Adobe chief threatens to abandon Asia over piracy
Simple business decision
Adobe Systems Inc last week threatened to stop supporting Chinese language versions of its software because of persistent pirating of its products in China and other Asian markets. The threat was made by Adobe's CEO Bruce Chizen in an interview with the Hong Kong English language newspaper, the South China Morning Post.
In the interview, Chizen said piracy was causing Adobe to lose money in some Asian markets. "It is a simple business decision. It costs $750,000 to localize an application for the Chinese language and if we are only going to make $500,000 in revenue it does not make sense for us to go ahead," Chizen said, adding, "Until the Chinese Government and its citizens realize they are hurting themselves [by using illegally copied software] it is hard for us to make an investment."
Other western software companies have suffered at the hands of Chinese software pirates who, according to the Business Software Alliance, a copyright
protection group, were responsible for producing 94% of all software distributed in China in 2000. Microsoft Corp in particular has suffered from piracy, and estimates to have lost $4.1bn in revenue to pirates in 2000.
Last year, however, Microsoft appeared to have healed relations with Chinese authorities after a visit to Beijing by Bill Gates prompted the government to proclaim a clamp-down on pirated software used in the public sector (which includes many state-owned enterprises).
Microsoft and other western software vendors appear to have convinced the Chinese government that a laissez-faire attititude to piracy (which undoubtedly helped spur the penetration of computer systems in Chinese business and government during the 1990s) was ultimately strangling the efforts of China's indigenous software developers to set up businesses of their own. With China now officially pursuing India's example, and setting out to create a major software export industry, the threat posed to this ambition by piracy is may no longer be acceptable.
However, in his interview with the SCMP, Chizen was skeptical of Asian efforts to stamp out piracy, and clearly believes that more needs to be done to justify further investment in Asia. He told the SCMP public statements by government had not produced any noticeable change in sales, and claimed to have recently paid just $3 for a pirated CD of his company's entire software portfolio in a trip to Beijing.
Referring to critics of western companies who blame them for encouraging piracy by charging high prices, Chizen said it was impossible to compete with dealers prepared to sell a complete Adobe suite for just $3.
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