Piracy -- An Interesting Problem to Have

Ten days ago, Hugh MacLeod posted an entry at gapingvoid titled “Rip off” or Homage? Was his work copied? See for yourself. In the discussion that ensued, some said that imitation is the highest form of flattery; some stated it’s a tough call.

In the comments, Phil said something that resonates with a recent conversation we had: “if you put work of any kind of quality online then you're pretty much definitely going to get copied.” That is exactly what Dr. James Chan said to us last night.

Piracy is an interesting problem to have. You can beat imitators, and there are many ways in which you can maintain your edge. Hugh suggests that he’s spent many, many man hours drawing out his skill –- and his cartoons show it. They have personality and a voice that is his alone. Read them closely and you’ll notice that it’s about the whole presentation and content, not just the lines. Inimitable, just like he is.

What about widgets? China is globally infamous for its pronounced lack of intellectual property rights protection and has long been a popular breeding ground for fierce pirating threatening the profitability and, in some cases, even the survival of foreign companies doing business there.

Like all successful people, James Chan has made a career out of thinking differently. Over his 30-year career, where price-point based strategies lose he has developed other key creative strategies that have helped his clients stay ahead of the curve. Dr. Chan is from China, speaks the language and knows the culture. It turns out that many of his strategies are anchored to knowing cultural practices. [The bolded parts are Dr. Chan's points. For more practical tips on cultural differences link here.]

1. Always assume that your product or technology will be pirated. The more successful your product is, the faster it gets pirated. Have an insider who will let you know what’s going on, in private. Never, ever confront someone or have a private discussion with him or her while someone else present.
2. Don’t let fear of piracy keep you from introducing your product in the China market. If the product is attractive to China, some people there will try to pirate it anyway. Instead, take the negative news as an important piece of market information –- there is demand for your product. Flattery will get you everywhere, but beware, there are two layers to every person’s behavior: an external and visible one, and an internal one. Don’t assume that what you see is what you get. Be very alert at all times.
3. Travel to China and study the weaknesses of the pirates and the real needs of your customers. Based on such field knowledge, design and improve your product and technology to stay ahead of the pirate’s capabilities. Use a representative on the ground who does not know as much about the product specs, so nobody can pump them for specific information. When you learn that your product has been copied, ask for a sample and study it. For example, books and publications are cranked out in sub par quality and have no archival value, and they miss pages and photographs.
4. Don’t compete with the pirates on price. If the pirate’s price is 20% of yours but his product is only 80% of your quality level, focus your marketing effort on the quality-conscious segment of the Chinese market. Certain materials are not available in China; can you use those in the manufacturing of your product?
5. Discerning China customers yearn for authentic foreign-made products once they see how much better they are than pirated products. Educate your customers and make them see the difference. Even for intellectual capital, find a way to give body to intangibles like education – for example, the diploma of a prestigious college or university, or the only recognized program that will teach you “x”.
6. Find creative ways to keep the secrets of your technology to yourself. How you keep such secrets should itself be a secret. You don’t even want to tell people where the secret is. Think about using trade secrets vs. patents. The difference is that you will not need to disclose all the information in your formula in a trade secret. Coca-cola uses one.
7. Pick the most talented people whom you can trust to work the China market and duel with the pirates. Don’t send to China your weakest link. You will need to have eyes and ears on the ground that will let you know what you can do and what you cannot do about your product or service being copied.

In China, there is no tradition and concept of “being yourself”. The prevailing mindset is still one of scarcity –- if you have one dollar, I have one less so I'll need to take that from you. So people will go after inequality to gain ground. The Chinese people understand transactions, not value. These are fundamental cultural difference that you need to understand before starting to do business there.

The culture will get you every time. Do you have piracy stories to share with us?

Comments

[Mike Wagner]

Lots of good food for thought and action here...as always.

"Think about using trade secrets vs. patents."

I have one client who utilizes this strategy for keeping trade secrets. And it works.

But at the same time they are dedicated to creating "new secrets".

Magicians know that "how they do it" can only be hidden for a finite period of time. Trade secrets are a Rubick's Cube that competitors eventually unravel. I suppose this especially true in a networked marketplace.

Having a new trick always in development is not a bad idea.

Thanks for sharing the wonderful learning opportunities you have there in Philly!

Keep creating,
Mike

[Mark Hehl]

Good sound advice here based upon my experience in China since 1995. One thing to note is that it is usually useless to try to fight pirates in the Chinese Courts.
Getting a ruling in your favor very rarely happens and it takes a long time. Do not waste your time and money.

Mark Hehl
www.hehlassociates.com

[Shahrooz Bhopti]

This was the first time I witnessed Dr. James Chan in person and it was quite an experience! My first introduction to him online was here: http://www.viddler.com/ageofmeaning/videos/7/
and now here, http://www.spareroomtycoon.com/

It was also my first of many CoF events to come :-) Keep the conversation going Valeria!

[Valeria Maltoni]

Mike -- great advice: always have new tricks in the pipeline. A product, service, angle, extension, etc.

Mark -- thank you for adding your advice to the conversation. It was really good to meet you and learning about your experience in China.

Shahrooz -- I enjoyed meeting you, too. Keep me posted on your blogs and communities. We can do a lot to build on each other's work in the open source format you prefer.

[Roger von Oech]

This is really good advice. I've had people ask me me, "Are you concerned that your Ball of Whacks will be pirated?" And my answer is, "Well, there are worse problems, such as no one wanting to pirate you."

BTW: Both of my first two books ("Whack" and "Kick") each had four different pirated Chinese translations. I survived just fine.

[Valeria Maltoni]

Roger:

Thank you for sharing from your personal experience -- the original is always the best. And I would venture that what makes the Ball of Whacks special is you.