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Chinese Authorities Crack Down on Product Piracy

For at least five years, Hunan Magic Power Industrial Corporation in China illegally sold its industrial adhesives under the label of the U.S. company, ABRO Industries. The cheap knock offs cost ABRO millions of dollars in sales -- and job losses for its suppliers. The case is one example of the serious consequences of piracy and the openness with which Chinese counterfeiters are working. In this third of a series of reports, Luis Ramirez reports from Beijing that there are efforts within the national leadership to stop product piracy.

It is a scene that has become a cliché in China. The Beijing government shows off its anti-piracy efforts to foreign reporters.

In the ABRO piracy case, those efforts may have worked. Under pressure, the Hunan Magic Power Industrial Company in China's Hunan province says it has stopped making fake ABRO products.

The company declined interview requests but a company source told VOA off-camera that authorities forced the firm in April to obey Chinese trademark laws and stop using the ABRO name.

However, using Magic Power's own brand has hurt sales. The source says most buyers want a brand they can recognize.

This is why ABRO president Peter Baranay remains skeptical that Hunan Magic Power will stop counterfeiting ABRO products. "I doubt they will do it. It's been too good of a deal for them. They've had too good of a run. They're not going to stop it now."

Even if Magic Power does stop, there is no guarantee others will not start copying ABRO's products again the moment the spotlight is turned away.

At China's Ministry of Commerce, Huang Hai, the official in charge of Intellectual Property Rights protection acknowledges the government faces a long-term challenge. "Many Chinese companies believe it's a crime to steal things from others but it's not a crime to steal the brands and innovations of others. We must educate them and tell them that it is as much of a crime to steal objects as it is to violate intellectual property rights by copying them."

That may be easier said than done. Piracy is a big industry here, and even the highly regulated Olympic trademark is illegally copied and sold openly on the streets of Beijing.

State-owned stores are not setting any examples. One sells copies of Hollywood's latest releases for about $2. U.S. officials estimate 95 percent of all CD's and DVD's produced in China are counterfeit.

A crackdown would hurt businesses that peddle fake U.S. designer clothing. Analysts say enforcement is likely to remain uneven at best.

Aside from economic considerations, Huang says officials have issues like poor coordination and corruption to contend with. But, he also says China is being unfairly criticized. "Intellectual property rights infringement does exist in Chinese companies. This situation does not only exist in China, but also in other countries around the world."

China is indeed not alone in pirating American designer shirts and other products. Russia, Argentina, Egypt, Lebanon, Thailand, and Venezuela are among the top 10 of a list of copyright violators that U.S. officials are keeping an eye on. But with 68 percent of all counterfeit products seized at U.S. ports coming from China, Beijing is the number one offender.