International Business – Can Piracy Be An Effective Market Strategy?

Piracy as a Business Model in International Business

Piracy is an enormous industry. We can’t even really get an accurate picture of how big the counterfeit industry is. Estimates range from the billions of dollars to the hundreds of billions of dollars annually.

For example, the US Congressional International Anti Piracy Caucus estimates that Piracy costs the US economy $25 billion annually, and that 375,000 jobs are lost each year in the USA because of piracy. The Internet is blamed for roughly half of it.

On that note, the Recording Industry Association of American (RIAA) estimates that music piracy alone costs the US economy $12.5 billion annually and $2 billion in lost wages to the American workers. These figures are just in the USA. Overseas they become more and more staggering.

Pirating (stealing for one’s own use) shouldn’t be confused with counterfeiting, which is basically manufacturing something for resale without paying any royalties or recognizing the true owner of the brand or patent.

The trends are simple. Piracy and counterfeit manufacturing is growing, popular and unstoppable.

For years many American companies have blamed Asian factories for product knock-offs. There is some truth to this. We can look at laws which don’t punish product counterfeiters and we can look at low cost labor and illegal (and unsafe) as factories as factors. Once you start to add come cultural norms, it’s easy to see that many Asian cultures aren’t even ashamed of piracy. In China, for example, counterfeits and IP protection are some of the problems companies face in doing business with Chinese.