China: World’s ‘Single Largest Source’ of Counterfeit Goods

May 16, 2010 Updated: October 1, 2015
Pirated software on sale at a shopping center in Changchun of Jilin Province, China. (China Photos/Getty Images)
Pirated software on sale at a shopping center in Changchun of Jilin Province, China. (China Photos/Getty Images)

Recent U.S. findings are showing similar results to other international research that confirms that "China is the single largest source" for counterfeit goods.

U.S. federal auditors have just released a study on “Intellectual Property: Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods.” The 41-page document from the Government Accountability Office (GAO) stated that the actual financial losses, jobs lost, and economic impact associated with piracy and counterfeiting is challenging to quantify.

There were some conclusive findings, according to the U.S. Customs and Border Patrol, which found that "seized counterfeit goods are dominated by products from China. During fiscal years 2004 through 2009, China accounted for 77 percent of the aggregate value of goods seized in the United States." The closest competitor to that statistic, Hong Kong, a special administrative region of China, accounted for 7 percent. India ranked third, accounting for just 2 percent. This research reflects a similar conclusion to the one reached by the Organization for Economic Cooperation and Development, an intergovernmental group based in Paris that also considered China the No. 1 offender when it came to counterfeit products.

However, it seems the global financial crises appears to have reached an all time high in pirated software from Microsoft Corp. and Symantec Corp., according to a study from Business Software Alliance and International Data Corp. (IDC).

Bilateral talks between U.S officials and the Chinese tend to always engage in the issue of piracy. The black market for counterfeit DVDs, software, and luxury items such as golf clubs appear rampant and operates in broad daylight. At times there are even movies being sold that haven’t reached cinemas.

Software Piracy

Business Software Alliance and IDC’s report indicates that personal computer sales have dwindled, combined with consumer education and enforcement efforts, which had a spillover effect of a drop in software piracy in 54 of 111 countries. However the growth of PC sales in China, India, and Brazil spurred global piracy to rocket to 43 percent of all installed software, up 2 percentage points from 2008. The rate is equivalent to a value of $51.4 billion in goods, when the volatility of exchanges rates are factored, it seems this amount is relatively unchanged from a year earlier.

Software piracy “continues to have significant repercussions on both the global economy and national economies,” Robert Holleyman, chief executive officer of the software trade group, said in an interview with Bloomberg. Unlicensed software allows “companies in high piracy markets to compete unfairly against companies in low piracy markets like the United States that are paying for their software.”

The headache for software manufacturers remains concentrated in China, with an estimated 80 percent of Chinese computer users are supposedly using pirated copies of Microsoft Windows. Ironically, Microsoft was banned from selling all its PC operating systems in China. The centrally controlled Beijing's No.1 Intermediate People's Court ruled against the U.S.-based company last December because it violated copyright restrictions regarding a particular character font. The case is currently in appeals.