Anti-piracy lobby tries softer approach in China

In a bid to encourage Chinese officials to crack down on rampant software piracy in the country, foreign critics are working hard to sell the notion that legal software is good for China's economy.

"It's seen as the foreigners' way of taking money out of the country without necessarily building factories or other obvious ways of adding value to the economy," said David Wolf, president and CEO of Wolf Group Asia, a consulting company in Beijing.

"You've got to put [the issue] in terms where the Chinese recognize they benefit as well," Wolf said.

This week, the Business Software Alliance (BSA), an anti-piracy group largely comprised of U.S. software companies, including Microsoft, released a 28-page report it commissioned to show the importance of China's software and IT services industries to the country's overall economy.

Among the economic benefits highlighted in that report, it said IT-related tax revenue will add 13.3 billion renminbi ($1.7 billion) to the Chinese government's coffers this year, more than twice the revenue generated in 2003. In addition, demand for IT services and products, including software, will add one million new jobs in China between 2003 and the end of 2006.

Anti-piracy campaigners aren't the only ones touting the economic advantages of a crackdown on pirated software. U.S. Commerce Secretary Carlos Gutierrez touched on the same themes during a recent speech to students at China's Chongqing University.

"One study projects that if China cut its software piracy rate down from 90 percent to 80 percent by 2009, it would generate the equivalent of $6.5 billion in taxes, in tax revenues that could be reinvested back in society," Gutierrez said at that time.

In addition, China would gain 2.5 million new jobs by reducing software piracy, Gutierrez said.

These messages are being delivered at an important time. The U.S. and Chinese governments sit down next week for the next round of U.S.-China Joint Commission on Commerce and Trade (JCCT) talks in Washington, D.C. Among the topics set for discussion during that meeting, the question of intellectual property (IP) protection, including software piracy, is expected to top the agenda.

There are signs that the campaign for greater IP protection is making progress in China. The Office of the U.S. Trade Representative (USTR) has praised China's efforts to improve legal protections for IP, but said more work needs to be done to enforce existing laws.

Vice Premier Wu Yi is currently visiting the U.S. ahead of the JCCT talks. She is travelling with a delegation of Chinese businessmen that is expected to sign deals worth billions of dollars with U.S. companies.

Included among those deals are agreements signed this week between Microsoft and two Chinese PC makers, Tsinghua Tongfang Co. and TCL, to use only licensed versions of Windows XP. While the value of those deals was not disclosed, they are expected to be worth millions of dollars in licensing revenue for Microsoft.