WASHINGTON — Chinese President Hu Jintao is on his first visit to the U.S. as that nation’s leader, and when he leaves the White House Thursday, entertainment industry executives hope he takes a commitment to fight copyright piracy back to his homeland.
Among the litany of complaints Washington has with Beijing is the seemingly endless addiction the rising Asian economic, political and military powerhouse has for bootleg movies, music and other intellectual property. Estimated U.S. losses to Chinese copyright piracy range from $2.5 billion-$3.8 billion a year, according to the U.S. Trade Representative.
According to the USTR’s April review, the country’s lackadaisical enforcement actions allowed infringement levels of 90% or more “for virtually every form of intellectual property” in China during 2004.
On Tuesday, Hu toured Microsoft Corp.’s suburban Redmond, Wash., campus and dined at company chairman Bill Gates’ home. Hu said he admired what Gates had achieved. He also sought to reassure Gates that China is serious about protecting intellectual property rights, a key concern for the company as it battles widespread piracy of its Windows operating system there.
“Because you, Mr. Bill Gates, are a friend of China, I’m a friend of Microsoft,” Hu said through a translator, according to the Associated Press. “Also, I am dealing with the operating system produced by Microsoft every day,” he added, to laughter.
Gates responded: “Thank you, it’s a fantastic relationship,” and then quipped, “And if you ever need advice on how to use Windows, I’ll be glad to help.”
Hu, Gates, Microsoft CEO Steve Ballmer and an entourage of Chinese dignitaries saw some business technology demonstrations and toured Microsoft’s Home of the Future, which features experimental technology.
That Hu’s American visit began with a tour of Microsoft and dinner with Gates could be viewed as a sign of a newfound seriousness the Chinese government has pertaining to intellectual property theft. His visit comes after years of battling widespread software piracy in the potentially lucrative China market. Chinese government officials say they are serious about cracking down on sales of illegal copies of Windows, and some computer makers are pledging to ship more computers with legitimate Windows software installed.
One of those companies, Lenovo Group Ltd., met Monday with Microsoft officials to reaffirm Lenovo’s five-month-old commitment to ship computers with genuine operating systems. Microsoft held a similar meeting last week with Chinese computer manufacturer Founder Technology Group Corp., also among the companies that have pledged to promote legal Windows use.
There also have been recent shows of force by the Chinese regarding piracy of entertainment products; authorities there have closed a half-dozen illegal optical disc plants and said they have eight more under investigation. Last month, the government also announced the creation of a new court that will prosecute pirates, amid increasing international pressure to protect the intellectual property of industries making everything from movies to medicine (HR 3/13).
The government also claims that Chinese courts last year sentenced 741 violators of intellectual property rights, adding that there were 16,583 civil cases against pirates in 2005, a 21% jump from the year before. In late 2004, China lowered the threshold for prosecution of piracy cases; individuals who sell more than 5,000 pirated discs can be imprisoned for three to seven years.
In advance of Hu’s visit, Zhang Pimin, deputy director general of China’s powerful State Administration of Radio, Film and TV, touted his country’s attempts to curb piracy.
“Personally, I hate piracy,” Zhang said in an interview through an interpreter. “It hurts the domestic industry as well as the international industry. Piracy leads people to illegal activity and illegal people.”
He enumerated the anti-piracy measures the Chinese have taken, saying it will take time for them to take effect. China only recently embraced a market economy with its attendant property rights, Zhang explained.
“We are in a kind of education,” he said. “Manufacturing is illegal, and now buying is illegal, too.”
Like the high-profile war against illegal downloads in the U.S., it is difficult to get people to understand the problems caused by rampant copyright theft, he said. The average Chinese has only eight years of schooling and per-capita gross domestic product is about one-twenty-fifth that in the U.S., according to the Chinese government.
While industry officials said they realize that changing the Chinese mind-set is difficult, they point out that piracy is not a new problem for Beijing; it’s one that they promised to fix before joining the World Trade Organization.
“I’m willing to give a little slack on that point,” MPAA chairman and CEO Dan Glickman said. “As long as they have a clear direction.”
The Chinese have talked a good anti-piracy game at least since 1996, when the U.S. under then-President Clinton threatened to slap tariffs on Chinese imports unless they took steps to rein in piracy and other unfair practices. Since then the country has been admitted to the WTO and is required to meet fair trade obligations, which include copyright protections, or face lawsuits that could result in sanctions. The studios, record companies and other intellectual property holders have asked the Bush administration to take WTO action, but so far it has not taken that drastic step.
“One of the things that strikes me is that the talking points they use are almost a mirror to those I use when I lobby up on the Hill,” RIAA chairman and CEO Mitch Bainwol said. “From the standpoint of rhetoric and understanding the issue, they have it down. The question is: Will they back the rhetoric with action?”
On a recent visit to China, Glickman found reason to question the Chinese commitment because pirated DVDs were an easy score.
“Street piracy was ubiquitous,” he said. “They give a lot of lip service, backed by limited action. Some of the local government officials are serious about it, but it is haphazard at most.”
Hu’s visit is as much about polishing his country’s image at a time when the copyright piracy helps exacerbate a U.S. trade deficit that is soaring above $200 billion. China is playing economic footsie with countries Washington considers tyrannical, and its undervalued currency hampers U.S. competition.
“Part of President Hu’s challenge is also to speak to the U.S. public,” Deputy Secretary of State Robert Zoellick, a leading administration voice on China, said in a speech this week. “China does not want to be seen as a threat; it’s seeking respect.”
U.S. and Chinese officials must “demonstrate to the United States public that the economic relationship with China offers a fair, two-way street — that there are mutual opportunities and benefits.”
Entertainment industry executives look at China’s billion-plus population and instantly see how it could benefit their business — only the government would take steps to protect their products.
To that end, execs hope that Hu’s visit will work as another pressure point for the entertainment industry.
“It’s on the president’s agenda list, we know that,” Glickman said. “And when their film people talk to me, they know it’s a priority.”
Bainwol said the Chinese don’t have to change their entire world to make a positive impact. A few concrete steps within the next few weeks or months would leave an indelible mark. Giving copyright holders the exemplars — fingerprints left on CDs and DVDs by the machines that make them — left in the plants they closed would be considered a show of good faith.
“Hu’s visit is a moment in time,” Bainwol said. “This is a journey, but there are critical moments coming up in the next few months that will make a difference.”
Story courtesy of Hollywood reporter
