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March 20, 2004

Piracy Fails to Damp Hopes for China

Michael Chan

China's entry into the World Trade Organisation two years ago was supposed to open the doors to ELT companies eager to enter the country's burgeoning English textbook market.

After all, China is in the midst of English fever. More than 100,000 people sit the Toefl examination every year. In preparation for the 2008 Olympic Games, the Beijing city government started a grassroots English-learning programme that has seen more than a million of its 13 million residents study English, and the introduction of English in the primary school curriculum in 2001 has given more than 130 million children the chance to study the language.

"China has become the largest market for English teaching in the world," says Robert Diyanni, director of International Services of the US-based College Board. With such a huge increase in learners it is inevitable that the sales of ELT textbooks and services will grow to match the demand, and publishers cannot help but see huge dollar signs.

However, their optimism is tempered by China's rampant textbook piracy problem, which the country is only just beginning to address.

Among the fake Gucci bags and pirate DVDs that can be found in Shenzhen, China's booming special economic zone just across the border from Hong Kong, are also illegal copies of several ELT texts. In many cases these copies are indistinguishable from the real thing apart from their price.

Until recently foreign publishers were forbidden to sell or distribute their titles in China. To get their books into the hands of Chinese consumers they either had to sell the publishing rights to a local firm who then printed, distributed and sold on their behalf, or set up a joint venture in which the Chinese side retained a majority share and appointed the chairman.

"The addition of so many intermediaries makes it difficult for us to know where the illegal printing is coming from," says one publisher. "It could be the printing company printing over the agreed print run and pocketing the profits of the extra copies themselves, it could be a local bookstore, or even one of our partners. We just don't know."

A typical price tag of 30 renminbi (roughly $3.50) for a genuine ELT text book may seem cheap compared with other ELT export markets, but it is a considerable expense in a country where the average white-collar worker in a city such as Beijing and Shanghai takes home $145 a month.

"When you consider that there are usually up to six levels per course, each level with a student book, work book, a vocabulary book and audio CD, it can be very expensive," says Tingting Ma, who frequently buys pirated texts. "It looks just like the official version – so why pay more?"

While most foreign publishers take the pragmatic view that things will get better once China begins to fulfil its WTO obligations and is more integrated into the global economy, the US-based Educational Testing Service (ETS) took matters into its own hands in 2001 and sued the country's most prestigious English school, New Oriental Education Group, for selling textbooks containing questions from past Toefl and Graduate Record Examinations papers.

The resulting two-and-a-half-year lawsuit between the world's largest private educational testing organisation and China's biggest English language school concluded in October with the award of over $1.1m in copyright damages to ETS – an unprecedented amount for a case involving copyright infringement and a foreign company. New Oriental was also ordered to pay legal fees of more than $120,000 and issue and official apology in national newspapers.

"Despite rampant piracy and years of high-pitched campaigns against it in the country, the Chinese legal system has not taken the issue of intellectual property so seriously," says Zhou He, an associate professor at the City University of Hong Kong. "The punitive compensation ordered by the court is among the largest sums ever levied." Indeed, China's enforcement of copyright laws and regulations has traditionally been lax, and the concept of intellectual property has yet to penetrate the consciousness of the Chinese consumer. "I think that this case demonstrates the resolve of the legal system to deal with intellectual property issues seriously," He says.

But the ETS case is unlikely to start a trend of ELT publishers using the courts to press their fight against piracy. As part of its WTO obligations to open up its book retail and distribution markets, China allowed foreign companies from May to set up retail outlets to sell their books directly to the consumer. The big ELT players such as Pearson Education and Cambridge University Press were among the first overseas publishers to submit their applications to the government to participate in the $12bn book retail market, and it is most unlikely that they would jeopardise their efforts by doing anything that might generate bad publicity and upset the feelings of the Chinese.

With the additional opening of the $6.8bn wholesale market to foreign companies next year, ELT exporters are far more focused on establishing their brand and setting up China branches than pursuing copyright violators. Even ETS has put the recent lawsuit behind it, and has already set up a joint venture with a local firm to distribute and sell its Toefl study materials.

This article was originally published in the Guardian Weekly on December 4, 2003. Michael Chan is a former editor of ELT News.

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