Every expat in China has a place to go for them: maybe a grease-stained man behind the local jiaozi stand, perhaps from a plastic crate strapped to a street-corner motorbike, possibly even so melodramatic as to be from behind a secret mirrored door swivelling out the back of an unassuming electronics shop. Fake and pirated DVDs in China are the open secret to end all open secrets. They are completely, totally, 100% illegal, yet can be found in every street, every city and every province in China. Their slim, rectangular sleeves – roughly the size of a standard Western greeting card – are as every bit an emblem of day-to-day life in modern China as skyscrapers, building sites and ever-present atmospheric haze.

Counterfeit China

The statistics are truly staggering. In 2007, it was estimated that 93% of all movies sold in China were pirated copies, worldwide DVD counterfeiting (of which China is the prime culprit) costs the global film industry 3 billion USD a year and not only has the United States repeatedly placed China on its "priority watch list" for intellectual property rights violations, it brought a 2007 World Trade Organisation action – the first of its kind – against it for "repeatedly failing to protect and enforce intellectual property rights."

Of course, for expats on the ground, fake DVDs are so commonplace it is somewhat of a shock to remember they are actually illegal. When three different vendors are set up shop on the busiest intersection in the city, unperturbed, it is hard to feel guilty about picking a few up. Prices vary depending on format, but rarely will you pay more than 10 RMB for one disc, and when legitimate copies sometimes sell for ten times that, the famous hard-wired Chinese bargaining mindset kicks in and pesky Western moralising gets tossed aside.

Punishment or promotion?

The Chinese government’s policy is that the sale of a single fake DVD is criminal, but in practice, punishment only ever amounts to an occasional perfunctory raid (usually ahead of a major international event or trade summit), followed by a swift return to the status quo.

The penalty for importing pirated discs is up to four years in prison and a fine of 1,290 USD for each imported disc. Beijing has also promised to "lower the threshold of what constitutes a criminal violation," but once everyone is finished with the grandstanding (which it must be admitted is not exactly inconsequential: in the first half of 2004, China seized 2 million DVDs and raided 8,000 DVD dealers, fining violators around $3.6 million) the vendors always creep back out into the open. Some commentators even say that local governments quietly tolerate piracy because it provides employment for large numbers of the population laid off from state-owned businesses.

The faking factories

So where do these DVDs actually come from? The government points the finger firmly beyond its borders. Speaking to the Xinhua news agency in 2007, Chinese government official Xu Hu stated that "illegal production lines are the source of pirated discs… and most of these illegal production lines are smuggled from overseas, and some are using cutting-edge technologies."

Dig a little deeper however, and one finds plenty of home grown counterfeiters around. It is usually an ugly blurring of the boundary between legal and illegal, with many legitimate businesses getting caught up in counterfeiting operations unwillingly. According to the LA Times, the Suzhou Baodie Laser Electronics Company was closed in the late 90s for breaches of copyright. Apparently it was running off copies for the California-based Microlink Systems during the day, but pirates used it to make fakes at night. Suspect factories such as these are scattered all over China, but the main regional offender (as usual) is Guangdong Province, which is doubly afflicted: first by its massive pre-existing industrial base and secondly through its proximity to Hong Kong and Macau, from where organised gangs smuggle thousands of copies over the border every month.

The solutions

So what can be done? Not much, according to Shaun Rein of Forbes magazine, other than to wait for China to develop further. "China's piracy problem is not a matter of morality," he says "More than anything, it is a matter of poverty." Chinese people cannot afford the prices of DVDs in the West, and until they can they are only going to keep on buying the cheap fake ones. China is simply too vast and too populous for the government to be able to do anything significant, and although it might seem like China is getting away scot-free, in the long run it is paying dearly. Companies won’t invest in research and development in China if they know they are only going to get ripped off and plagiarised.

Moreover, this behaviour seems to be the norm for emerging Asian economies. DVD piracy was similarly rampant in Taiwan, Korea and even Japan until consumers got wealthier and their economies started innovating. The current issue in China is that the country does not create, only manufactures, so when China gets to the stage it has something to protect, intellectual copyright will become hugely important. Then, China will have its own incentives to crack down on piracy.

However, until then, it is unlikely that there will be any major changes in China. Which to be honest, for the majority of expats with no official means of access to Western movies, is rather welcome news. For the culture-shocked China-newcomer, DVD vendors can offer quite the lifeline. And let’s face it, cheap is cheerful…

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