Chinese Piracy Economics 101
The handbag has a much better mark-up than heroin.
—Andrew Oberfelt, Abacus Security
Why has China emerged as the world’s pirate king? The simplest answer is that at least in this case, crime pays—and the payoffs are huge.
A major reason why counterfeiting and piracy is so profitable is that China’s rip-off artists do not have to engage in research and development to produce a product or design. They just steal the intellectual property after it is produced. That saves enormous sums, particularly in R&D-intensive industries such as automaking and pharmaceuticals.
China’s pirates also do not have to spend huge sums of money on advertising and marketing to build and sustain a brand name and open new markets. They ...
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