In "Chinese Movie Piracy is Overestimated," Tyler Cowan blogs a paper on the issue, and comments follow.

"Pilgrim" makes a good point in commenting that the reason that China is such a concern is partly because of their significant exports to other markets, even if domestic consumption of the products were low due to the generally low standard of living.

And, as always, one might reasonable point out that not every product necessarily would have been a sale. And that poverty in such countries makes that even less likely. But these points only go so far. Business models have to be forward looking. Someone who buys a pirated product is certainly a part of a potential market, if not a current market. Standards of living rise--potentially quite quickly.