Piracy: The China Crisis

The cracking and crunching sound lasted for an hour, and millions of CDs lay in pieces on the yard. Then the cameras were shut off and journalists returned to newsrooms until the next bulldozer performance in a Beijing police warehouse. Amid the shards of plastic, there were disjointed pictures of Bono, Enya, Boyzone and Mary Black. Mary Black and Ronan Keating – together on a Beijing police yard.

Such ritual disc-smashing sessions are held a few times a year for the benefit of the international press. The Chinese Communist Party, has, in its own pompous thinking, stood up against piracy. But the bluster and showcase destructions are usually as fake as the discs being destroyed. In the latest Politburo salvo, earlier this month, Chinese vice premier Wu Yi says China will “make an effort to create an environment in which intellectual property rights can be well protected.” In trademark vacous Communist Party-speak, Wu Yi promised to “strengthen the legal system” in order to ensure “relevant laws” are observed.
Hot air on piracy won’t rise from Communist Party conferences as easily as before however. American trade officials have threatened China several times in the past year with trade penalties if piracy isn’t brought under control. The International Federation of the Phonographic Industry (IFPI), a music industry watchdog, has opened an office in Beijing and has recruited Chinese bands to awareness campaigns, part of a strategy to point out the damaging effects of piracy to local musicians.
According to the IFPI, global sales of pirate CDs have more than doubled in the last three years and the one billion units sold every year now account for more than US$4.6 billion of total CD sales around the world. One in three of all CDs sold worldwide is a fake – while the total value of the pirate music market, including cassettes, was US$4.6 billion in 2003, up 7% on the previous year.
The global pirate music market is now worth more than the legitimate music market of every country in the world, except the USA and Japan. Top of the list in piracy rankings is China, where more than 90% of all recordings are pirated. China produces over US$530 million worth of fake CDs every year, according to the IFPI, despite commitments made during the country’s accession to the World Trade Organisation. Other “priority countries” in the IFPI’s sights include Brazil, Mexico, Poland, Russia, Spain, Thailand and Ukraine.
On the streets of Chinese cities, shops sell pirated CDs and DVDs under the nose of police. There’s nothing underhand about the trade: well-kept shops with wide windowpanes and large neon signs sell thousands of disks on Beijing’s main streets. The shops get smaller and grubbier in suburban neighbourhoods but they’re even more plentiful there.
In every shop, Irish musicians are massively popular sellers. Ireland is immediately connected in most locals’ mind with music – and Riverdance. Westlife, U2 and Enya are easily three of the most popular artists across the country.
“Ireland is my favourite country. It’s a cool place,” says Ba Min, a 24- year-old radio journalist from remote Guilin province. “You have all those musicians, I don’t understand why you have so many famous singers.” Ba works for Easy FM, a local station belonging to China Radio International, a huge umbrella group of stations broadcasting domestically and internationally. Her collection of CDs is made up entirely of pirated discs, “daoban” in Chinese. Price and availability drive her to buy bootlegs.
“I don’t feel good about buying fakes all the time, but I want to have a lot of CDs and all my favourites,” she explains. “I like to go CD shopping but I can’t afford the real ones. And it’s often hard to find the real version of a lot of new CDs. Record companies should lower the price and then people would buy the real ones.”
Many music shops selling pirated discs often stock a huge range of artists and genres, as globalisation and the internet bring rock and rap to Chinese campuses. Most shops take orders for recordings they don’t stock. A shop owner in Harbin, a northern provincail capital a few hundred kilometres from the border with Russia, showed me a glossy catalogue of big-name concert DVDs prepared by a local factory. I could choose from a huge range of live shows and she could have my order in 24 hours. Riverdance was one of her best sellers she assured me, and Michael Flatley’s Lord Of The Dance is always popular too among her customers.
DVDs here cost 18 yuan (E1. 70) in sturdy plastic boxes and 10 yuan (95c) if sold in cardboard packaging. As in most Chinese CD and DVD shops the packaging is high quality and it’s difficult to distinguish the recordings from legitimate discs. Metallica, U2, REM were prominently displayed but nu-metal acts like Linkin Park and Limp Bizkit were also on the shelves. A bigger pop section was headed up by Blue, Boyzone and Westlife. Most surprising however was the diversity of the recordings held in storage for serious rock fans: Radiohead, Coldplay and Oasis were there but so too Bush, Puddle of Mud, Styxx and the Manic Street Preachers.
China’s Communist Party has long been associated with piracy. Several state-owned enterprises, some of them run by the People’s Liberation Army, once turned out pirated household appliances, clothes and discs. Today, local officials portray China as a victim of piracy. That’s because, they say, most of the production gear comes from abroad. According to government intellectual property expert Gui Xiaofeng CD-production lines and materials are mainly produced in the developed countries. “Some factories in these countries even sent technicians to install CD-product lines bought by illegal piracy groups and guided their production,” claims Gui.
Tiny production costs allow piracy bosses to make healthy profits. It costs less than one yuan (9c) to turn out the CD. Most of the costs are spent in printing liner notes and the wrap-around carboard jacket that usually covers CD cases. But with a total production cost of 3 or 4 yuan (29-39c), producers can afford to wholesale the CDs at 6 yuan, leaving shopkeepers a hundred percent markup. Bootlegging factories can turn out 20,000 CDs a day, according to police reports on plants that have been closed. Some pirate operators have their own shops, and clerks in several stores I’ve visited in Beijing worked variously at packaging and selling pirate CDs.
Lack of production capacity for genuine products is cited by state-mouthpiece newspapers as a root cause of piracy. Statistics from the China Audio-Video Association quoted by the China Youth Daily recently show that China’s legal disc production lines had a capacity of 600 million discs in 2003, while total sales volume in the whole country reached 5 billion.
Amid the indiscriminate piracy of music and film there are some causes for hope for beleaguered record labels. In September last year, copyright enforcers were given more powers, after months of arm twisting and coaxing of China by other WTO members. Sales of legitimate releases are also up in China.
Meanwhile, the campaign of self-deception continues. “China has stepped up its all-out war against disc piracy since late 1980s” a recent State Council report trumpeted. Amazingly, the report put the “booming sales” of copyrighted discs down to the “successful fight against piracy” in China.