The Cost of Chinese IP and Trademark Theft (it’s probably not that much)

This is a pretty fascinating article How Costly is Chinese IP Theft?

It agrees with what I have been thinking for the past year, which is that the conventional media narrative about China is almost certainty wrong or misleading, and that this China stuff is overblown.

It’s very hard to measure the extent of theft, or even what constitutes theft.

Trying to win is like trying to win the war on drugs, as in it’s futile.

The media frames the issue in the context of intellectual property theft, but software piracy is much smaller amount than counterfeit and knockoff goods, such as fake shoes and handbags, as the article states, “the same OECD/EUIPO study found that while 95% of counterfeit goods seized by customs officials were protected by trademarks, only 2% were counterfeits of patent-protected goods.”

Moreover, if China by cheating is somehow hurting the US economy, you wouldn’t know it by looking at S&P 500 earnings, which are stronger than ever. Or GDP data. Or a ton of other metrics. The evidence suggests that multinationals derive a net-benefit from selling to China in spite of some theft. Nike derives more total sales from the rich Chinese than they lose from counterfeit shoes sold in China and elsewhere. Most of the people who are buying these pirated program and fake shoes and handbags were probably never going to buy the authentic thing, anyway. Also, IP theft is much easier said than done. Apple has been selling phones in China for a decade yet it’s not like the Chinese have anything comparable to an iPhone or have been able to replicate the success of Apple. Part of the reason is, Apple and these other tech companies have built huge networks and services around their products, so even if the Chinese are able to replicate the hardware, they will never be able to replicate the service and network aspect of it.

As much as pundits whine and pound the table about trade and how China is cheating, nothing is going to change. In 2 or 6 years, when Trump is gone, it’s possible that much of his policy on China will be reversed by his successor (it’s a certainty if a democrat wins, but maybe maybe a coin toss if a republican wins). The only way for this not to happen would be to codify the trade policy into a piece of legislation, but that’s not gonna happen. Even if somehow policy were put in place , it would not do much to change preexisting trends.