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I was recently interviewed by bazaar on national public radio[npr] about internet buzz in china and how word of mouth often leads to a proliferation of pirated dvds and cds that are downloadable around the for tv shows like prison break(Nws).A senior executive with time warner was also interviewed to spotlight their efforts in combating piracy.You can hear an interview and read the transcript here.
Intellectual property rights have certainly been the red hot issue on the agenda for president bush and his predecessors like clinton as the money lost by large mncs like nike(Nke)And ms(Msft)Could greatly assist to reducing the current trade imbalance between the us and china.The work software alliance estimates that in 2005, 86% of all applications used in china was pirated, human resources for a $3.9 million dollar sales loss.On a recently available trip to a local it bazaar, several of my firm's analysts found beta versions of windows vista in english for a little over $1 usd before the state version was even released in the us.Some analysts estimate that bogus goods out of china amount to between $50 and $60 billion dollars a year.The us china economic and security review commission estimates that fake goods represent almost 8% of china's gdp.
It is certainly a huge problem that mncs need to take into consideration when they develop their china strategies.Companies that can learn how to solve the problem will do better going forward as they can tap into china's emerging 250 million middle class.Investors should observe the companies that can get out of the pirating quagmire and begin to turn a profit in china as the profits in china will reach levels that will begin to impact the bottom lines of companies.
Luxury products millions of chinese are entering the ranks of the middle class and they want to fit the part of urban aristocrat and consume luxury items like louis vuitton, prada, gucci, moreover burberry.This means that they are willing to part with a lot of their salary to purchase a designer handbag, chic shades, or swiss check out like rolex, and they generally do.During the last decade, more popular luxury brands have become favorite targets of the counterfeiters who sold their wares at the famed silk road market in beijing and xiangyang market in shanghai.
Conversely, true is not all bleak for luxury producers.My firm conducted in depth personal interviews with aspiring consumers in shanghai and beijing.We found that consumers prefer to buy genuine articles if they'd like to afford it.What respondents said is they're buying real products and then completing their ensemble with fakes.
One female participant said,"Right now i can not afford to buy a lot of real lv or coach(Coh), So I effortlessly find the fake items.I hope that in the future i will afford the real thing, but right now i want to fit the bill,
Another young woman remarked that she did buy fakes but said that"If you wear a lot of fake clothing or have a lot of counterfeit bags neighbors will know, so anyone with fooling anybody.It is better to have actual intercourse.It does not make the brand worse if usually often times there are fakes,
One older man said that"Men don't need to have as many accessories as women so it is better to just save money and buy a real watch from omega or a real bag.You won't are proud of http://www.rajpauljewellers.co.uk/burberry-women.html a fake,
As being a, investors should realize that while piracy has been a problem in china for luxury product companies and brands like polo ralph lauren(Rl), Nike(Nke), Pfizer's(Pfe)The blue pill, not to mention callaway(Ely), The situation will get better because Chinese consumers want the real products whenever they can afford them and when there is a material benefit to having a genuine article.With escalating disposable incomes, your destiny is bright for purveyors of real products.
Software/dvds what i'm, never the less, less hopeful about software companies and media giants like time warner(Twx), Unless they become much more realistic in their recommendations for combating piracy problems.Stop whining that it is wrong for brands like baidu(Bidu)Or pirated dvd producers to steal their cerebral rights.When they are morally and legally correct, their current posturing http://www.rajpauljewellers.co.uk/ does nothing to stop the pirates or generate revenue from legitimate sales.
Actually, they will go directly after the pirates from a business standpoint.There is limited benefit for most chinese consumers in buying a real dvd over a pirated one with regards to the film quality.The executive from time warner who was also interviewed by specific niche said: "Part of the strategy is to actually sector the pirates,
Definitely right strategy, but time warner is not conducting correctly.Private information has just started putting out low cost, legitimate dvds on the road for about $2 or $3 each.But that is still 3 4 times costlier than the pirated dvds.In contrast to software where microsoft might send updates, there is certainly benefit to owning a real dvd over a pirated one, except that the subtitles might be better and one can promise quality(Though most pirated dvd vendors will replace dvds with little argument if it's found to be defective).
Given that the pirates will never go away on their own anytime soon, manufacturers like time warner will have to learn to compete even more closely on price.They must sacrifice margins by going face to face with pirate, s but at the same time they will create an opportunity to sell to a chinese market that is incredibly interested in hollywood tv and movies.Even if it takes low cost products to reach chinese clients, companies have a lot to gain from selling directly to such a tech savvy society when they realistically cannot offer a compelling reason to buy actual intercourse.
Time warner could also sell a wider range of film titles and embed coupons on products or through digital media that get consumers motivated to buy the real products.As i wrote about for wisdom wharton, chinese consumers want user created and active digital marketing campaigns like those created by Pepsi(Pep).These email articles create positive buzz and build brand loyalty and, you'll want to, become profitable.
An example, if time warner created campaigns where people who bought the legitimate copies of dvds could be signed contests to meet movie stars in time warner's movies or win prizes, that might get consumers to switch to buying the actual thing even if there was say a 10% premium(But not really 200 300% or more! ).
But the job interview on marketplace shows me that time warner just does not get it in china.They can now create compelling content that necessitates buying genuine articles.When companies find the appropriate mix of price http://www.rajpauljewellers.co.uk/burberry-women/burberry-trousers.html and prestige they will reap benefits from china's economic growth rather than crying foul while pirates take their bounty.
On the excellent side, china's it industry starts to bloom.Once enough domestic chinese business taste are hurt by the pirates, there'll be chinese firms lobbying for better protection.And if they do, it is certain that the us government will pay attention and protect its wards.The piracy problem was huge and fixed in a very similar way in countries like korea and taiwan.The blind levels are bigger in china, so mncs need to be more proactive option reactive in how they expand in china.