China

The Benefits of Chinese Piracy

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Via Alan Vanneman comes a link to this super-interesting story in Foreign Affairs.

It's about the benefits that come from China's brazen disregard for international intellectual property laws. Some excerpts:

American anxiety and anger over Chinese piracy are misplaced. Copying is not the plague that American business leaders and politicians often make it out to be. In fact, far from always being an enemy of innovation, copying is often a critical part of creativity. Although copying has a destructive side, it also has a productive side. Nearly all creations rest on prior work, and the ability to freely copy and refine existing designs fuels fields as varied as fashion, finance, and software. Copying can also foster stronger competition, grow markets, and build brands….

In 2012, Beijing Review recently reported, Bentley Motors sold 8,510 vehicles worldwide, of which 2,253 were sold in China, making it the brand's second-largest market. Even for Apple, the land of the HiPhone is lucrative: Apple's business in China is worth nearly $25 billion annually, second only to its business in the United States. Moreover, China was the only place in the world where Apple's sales grew in the first quarter of 2013.

In this way, China's knockoff economy allows products to filter down to average Chinese people—sometimes improving along the way—and in the process helps China and Chinese firms develop and compete in the near term. In the longer term, open copying may build demand for Western innovations. As Microsoft's co-founder Bill Gates—not one known for his lenient views on intellectual property rights—famously said of Chinese software copying, "As long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

Read the whole thing.

And watch Reason TV's interview with UCLA's Kal Raustiala, author of The Knock-Off Economy: