China Faces Uphill Battle against Counterfeits

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Last updated at: (Beijing Time) Wednesday, July 23, 2003

China Faces Uphill Battle against Counterfeits

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China is still faced with an uphill battle against counterfeiting though the government had gained initial success in curbing the wide-spread infringement on intellectual property rights, according to results of a survey by China's top policy consultation agent.

The Development Research Center (DRC) under China's State Council released a report on the damage that counterfeiting incurred on China economy Tuesday. The release of the report coincided with a symposium sponsored by the Quality Brands Protection Committee, an intellectual property watchdog under the China Association of Enterprises with Foreign Investment (CAEFI).

According to the DRC report, the market value of counterfeited goods in China was estimated at 160 billion to 200 billion yuan (19 billion to 24 billion US dollars) in the year of 2001.

The report said though the total value of counterfeiting grew at an annual rate of 7 percent during 1999-2001, counterfeiters were losing ground in terms of market share. China retail sales market was expanding at an annual rate of 11 percent in the period, far exceeding the growth rate of counterfeiting.

Local enterprises surveyed said they would have led a much harder life if the Chinese government left counterfeiting unchecked.

More than half of the 213 enterprises surveyed said the severity of counterfeiting were alleviated in China after the Chinese government launched a nationwide market disorder rectification campaign in 2001. This reflected a change of attitude as compared with several years ago, when a similar survey conducted by the DRC in 1999 found nearly three quarters of the enterprises saying things were going from bad to worse.

In the a survey concluded in May, 2002, the DRC sent out 2,000 pieces of questionnaires to enterprises in various industries around China. Among the 213 valid responses, 16.4 percent were foreign-funded companies, 33.8 percent were share-holding companies and 37.2 percent state-owned enterprises. All these enterprises were producers of well-known brands in China and the world.

According to official figures, the Chinese government squashed more than 500,000 underground factories of counterfeited goods and dealt with over 1.2 million cases of counterfeiting in 2001.

Zhang Xiaoji from the DRC said the Chinese government has achieved initial result in curbing the rampant spread of counterfeiting. However, he said the country still faced an uphill battle against counterfeiting.

The DRC survey found that the greatest economic damage caused by counterfeits was loss of tax revenue, which reached an estimated 27.5 billion to 34.5 billion yuan in 2001.

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