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Pirating of Intellectual Property by Chinese Businesses is Huge Problem


President Bush just spent three days in China. A key topic on his economic agenda was pressing the Chinese to honor intellectual property rights.

Counterfeit products made in China cost U.S. companies billions of dollars in sales every year.

Chinese markets sell knockoffs of just about everything, from watches to Honda motorcycles.

The town of Dafen sells fake artistic masterpieces, copied from DaVinci and Van Gogh.

In Beijing, you can buy the "Cherry" mini-car, an exact copy of the Chevy. These American products cost billions of dollars to develop, but have been copied in China for virtually nothing and sold for huge profits.

And in some cases, there could be a real danger -- with fake brake pads and airplane parts.

Nicholas Blank is a risk analyst with an American consulting firm. "They only face the risk of paying a monetary penalty, which in China is just considered a cost of doing business."

The problem is clear at a market in Guangzhou -- stalls raided two days ago are already back in business.

Movies, music and software are among the most commonly pirated merchandise. At the Shanghai opening of the newest "Harry Potter" movie, Frank Rittman, of the U.S. Motion Picture Association, said China sets limits on foreign films, which analysts believe increases black market demand.

"Simply getting our legitimate products in is a very difficult matter in China,” he said. “As you probably know, the Chinese only allow 20 foreign films in a year on a revenue sharing basis."

Action heroes Jackie Chan and Arnold Schwarzenegger, now governor of California, are appealing to Chinese citizens to take a stand against piracy, in a new public service campaign they launched in Hong Kong.

"We can penetrate to go through all the other stuff, penetrate and go directly to people of China," said the governor.

"If everybody just do a little bit. I think very quick, nobody want to buy piracy any more," added Mr. Chan.

Some U.S. businesses are trying new strategies. The latest Harry Potter movie opened in China even before its U.S. release... in the hope Chinese fans will pay for tickets before pirated DVD's show up in markets.

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