EyePress via AP file
Local residents buy pirated DVDs on a street in Lanzhou, in China's Gansu province. U.S. officials say China's counterfeit exports cost legitimate producers worldwide up to $50 billion a year in lost potential sales. 
By Reporter
NBC News
updated 8/30/2006 8:12:43 AM ET 2006-08-30T12:12:43

BEIJING - While millions of American moviegoers flock to the theatre this summer paying an average of ten dollars to see summer blockbuster films such as “Pirates of the Caribbean: Dead Man’s Chest” and “Snakes on a Plane,” Huang Yue of Beijing, like millionsof others in China, simply walk down to their local street vendors and purchase a pirated copy for about a dollar.

In an attempt to beat DVD counterfeiters at their own game, Warner Bros. has decided to release its films on DVD for sale in China as quickly as 12 days after their theatrical debut, and at prices as low $1.25 a movie.

“This is a good strategy introduced by Warner Bros. because even though there are counterfeit copies of movies about three days after they reach the theatres, it takes about three weeks for vendors to perfect the quality,” say Huang Yue, a Graduate Student at Renmin University in Beijing and a movie buff.

But, is a complete crackdown on rampant piracy in China possible?

Damage in lost revenue
Warner Bros. is one of the first studios to aggressively combat the losses Hollywood is suffering because of pirated DVDs. According to the Motion Picture Association, the organization which represents major Hollywood studios, piracy cost U.S. filmmakers an estimated $565 million last year. The study indicates that nearly 93 percent of all movie sales in China were pirated versions.

But, many in China would argue that pirated films are the only way they can afford to keep up with the times. The average salary of a person living in Beijing is $3,000 per year, according to a survey done by Renmin University. “Going to the movie theatre for the actual market price is just not within our financial means,” said Huang.

“Because of our low salaries compared to the U.S., piracy doesn’t end with the purchasing of DVDs,” explained Deng Ying, a Peking University Law student. “College age students and professionals have purchased computer software such as Windows XP, Microsoft Excel and Norton Antivirus for only six Kuai, which is equivalent to about 65 cents.”

Huang argued that working with pirated technology is necessary to keep up in a global world. “If the pirated versions of software were not available, most college students and professionals alike would not be familiar with such programs,” said Huang. “The worst thing that we can do is not be up-to-date with the latest advances in computer programs and technology in a globally competitive world.”

Pop culture infatuation   
And it’s not only keeping up with the Joneses in terms of new technology that the Chinese care about. What helps drive the rising piracy numbers is the fact that the Chinese have become increasingly infatuated with American movies and TV shows as American culture continues to spread across China at an accelerated pace.

“The Internet and an influx of entertainment magazines like Cosmopolitan and Vogue, which often run feature stories on American actors and actresses has resulted in great interest in such popular TV shows as “Friends,” “Desperate Housewives,” and “Sex and the City,” said Deng.

“The internet also serves as an outlet where Chinese people can write their thoughts about recently viewed TV shows. Lili Liu writes on sina.com, in a forum titled “American TV,” “‘Desperate Housewives’ is my favorite show for the interesting storyline and for the fact that I am a housewife and can relate to many of the characters.”

Difficult enforcement
While the selling of pirated goods is illegal in China, sales take place so openly on the street and in DVD stores through out Beijing that there is no the impression that the trade is illicit.

“I don’t know why Chinese government should crackdown on the people who are selling pirated DVDs because if people didn’t buy them from us, they would download it from the Internet.” said Mr. Wang a DVD street vendor. “If we don’t sell it to them, they will not buy it at regular price, so why not let us feed our families from the profits that we make from selling DVDs.”

Cracking down on piracy has been difficult in China. “Street vendors are difficult to catch in the act because when they see us coming,” explained one Beijing police officer who asked for anonymity because of the nature of his work. “They load their DVDs into a suitcase and soon vacate the area before we have a chance to confront them.” 

The police office explained that cracking down on shops that sold pirated goods was just as difficult, but not his job.

“And as far as cracking down on registered businesses that sell pirated goods, if they pay the business tax to the government and have legal business papers, we are not allowed to enter the store. That is the job of the Business Administration department.”

But, the Business Administration notifies business owners many days in advance of actually entering any stores, thereby stymieing any would-be arrests. “Before they come, we will temporarily remove all of our pirated goods from the store and restock when they leave,” said one DVD store owner in the San Li Tun District.

End in sight?  
The situation is unlikely to improve any time soon. “The Chinese government knows that unemployment is rampant in China and piracy is a means by which people feed their families,” said Qi Hang Huang, a patent lawyer with China Sinda, a law firm that specializes in intellectual property in China. 

The realities of the emerging Chinese economy mean that a crackdown on piracy would be not only logistically difficult, but politically unfeasible, too. “There are so many people selling pirated goods that if we cracked down on all of them, we would hurt our economy and many families will starve,” said Qi Hang.

At the end of the day, as the Chinese economy develops, the marketplace and competition will likely be the best catalysts for an end to piracy. 

“For anything to change, the Chinese must become more innovative and build their domestic industries so that the government would happily enforce piracy laws to protect those industries,” said Qi Hang.  

Derek Levine is a researcher in the NBC News Beijing Bureau.

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