Wrong Reasons, Right Conclusion: Why China Imitates Western Brands

Global branding, local marketing
Genuine IKEA in Hong Kong offers "lucky bamboo"
Photo: Danny Friedmann

Panos Mourdoukoutas, professor of economics at Long Island University, gives four reasons why China imitates Western brands. See his Forbes article here. Since I do not agree with all of them, I have given my comments below his assertions:

Mourdoukoutas: 1. "A get rich quickly mentality. After suffering for many decades from the failures of communism, some Chinese people have been trying to improve their standard of living, but they have yet to grasp the meaning of modern capitalism: a system of wealth creation within certain social norms, including respect for other people’s property."
Friedmann's comment: The countries of Eastern Europe also suffered for decades from the imposed plan economies when they were satellite states of the Soviet Union. However, after the wall fell, the intellectual property rights were not as widespread infringed as in China. Precisely because Chinese completely "grasp the meaning of modern capitalism" they make use of every leeway possible. Especially so, since a sufficient safety system by the state is lacking.

Mourdoukoutas: 2. "The belief that intellectual property is a social good. Coming of a communist rule, where many commodities belong to society, and therefore, could be shared among all society members, some Chinese people believe that intellectual property, including brand names can just be shared for free."

Friedmann's comment: See my comment above. Mr Mourdoukoutas does not mention the evolution from trademark counterfeiting to copying design and business methods. This shows that a growing number of Chinese companies understands the value of brands and are starting to develop them.  

Mourdoukoutas: 3. "Weak enforcement of property rights. Intellectual property receives little protection in China, especially when it comes to prosecuting and punishing violators."

Friedmann: Intellectual property and enforcement in China has improved significantly over the years. One can argue that the authorities have a duty to enforce on their own initiative. But China is compliant to article 41 (5) TRIPs when it has other priorities to spend its resources on (see page 46 of my thesis). Therefore the proprietors should take the first step to enforce their IPRs. There are enough possibilities: enforcement via customs, the courts, administrative route or even criminal route, see here.   

Mourdoukoutas: 4. "A supply side approach to entrepreneurship. In western countries, developing a new brand is a form of demand side entrepreneurship that begins and ends with the consumer; it involves a great deal of consumer research and engagement that require the commitment of great deal of human and non-human resources—and that’s what makes western brands so successful. In China, brand development is a form of supply side entrepreneurship that begins with supply, with abundant labor and financing, but little market research and consumer involvement—and that’s why Chinese brands flip."

Friedmann: I do not agree. Chinese approach entrepreneurship from the demand side. As I pointed out in my article about 11 Furniture, the IKEA clone, see here, Chinese entrepreneurs in second and third cities are listening to what the consumers want. In these second and third tier cities they want high quality, safe goods (Shaun Rein even asserts that Chinese assume Western fast food is healthy, see here) that can be bought in a comfortable way. Many Chinese perceive that these product attributes are provided by Western brands.

UPDATE August 8, 2011:
Professor Mourdoukouras was interviewed by CTV and he argues that Chinese counterfeiters cannot replicate service of Western brands. Again I do not agree. See here.

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Why Intellectual Property Rights In China Don't Come Naturally

I was delighted to receive the learned paper of Charles R. Stone, published in the Marquette Law Review, Vol. 92, p. 199, 2008. It is called 'What Plagiarism Was Not: Some Preliminary Observations on Classical Chinese Attitudes toward what the West Calls Intellectual Property'.

It has 32 pages and I read it in just half an hour. And a splendid half hour it was.

In this paper Charles makes it plausible that the classical Chinese authors expected their readers to be erudite enough to know what and when they quote and how to interpret these often substantial quotes within the rest of the text. By comparing Chinese classical texts with a legal text that includes references to Supreme Court opinions and quotations, Charles gives his readers (especially the ones with a legal education) the chance to actually experience that the process of interpreting a legal text has in a way many similarities with interpreting a Chinese classical text, which is of course only possible if you have had a classical Mandarin education. Charles explains that in such a cultural environment, heavily influenced by Confucianism, Buddhism where the classical texts were made for the initiated, and communism, a different development of looking at intellectual property was inevitable in China.

Gaining power from the dharani

"The reproduction of religious texts is uniquely appealing to Buddhists because it is a tenet of that religion that the copying and distribution of its sutras is a way to receive the blessings of its founder. The Buddha, it is said, once remarked, “Whoever wishes to gain power from the dharani [charms] must write seventy-seven copies and place them in a pagoda.” The underlying “religious motivation is . . . confirmed by the earliest printings of the dharani discovered in Japan and Korea.”"

Fascinating. Thanks Charles.
Using the web as a pagoda here is a chanted version of (one of) the most famous dharani the Lotus Sutra.



Picture by Peter Nijenhuis can be used with the following Creative Commons license.

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