Piracy moves up value chain despite China crackdowns

BEIJING, CHINA: China's intellectual property rights (IPR) pirates are getting bolder and more high-tech, moving up the value chain from products like DVDs to high-speed trains, defying repeated government claims to be getting tough.

Rampant unauthorised copying in China of everything from computer software to hand bags has long irritated foreign firms forced to weigh the benefits of access to the growing market with the costs of copyright and trademark infringement.

Now, complaints about fake brand-name goods are being overtaken by a chorus crying foul on China's assimilation of more patent-heavy foreign technology.

A recent report by PricewaterhouseCoopers said the urgent need to protect intellectual property has forced 92 percent of surveyed companies operating in China to plan budget increases on information security in the next 12 months, a higher rate than in North America, South America and Europe.

Papageorgiou noted that the eight industries that China is pushing in its next five-year plan are those in which the U.S., Europe and Japan make a substantial part of their industrial GDP.

High-speed trains, auto designs, mobile phones and wind turbines have all been the subject of vitriol about whether Chinese firms have stolen foreign companies' patents or whether the Chinese government has excluded foreign competitors by demanding that they hand over valuable patents and designs.

The real deal?

Visit any Chinese city and claims the government is bringing vendors of consumer knock-offs to their knees appear stretched.

Large banners in English strung up inside one of Beijing's biggest markets for tourists denounce pirated goods, but next to the banners vendors continued selling bootleg wares.

The International Intellectual Property Alliance, which represents U.S. copyright industry groups, has estimated that U.S. trade losses due to piracy in China surpassed $3.5 billion in 2009.

"For a long time, there has been a myth that campaigns on IPR infringement harm local economic development, and our special operation will help to break this myth," Jiang told reporters.

Jack Chang, the Chairman of Quality Brands Protection Committee, a coalition of foreign firms that lobbies the government on intellectual property rights issues, said he was encouraged to see China trying to improve enforcement.

But with the JCCT trade talks looming and Chinese President Hu Jintao due to visit Washington in January, China's new copyright campaign may be missing the point.

The problem for China is that piracy also hurts Chinese companies, and damages the country's ambitions to move away from simply being the world's factory and become more like Japan or South Korea, designing their own goods.

To that end, China says that IPR protection is at the core of its national spirit of innovation, but admits that a new set of regulations must be implemented to punish and deter offenders.