COUNTERFEITING AND CHINA’S
ECONOMIC DEVELOPMENT
June 8, 2006
Written Testimony of
Professor Daniel C.K. Chow
The Ohio State University College of Law
55 West 12 Avenue
Columbus, Ohio 43210
Tel: (614) 292-0948
Fax: (614) 688-8422
E-mail: chow.1@osu.edu
2
I. Introduction
China has the most serious counterfeiting problem in world history.
According to recent estimates by the PRC’s own State Council Research and
Development, in 2001 China was flooded with between $19-$24 billion
worth of counterfeit goods. This figure, although substantial, may
underestimate the size of the problem. Brand owners estimate that between
15-20% of all well known brands in China are counterfeit. Brand owners
claim that they are losing tens of billions of dollars in China due to
counterfeiting. Microsoft’s annual losses alone due to commercial piracy in
China are estimated to be $10 billion.
Counterfeiting is now estimated to account for 8% of China’s gross
domestic product. Many municipalities and towns in China depend upon
counterfeiting to sustain their local economies. There are millions of people,
perhaps tens of millions of people, involved in counterfeiting in China. There
are hundreds of thousands of people involved in anti-counterfeiting.
Although the current situation suggests a formidable problem, future
trends are a source of even greater concern. First, despite the intense
international attention focused on the counterfeiting problem in China for the
past decade, counterfeiting in China appears to be getting worse, not better. I
will give a specific and detailed example of why this is so. Second, the PRC
government lacks the political will to engage in a crackdown on
counterfeiting or to make any meaningful progress in addressing the problem.
The result is that for the foreseeable future, there is unlikely to be any real
improvement in the counterfeiting problem in China.
II. Counterfeiting in China, China’s Economic Development, and Global
C