Made in China: How IP Theft Became a Norm in China

Tiffany Saez, MJLST Staffer


While discussions regarding North Korea and trade have comprised much of President Trump’s tour around Asia insofar, the President has yet to arrive in China – China is the third stop of his Asia tour. This has left many speculating as to what will result from the President’s visit to Beijing. This may be since Trump advocated a stronger stance against China during his campaign and has taken no significant action with respect to China’s economic policies during his presidency.


In light of the President’s visit, however, some are already urging him to crack down on China’s human rights violations. Others are asking President Trump to confront China about North Korea’s nuclear threats. China’s rampant intellectual property theft is one issue that has long been overlooked by political agendas but deserves more attention. IP theft by China continues to present a serious threat to the US economy. Annual cost currently exceed $225 billion in counterfeit goods, pirated software, and theft of trade secrets; this figure is expected to reach $600 billion.


Chinese IP theft has slowly made its way into the spotlight following the release of the HiPhone in 2008. The HiPhone is a cheap Chinese knock-off of Apple’s iPhone. The HiPhone was just the beginning of a series of IP disputes between China and both American and European businesses. Many businesses have accused Chinese nationals of illegally reproducing their creations and then misleading consumers into thinking that they are purchasing authentic products.


With a weak IP regime that has done little to curb a growing copycat culture among Chinese businesses and individuals alike, it is no wonder that China has become the leading country for IP theft. The Chinese intellectual property and manufacturing policies in place are largely to blame for the increase in IP theft.


Boasting a population of 1.38 billion, China has become one of the world’s largest markets for companies looking to expand their marketplace. The country is not only full of potential consumers but it has also demonstrated its ability as a manufacturing powerhouse. Doing business in China, however, has proven to be rather problematic since a stake in one of China’s industries often entails a trade-off in terms of technology. That is because foreign firms that wish to do business in one of China’s industries are required to enter into joint ventures with local partners or share their technologies with the state’s regulatory agencies. Such partnerships often lead to IP theft by Chinese companies


The United States’ intellectual property disputes with China represent only a fraction of a much larger debate over IP rights in the global context. Proponents of IP rights insist that stronger rights are needed to foster innovation and encourage individuals to participate in research and development by ensuring they will be economically rewarded for their contributions. Meanwhile critics of stronger IP rights argue that such rights favor wealthier countries over developing ones. Even so, US companies, such as Apple and IBM, – who are often the first to be impacted by Chinese IP theft – are hoping that the Trump administration will capitalize on the trip to Beijing and finally take stronger measures against China’s lax IP laws.