Sina – Sohu – US vs. China Trade War Looming?

Today (April 9th, 2007) US filed with WTO two trade cases against China over copyright piracy and restrictions on the sale of American movies, music and books there.

This action, together with the recent penalties it places on China’s glossy paper, indicated the growing willingness on the US side to start a trade war.

It is going to be a long two years before the US election. US’s economy is growing so well, but that matters little to US politicians as they try to out-tough each other by appealing to American’s most basic instincts.

China is between a rock and a hard place. If they don’t do nothing or capitulate, US politicians would just add more and more punitive measures with no end in sight. If they do retaliate, it will be a trade war, and everybody suffers.

In terms of stopping piracy, it may be to China’s own self interests to start IP enforcement. As Chinese companies get more sophisticated, the result of their own R&D efforts needs protection. As many Chinese companies went up the value chain, they need IP protection.

Just like CCTV needs protection from these P2P companies, there is monetary incentive for the domestic media company to protect their contents.

All this has to be positive to Sina. Sina has the music box initiative where all the contents are legal. She is probably doing the same thing with the video.

If China really starts to get serious with piracy, in 2 years, the biggest winner might just be Sina. By then, she will have four brand new lucrative businesses: China’s default music platform on the internet, China’s default music platform for the 3G mobile phone, China default video platform on the internet, and China’s default video platform for the 3G mobile phones.

Sohu, are you listening? Better hurry up and get busy.