China has gone on the counter-attack over its increasingly bitter piracy dispute with the US.
The US said on Monday it would file a case at the World Trade Organisation (WTO) over widespread copyright piracy in China that it claims is costing US businesses billions of dollars a year.
It also planned to lodge another complaint at the WTO accusing China of restricting distribution of foreign music, films and books.
The Chinese government says these complaints could damage trade relations between the two countries because Washington had not fully taken into account China's efforts to fight copyright piracy. China's commerce ministry expressed “great regret” at the US moves and said the US did not understand the huge problems China has enforcing copyright.
In recent years, China has issued a raft of regulations to fight piracy.
Under new rules issues last week, anyone who produces more than 2,500 discs of movies, music or computer software is now regarded a serious offender and can be jailed for seven years, down from the previous cut-off level of 5,000 discs.
But as any visitor to China will confirm, counterfeit goods of all types are still readily obtainable, although the fake wares are no longer so blatantly advertised and much of the trade has gone underground.
Nintendo, the Japanese games company, was quick to endorse the tough US stance.
It says it has been particularly hard hit by piracy, with millions of counterfeit Nintendo products seized from retailers and manufacturing plants in China through the years. But there has only been one criminal prosecution, the company complains, and numerous factories, where tens of thousands of counterfeit Nintendo products were seized, “escaped with only trivial fines or no penalty at all.”
Often these production sites continue to operate after products are seized. In order to avoid punishment, many counterfeiters are sophisticated and keep stock levels below the criminal thresholds and avoid keeping sales records.
Perhaps more worrying, the counterfeiters are moving up market and practicing their skills on sophisticated electronics goods and industrial parts and equipment.
For more on the problems policing China's counterfeits, see this BusinessWeek article