Signs of Hope in the World’s Fastest-Growing Markets?

posted by in Industry November 29, 2010
Nov 29

Around the world today, policy-makers are coming to understand the role intellectual property can play in invigorating economic growth and creating jobs. I have just returned from a series of meetings in India and China, and while I saw signs of progress on intellectual property issues in both places, I was also reminded first hand of the significant challenges the software industry still faces in these fast-growing markets. 

China Sees Software Legalization as “Low-Hanging Fruit”

During my visit to China, I had the opportunity to meet Mr. Wang Qishan, Vice Premier of the State Council, who shared the software industry’s views on the importance of maintaining a strong intellectual property rights regime in order to spur innovation. The meeting was reported widely by the media, including CCTV1.Robert Holleyman with Mr. Wang Qishan

There is no doubt that China has much to gain from reducing piracy. A piracy impact study produced by IDC and BSA earlier this year found that if China were to reduce its PC software piracy rate by 10 percentage points in four years, it would stand to benefit from US$21 billion in added economic activity and 250,000 new jobs. Especially noteworthy was the study’s finding that the vast majority of the benefits of any piracy reduction China can achieve — 84 percent — would be captured locally by the Chinese IT economy, not by multinational firms. Vice Premier Wang was quick to note the Chinese government sees this as “low-hanging fruit.” He added that government legalization in itself presented many such opportunities.

I am confident that a strong commitment to action by the Chinese government would lead the way to wide-scale legalization of software, starting with state-owned enterprises and pulling through to the private sector. This, in turn, will trigger increased economic activity for software companies and the local and international economies they serve.

India Focuses on IP to Spur Competitiveness

India is an exciting software market that offers much promise, but also some unique challenges.  To date, the combination of timely government policies, particularly the focus on education and the creation of a large talent base, as well as public-private sector cooperation, have played a key role in the growth of the India’s IT industry. According to the National Association of Software and Services Companies, the total IT business process outsourcing industry in India reached US$71.7 billion in FY2009, accounting for 5.8 percent of India’s GDP.  Software and services revenues aggregated to about US$60 billion. Interestingly, the software products industry lags behind, contributing only $1.6 billion in 2009. It is imperative that we find ways to spur the growth of the software products industry in India through the development of a strong intellectual property ecosystem.

The Economic Times Forum

On November 15, I participated in a forum in Delhi that focused on the importance of innovation in enhancing India’s competitiveness. The forum, which was organized by India’s leading financial daily, The Economic Times, drew strong interest from the public and private sectors.

Our discussion quickly established that strong intellectual property protection is crucial in driving innovation. Mr. Abhishek Singh, Deputy Secretary of the Ministry of Information Technology, offered full support for the argument.

Earlier in the day, I had also met with Mr. Kapil Sibal, Minister of the Ministry of Human Development, and held lively discussions on proposed amendments of the country’s copyright laws. I was delighted to see the importance the Indian government is placing on intellectual property rights. It demonstrates a strong understanding of the economic incentives and legal framework needed to harness the kind of creative energy that drives technological progress and overall growth.

Continuing the Conversation

Now home in Washington, DC, I am looking forward this week to a series of meetings between the general counsel of many BSA member companies and senior leaders from the Obama administration and Congress. Our meetings will focus on the challenges and opportunities facing the software industry in India and China. In particular, the upcoming meeting of the US-China Joint Commission on Commerce and Trade provides a key opportunity for the US government to press for a results-based trade policy with China. I will be writing more in the coming days about these meetings. But my travels in Asia the past few weeks have provided great perspective heading into this week’s discussions. We share interests with the Chinese and Indian governments. Now we just need to focus on achieving tangible results.

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