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Has China Reached The Tipping Point On Software Piracy Yet?

March 6th, 2008

Software piracy is stifling innovation, claims a recent study commissioned by the Business Software Alliance. Having little confidence that their intellectual property rights are protected, software developers have been reluctant to develop new products from the China market. ZDNet Asia, always a good source for technology news, also points out that reducing piracy can create jobs:

“Commissioned by the Business Software Alliance (BSA) and conducted by research house IDC, the study released Tuesday said the reduction would add highly-skilled jobs to the labor force, support the creation of new companies, lower business risks, and fund government services without a tax increase. Some 435,000 new jobs, over US$40 billion in economic growth, and more than US$5 billion in tax revenues above current projections, could be generated in the region, the research projected.”

Piracy used to be a boon for China as the laobaixing benefited for years from lax regulation. It was only through piracy that someone earning US$100 per month could afford Microsoft products selling for hundreds of dollars. The problem is that the economy is now stuck from an innovation standpoint, and China must realize that it makes better sense to support software rights. The question is whether China has yet reached that tipping point. Does China still benefit more by allowing the wholesale piracy of software, or is the practice doing more harm than good now?

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