyright Policy against Piracy in China
Unformatted Document Text:  9 Above all, the low prices of pirated products fuel the piracy demand. Particularly, optical media products, such as CDs, DVDs, and software on CD-ROMs, have the smallest marginal cost, which is little more than what a blank disk would cost. According to IIPA (2002), pirated DVDs sell for $1.02 to $2.50 and VCDs sell for $0.76 to $1.92 per title in major cities in China. 3 Another economic factor that exacerbates the piracy problem in China is the lack of a localized copyright industry or the fact that the industry remains in its infancy. In China, the indigenous entertainment media and computer software industry are very much at infancy stages, which is why there has not been too much resistance from local manufacturers concerning the high levels of piracy. In addition, since the establishment of the People’s Republic of China in 1949, the Communist government has exercised very strict control over the dissemination of media products. As a result, the media business and the publishing industry are among the most heavily regulated industries in China (Lee, 1997). Due to this stringent information control policy, many media products are not available even if there is great demand in the Chinese market; some consumers may settle for black market products or pirated goods. Although these infringing substitutes are often inferior to the genuine products, many consumers are not able to compare with or select from the genuine products. Piracy, in general, harms not only foreign copyright holders but also the development of the domestic copyright industry. In China, however, consumer surplus gained from the cheap price of pirated products and the huge market demand is incredibly high. On the contrary, piracy has little influence on the domestic producer surplus since the original resources of pirated products are imported from foreign producers. In particular, pirated products of digital – or optical – format, allowing perfect copies identical to the originals, hardly create consumer injuries due to the inferiority of counterfeit goods. Consequently, the current piracy in China may be interpreted as protectionism for infant local industries. Post (1998) asserts that protectionism has helped maintain the country’s status as a copyright importer. He explains that “[i]f country A imports more 3 According to an AP news article (Associated Press, April 18, 2002), “On Beijing’s main drags, DVD purveyors still accost passer-by to sell $1.20 copies of new Hollywood movies like “Planet of the Apes” remake ($22.95 on Amazon.com); between customers, they chat with traffic cops who know exactly what they’re up to.”

Authors: Mun, Seung-Hwan.
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9
Above all, the low prices of pirated products fuel the piracy demand. Particularly, optical
media products, such as CDs, DVDs, and software on CD-ROMs, have the smallest
marginal cost, which is little more than what a blank disk would cost. According to IIPA
(2002), pirated DVDs sell for $1.02 to $2.50 and VCDs sell for $0.76 to $1.92 per title in
major cities in China.
3
Another economic factor that exacerbates the piracy problem in China is the lack
of a localized copyright industry or the fact that the industry remains in its infancy. In
China, the indigenous entertainment media and computer software industry are very
much at infancy stages, which is why there has not been too much resistance from local
manufacturers concerning the high levels of piracy. In addition, since the establishment
of the People’s Republic of China in 1949, the Communist government has exercised
very strict control over the dissemination of media products. As a result, the media
business and the publishing industry are among the most heavily regulated industries in
China (Lee, 1997). Due to this stringent information control policy, many media products
are not available even if there is great demand in the Chinese market; some consumers
may settle for black market products or pirated goods. Although these infringing
substitutes are often inferior to the genuine products, many consumers are not able to
compare with or select from the genuine products. Piracy, in general, harms not only
foreign copyright holders but also the development of the domestic copyright industry. In
China, however, consumer surplus gained from the cheap price of pirated products and
the huge market demand is incredibly high. On the contrary, piracy has little influence on
the domestic producer surplus since the original resources of pirated products are
imported from foreign producers. In particular, pirated products of digital – or optical –
format, allowing perfect copies identical to the originals, hardly create consumer injuries
due to the inferiority of counterfeit goods.
Consequently, the current piracy in China may be interpreted as protectionism for
infant local industries. Post (1998) asserts that protectionism has helped maintain the
country’s status as a copyright importer. He explains that “[i]f country A imports more
3
According to an AP news article (Associated Press, April 18, 2002), “On Beijing’s main drags, DVD
purveyors still accost passer-by to sell $1.20 copies of new Hollywood movies like “Planet of the Apes”
remake ($22.95 on Amazon.com); between customers, they chat with traffic cops who know exactly what
they’re up to.”


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