JURIST Guest Columnist Jiamin Chen, Chicago-Kent College of Law Class of 2012, is a LL.M. student specializing in intellectual property and international trade law. She calls for the people of China to transform their perception of intellectual property in order to allow for better protection of intellectual property rights and to promote economic growth…

There is a popular saying about the Chinese in China, and it holds that, “they would prefer spending $700 purchasing an iPhone than $1 buying a legal application,” which succinctly summarizes the public’s perception of copyright in China. Many Chinese consumers love Steve Jobs and his products, which have become fashion icons in China. Everywhere people are immersed in their iPhones, playing games, such as Angry Birds or Fruit Ninja, and most of these applications are pirated. China boasts of its long history and famous culture, but, in China, the idea of copyright only dates back 100 years to the feudal Qing Dynasty. The Chinese people’s perception of copyright differs greatly from the views held by people in the US, where the Federal Copyright Act of 1790 [PDF] was enacted early in the young nation’s history. China has become one of the most powerful economic entities in the world, but its people are still unwilling to support legally copyrighted products.

The music industry, for example, illustrates this problem. Since the rapid development of the Internet, traditional records have been impacted greatly by digital music. According to the International Federation of the Phonographic Industry’s 2011 report [PDF], the global sales volume of records decreased 31 percent between 2004 and 2011, while digital music sales increased by 1000 percent during the same time period. In 2011, the market share of digital music climbed to 50.3 percent and, for the first time, exceeded the market share held by traditional records. Unlike the astounding advances of digital music and the progressive decline of traditional records in the US, China’s record industry was easily defeated by the “Internet era” and its digital music industry continues to struggle. The main reason behind this phenomenon is the lack of appreciation for copyright and copyrighted works in China.

Beijing Taihe, Vice President of Rye Music Company, believes that the music industry has suffered less in western countries because consumers will pay for digital music. Western countries also have more of a tendency to follow through with legal sanctions when people steal music. In China, however, pirated music is readily accessible and people do not generally purchase licensed music, as there is little appreciation for intellectual property and there is little in the way of a legal framework to serve as a deterrent. Rye Music Company has transformed from a traditional record company into a music publishing company, specializing in providing copyright service platforms to musicians. Most traditional Chinese record companies are also going through industrial transitions, and facing the challenges presented by pirated digital music. The movie industry is also suffering from a similar situation. The openness of the Internet, the availability of pirated music, the incomplete nature of copyright law in China and the “free usage” habits of consumers have hindered the development of the digital music industry in China.

The infamous “Great Fire Wall,” built by the Chinese government, prohibits public comments that the government believes to threaten social stability. However, there are no federal entities in China that fight against piracy. Pirated digital music can easily be transmitted around the Internet. Few will be sued for infringement because it is difficult for plaintiffs to produce evidence and to identify a defendant. In addition, the current penalty for piracy is not enough to deter violations. Sound legal norms are severely lacking. The US’s Digital Millennium Copyright Act, which criminalizes production and dissemination of technology or services intended to circumvent measures that control access to copyrighted material, heightens the penalties for copyright infringement on the Internet. This legislation has the potential to serve as a good working example for China. It demonstrates how to better protect copyright in today’s Internet era and, for now, it is a good method for regulating online infringement based on the unique characteristics of the Internet. Furthermore, it has a potentially apt application in Chinese culture, where Confucian notions of harmony are highly regarded. Not only is it more economically efficient to ask an infringing website to take down offending content, the “takedown notice” measures provided for by the legislation actually conform to the Chinese idea that a bad compromise is better than a good lawsuit.

Chinese electronic commerce is not as developed as US electronic commerce, where one can easily access a website to shop for just about anything, including music. In contrast, most Chinese consumers are still reluctant to carry out transactions online due to the incomplete construction of a social credit system, and the fact that many websites are vulnerable to hackers.

Furthermore, if available, people tend to prefer free music and applications in China, no matter how low the price of the legal copy is. In Chinese culture, citizens are educated to be diligent and hard working, but they are seldom educated to recognize the sweat of the musician’s brow, or to respect the fruits of another’s labor. There is an urgent need for government and non-governmental organizations to educate the public about copyright protection.

As previously mentioned, a contradiction exists in Chinese public perception, while people are willing to spend large sums of money, especially on luxury goods, they will not pay small amounts of money to purchase legal music and applications. Additionally, Chinese consumers are more willing to purchase foreign brands than domestic ones. In fact, most trademarks in China are based on foreign brands. All foreign goods are more expensive, and Chinese consumers are more willing to purchase them. A general lack of confidence in domestic brands further contributes to the preference of Chinese consumers for foreign products, and Chinese companies know this and capitalize on it. For example, a Chinese company has been selling sporting goods using the Chinese name of Michael Jordan, “Qiaodan,” for many years. Michael Jordan is the most famous basketball player in the NBA’s history, and people in China know him well. Accordingly, people believe that the company selling “Qiaodan” sporting goods is authorized by Michael Jordan. Even though the company argues that “Jordan” is a common last name in English, it is obvious that consumers associate this name with Michael Jordan.

Not all people and entities in China disregard the importance of copyrights. In fact, several enterprises are beginning to take notice of the importance of intellectual property rights. One good example is Huawei Technologies, one of the few companies in the world that produces top grade routers. It is also the largest telecommunications network solutions provider in the world. The success of this Chinese technology enterprise has, to a certain extent, changed other countries’ views of Chinese brands and companies. Its emphasis on innovation and core technology plays a major role in its success, and it has the potential to provide a great model for other Chinese companies.

Above all, both copyright and trademarks are important concepts that countries must come to recognize and protect in the process of development. China, as an economic world power, should not just be complacent with the role of “world factory,” but rather, it should play a leading role in innovation and creativity. A basic and complete legal framework is needed to provide protection for intellectual property. A thorough education scheme needs to be created to transform the public’s perception of intellectual property protection. A regular intellectual property awareness week, which could be held in schools to raise awareness for the protection of intellectual property, and other educational programs that promote student innovation and creativity should be set up. Intellectual property is the most valuable asset for an enterprise and it is a means of gaining valuable consumer recognition. Only when the public’s perception is transformed, will Chinese society be able to create a supportive atmosphere for the development of intellectual property, which will play an indispensable role in promoting sustainable economic growth.

Jiamin Chen is a LL.M. student at Chicago-Kent College of Law. Chen holds a law degree from the China University of Political Science and Law, in Beijing, and was awarded the Chinese Law Practitioner Qualification Certificate in 2011.

Suggested citation: Jiamin Chen, Transforming China’s Perception of Intellectual Property, JURIST – Dateline, Mar. 26, 2012, http://jurist.org/dateline/2012/03/jiamin-chen-china-ip.php.