Sunday, July 22, 2007

The Cost of Doing Business (by Taimoor)

Ah Anees, everyone’s favorite Yemeni based Cheetos knockoff brand. Anees is essentially identical to the Puffy Cheetos snack so familiar to Americans with its cornalicious flavor and its Dangerously’ (at least for your heart, colon, and cholesterol level) Cheesy flavor, though while Cheetos is saturated in and practically oozing with their much vaunted cheese flavored slime, Anees is actually only lightly brushed with a smattering of that same flavor. The snack is relatively popular here and sold in many of the little roadside stands that dot the corners of Sana’a’s streets for approximately five U.S. cents.
Two of its more unlikely fans are apparently Bert and Ernie, stars of the American television series Sesame Street, and the spokesmen for Anees in Yemen, if their pictures on the cover are any indication. The first problem with this endorsement is, of course, that Bert and Ernie are puppets and therefore unable to verify the quality of food. But then the American advertising market is flooded with tigers hawking sweetened corn flakes, elves selling cookies, polar bears selling coke, mermaids selling tuna, giants selling vegetables, and even anthropomorphic peanuts selling their own kind, so perhaps a little suspension of disbelief is appropriate in this situation.
The second problem is, of course, that this is an illegal appropriation of copyrighted American intellectual property and not sanctioned or most likely even known about by Sesame Street. Copyright infringement is common enough in most developing countries, both because local entrepreneurs see the opportunity in copying and undercutting the cost of already popular products and because local governments usually lack the resources and/or the motivation to crack down on violators. For one thing, such violators stimulate local economies by providing jobs and infrastructure. It is significant to note that while the vast majority of goods I’ve encountered in Yemen have been foreign exports from China, South Korea, Japan, or Malaysia, Anees is the first packaged product that I’ve seen to have actually been made in Yemen. Yemen is a developing country that suffers from a dearth of foreign and domestic investment due to the government’s rampant corruption, Byzantine bureaucratic system for starting up a business, perennial energy crisis, and of course the plethora of cheaper and safer alternatives around the world, such as China, South Korea, or Malaysia from whom the Yemeni buy most of their manufactured goods.
Enforcing copyright laws in Yemen would only serve to drive out one of the rare surviving Yemeni factories and result in lost jobs, tax money, and bribe money for officials. China, currently the fastest growing large economy in the world, has a similar and much publicized problem with piracy. Ted Fishman says in his book China Inc. that contrary to the stance of the central government, local Chinese officials often turn a blind eye to, or even encourage local counterfeiting industries, the products of which circulate throughout China and are even exported around the world including, most likely, Yemen. (Fishman 238)
Even China though, is a member of the World Trade Organization and so copyright infringement is technically illegal in the country. However half-hearted the government’s attempts to enforce compliance with international law may be, some action is taken, and the occasional flagrant violator is caught.
Yemen, on the other hand, is not a member of the World Trade Organization (though it is petitioning for membership) and therefore not legally obligated to respect copyrights at all, and while Carratu International , a leading British corporate investigations firm focusing on the violation of international copyrights, states that around 9% of world trade today is counterfeit, that number is most likely significantly higher in Yemen. (Fishman 235) While Bert and Ernie sell lightly cheese flavored snacks on the streets, Spider-man hawks roller skates, Mickey Mouse sells genuine Yemeni honey, and Pikachu really wants you to buy your ice-cream from that particular store. Street vendors here sell Folexs, and fake Folexs, Versace sunglass knockoffs, shoes that may or may not be Pumas for a tenth the U.S. price, and what are essentially Chinese imitations of Japanese electronics. Perhaps one of the most bizarre examples of copyright infringement that I’ve seen so far are WinShoes XP 2007, a shoe company that uses the Windows computer logo, and that, presumably, runs about as fast as and crashes about as often as its namesake. So far, I’ve chosen to wait for some Mac shoes.
U.S. and Bollywood movies are also a big hit. You can get an internet cd burn for a dollar, or you can go to the somewhat wealthier area of hada street and purchase DVDs about equal to U.S. quality, even movies that have just arrived in theaters recently such the new Fantastic Four and Transformers movies, and some that, technically, aren’t even in theaters yet. Presumably, this is part of the 8 billion dollars that Hollywood claims it is losing yearly worldwide due to movie piracy. Currently Hollywood and American drug companies are the staunchest supporters of keeping adherence to international copyright laws a requirement for membership in the World Trade Organization.
Yemen is currently petitioning to become a member of the World Trade Organization, hoping that membership will help to bolster investment in the country. But is it really worth it? The biggest barrier to international trade and investment in Yemen is not a lack of trade negotiations, but once again the nations crippling corruption, crushing bureaucracy, lack of infrastructure, and the great number of better international alternatives. Would being a member of the World Trade Organization help all that much? The downside of membership, as protestors in Washington D.C. yearly shout behind handmade signs with somewhat pithy slogans, is that membership would require the government to crack down on cheaper pirated goods.
The people of Yemen live in what is easily one of the poorest countries in the world. Not only would adherence to copyright laws destroy many local businesses like Anees, it would force Yemeni’s to pay much higher prices for everyday goods, thereby drastically decreasing their standard of living. In a country where a decent yearly salary is $1400 U.S. dollars, paying legal prices for non-pirated goods would seriously cut into the cost of living.
To give you an idea of just how much, consider that while new Playstation 2 video games cost around $50 in the U.S are about $2.50 here. DVDs are around $1.50, a large, sturdily built suitcase by “Polo Classio” can be bought for around $25, sports jerseys are about $5, books are, as a general rule, around a tenth the U.S. price, and bags of chip like snacks are around 5 cents. Legal international goods in Yemen, on the other hand, cost around the same as their U.S. counterpart. Some are sold everywhere, such as a can of Coca-Cola which is around 30 cents, and a candy bar, which is around 50 cents (ten bags of Anees). Others are sold in specialized Super markets catering to the Yemeni upperclass. Here, we find our real Cheetos for ten times the price of Anees, a box of Frosted Flakes cereal for the price of four full Yemeni restaurant dinners or three DVDs, or a wedge of Dutch cheese for around the price of five full roast chickens in Yemen plus ten salads and 10 cups of tea. Currently, these exorbitant prices are paid by wealthy and upper middle class Yemenis who essentially form the same niche as U.S. consumers who only shop at organic food stores.
Though the benefits of international trade are considerable, they take a while to manifest and are by no means certain, while the poverty caused by increased prices are immediate, devastating, and highly unpopular. I wonder if Yemen, a country that has consistently poled as favoring stability with stagnation over progress with a drop in the standard of living would be willing to accept such a trade off. (Yemenis have poled as preferring an existing in power leader, like Ali Abdullah Saleh, if there is a chance he can be reformed over a new, untested leader, and they prefer to keep oil subsidies, even though it wastes the economic potential of Yemen’s greatest natural resource) Most likely the government will try to avoid enforcing copyright laws as much as they can as China has done. However, lacking the economic clout of China as well as its propensity for fast economic development, the Yemen government may not be up to the task of juggling international scrutiny and domestic outcry. The economic future of Yemen is, like much of the rest of the country, up in the air. The trade off between initial standard of living and international trade is the cost of doing business, though not one that the Yemeni people may be willing to pay.


scott said...

"The Cost of Doing Business (by Taimoor): An excellent Report, Taimoor should apply to the U.S. State Department for a job as a roving reporter. No kidding.

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