China Blasted Over Piracy

The Chinese government has drawn heavy criticism by two U.S. business groups urging China to crack down on its growing piracy market and focus on protecting intellectual property rights in the country.

Despite laws and international agreements protecting intellectual property rights, an overwhelming lack of political will within China to enforce those rules allows piracy to rapidly expand, according to a white paper published Thursday in Beijing by the American Chamber of Commerce People's Republic of China (AmCham-China) and American Chamber of Commerce Shanghai (AmCham-Shanghai).

The lack of patent and copyright protection also hurts high-tech investment in the vast Chinese market, the group says.

Overwhelming Complaint

More than three-quarters of AmCham members surveyed for the group's sixth annual "White Paper on American Business in China" say they were negatively affected by the infringement of intellectual property rights. More than 90 percent of respondents saying they see "virtually no enforcement" of intellectual property rights by China, the group says in a statement.

The group is calling for fines to be replaced by harsher criminal penalties for product piracy.

China has a growing reputation as a country with a tolerance for some of the highest piracy rates in the world. In July, a report issued by the Business Software Alliance estimated 92 percent of software used in China during 2003 was unlicensed and illegal.

AmCham-China, based in Beijing, says it currently has 1800 individual members representing more than 800 U.S. companies doing business in China. The white paper's results are based on anonymous survey responses from 238 companies, the group says.

The study also highlights a belief within the American business community that China is actively restricting trade between the two countries through the use of its technology standards. According to the white paper, 50 percent of high technology companies surveyed say that standards and certification procedures are being used as legal, non-tariff barriers.

Monitoring Promised

Over the next year, the group plans to closely monitor the Chinese government's use of technology standards as it relates to U.S. companies attempting to conduct business in the country, AmCham-China Chairman and a Motorola executive Jim Gradoville said at a press conference introducing the white paper.

In its report, the U.S. business groups praises China for its efforts over the past year to adhere to its World Trade Organization commitments with regulation in the areas of trading rights, insurance, auto finance, and agriculture. But it warns that such efforts to improve the environment for American business in China could be overwhelmed by the lack of enforcement of intellectual property rights.

Lawmakers in Washington, D.C., came under criticism as well, with AmCham-China and AmCham-Shanghai pointing to a difficult and restrictive U.S. visa application process that they say costs U.S. businesses billions of dollars yearly. The report says the U.S. government must do more to balance commercial and security needs.