We hear a lot of guff about China – lumbering giant, colossal market, a billion consumers, next hyperpower, etc. And we see huge western technology companies – Google, Microsoft, Yahoo, Cisco – willing to abase themselves in any way necessary to ensure pole position in the race to reach those billion consumers.
Only last week, Google’s chief executive, Eric Schmidt, made another embarrassing speech ‘explaining’ his company’s capitulation to the demands of the Chinese government to filter search results. ‘I think it’s arrogant for us to walk into a country where we are just beginning operations and tell that country how to run itself,’ he told reporters in Beijing.
He was there to promote Google’s new (self-censored) Chinese search engine and to meet senior government officials. He also announced the opening of the statutory research and development centre in the Chinese capital’s hi-tech district and revealed the brand name for the censored search engine – ‘Gu Ge’, which roughly translates as ‘a harvesting song’.
In a poorly reported aside, Schmidt attempted to draw an analogy between Google’s decision on China and the fact that it has to conform to, say, Germany’s ban on Nazi propaganda sites. It took John Paczkowski of the San Jose Mercury News to spot the breathtaking double-think implicit in this attempt to put ‘a narrow ban on indefensible hate-mongering on a par with censoring access to vast swathes of [the] web dealing with freedom’.
The one phrase you hear very little of whenever China’s economic potential is discussed is ‘intellectual property’. This is because China is world champion in every branch of piracy known to man. I don’t think there’s a CD, DVD, computer game or software package that is not illicitly available for a dollar or two in virtually every town in China.
That’s why the top executives of Western technology companies are – to a man or woman – agreed upon one thing: that while they are more than happy to have their products manufactured by Chinese labour in Chinese factories, they will never, ever entrust their intellectual property to any Chinese organisation.
The reasoning is simple: even if the Chinese wished to respect intellectual property (a big ‘if’), they simply could not do it. This is because IP requires a culture of laws and adherence to them, plus an infrastructure of courts, legal services and all the other paraphernalia of litigation and enforcement. Neither the culture nor the legal infrastructure exists in China, and it will take decades to build. Even if China’s rulers wanted to transform their territory into a society which respected intellectual property, they simply could not do it on any realistic timescale.
And this, of course, now impales them on the horns of a dilemma, because they desire to play in the grown-up world of high technology. They have, for example, joined Wipo, the World Trade Organisation’s IP wing, which requires them to take seriously the protection of intellectual property.
So this week the Chinese State Copyright Bureau decreed that China’s PC manufacturers will henceforth be barred from shipping ‘naked’ PCs – computers without a pre-installed operating system. The reason is that these cheap PCs are then invariably fitted out with bootleg copies of Windows, thereby depriving Microsoft of substantial licensing revenues.
This edict is probably window-dressing ahead of the Chinese president’s forthcoming visit to the US, where people get very steamed up over piracy. If you really want to see what things are like on the ground in China, consider what happened last week in the mobile communications arena.
For the past seven years, Canadian firm Research In Motion (RIM) has been planning to launch a version of its BlackBerry mobile email service in China. It filed its first application to do business there in 1999 and has since registered at least nine trademarks for the device and accompanying service.
And now, just a few weeks before the BlackBerry service launches, guess what happens? China Unicom, the state-controlled wireless network, has launched a rival service called – you got it – RedBerry.
According to Paczkowski, RedBerry is virtually identical to RIM’s service, but a lot cheaper. It is, after all, a state-owned enterprise, immune from the tiresome obsessions of shareholders and the stock market. So a standard e-mail account at RedBerry will cost less than a dollar a month, plus a few cents for each email sent.
RIM has not revealed its rates for Chinese service yet, but it will certainly have to be higher if the company is to make a return on all the investment it has put into penetrating the market. Just for illustration, a typical BlackBerry account in Hong Kong costs up to HK$64 (￡4.70) a month.
The RedBerry is yet another blatant case of ‘brand piracy’ and is par for the course in China. So by all means get your stuff made there – but keep your IP at home.