For all the public flogging and private government meetings about the problem of content piracy in China, perhaps the best illustration of the problem can be measured by the remarks of another American I heard at a lunch here in Beijing.
The statement went something like "Piracy is terrible; so terrible that I plan on limiting my DVD purchases to only 100 this year."
The remark was followed by peels of laughter.
Why all the chuckling? Because in China, pirated DVD's sell for around $1.50 – if even that much – and are not bought furtively out of the back of some guy's trunk. They are sold in plain sight everywhere: in expatriate-oriented video stores and at Western supermarkets, but mostly to countless Chinese who find it's an easy way to see big-budget movies at a low-budget price.
For that matter, it's sometimes the only way to see Hollywood-type movies in any sort of timely fashion since Chinese officials limit the number of American and European films which screen here yearly.
Illegal, but how's the picture?
Are the pirated DVD's of decent quality? Depends.
Long time ex-pats knowledgeable in the art of buying pirated DVDs warn newcomers never to buy disks of movies still in U.S. theaters from the guys on the street in front of Beijing tourist stores.
Those movies tend to be nothing more than grainy copies shot by someone in a movie projection booth with a camcorder. It's hard to make out what's even on the screen, but you can clearly see people in the audience standing up and making their way for snacks and bathroom breaks.
Another aspect of pirated DVDs which often produces a chuckle is the labeling. Often it is painfully translated. Or it may be in perfect Chinese - which in some cases is worse. Or, in an effort to hype the movie and make the DVD packaging look authentic, it's not uncommon to see the pirates list a quote from a movie critic that is negative; heralding something like, "That's two hours of my life I will never get back."
Problem is: copies usually are good
The truth is, though, that the majority of the DVDs are good copies – and that's why U.S. entertainment companies aren't laughing. Movie piracy is just one aspect of intellectual property rights theft that is a huge concern for American companies doing business with China.
Carlos Gutierrez, the U.S. Commerce Secretary in Beijing, told me in a recent interview that intellectual property right theft worldwide costs U.S. business as much as $250 billion in lost sales annually.
For its part, China has stepped up efforts to crack down on pirates. But many U.S. company executives fear that the pirates stay one step ahead – and have come up with a strategy to fight back: Good old price cuts.
If you can't beat them, join 'em
For instance, Twentieth Century Fox Home Entertainment announced in November that they entered into a partnership with the largest video distributor in China.
Knowing that relatively few can afford to pay, or are willing to pay, $15 for a movie, Fox plans to sell its movies on DVDs for as little $2.25 - $3.75 – still more than double the going rate which can be $1 or less.
Ultimately, though, the biggest competition for Fox and other Western entertainment companies may be the lightning speed that pirated copies of movies and TV show can hit the market place.
At the press conference where Fox Home Entertainment was announcing its new China rollout, a video store just three blocks away already had illegal copies from the current season of the Fox hit show "24" on the shelf.
And the boxed set for the whole of the just-finished fifth season? About $8 bucks.