May 24, 1996

Chinese Fake-aways Pay Lip Service To Trade Law
Eric Ellis Guangzhou


Fancy The Cranberries' latest release on compact disc? Hand over just 25 renminbi ($3) at a stall on Shamian Island in Guangzhou.
What about a modern classic such as Michael Jackson's Thriller? In downtown Urumqi, in China's remote far-western Xinjiang province, it will cost Rmb20 for the CD and half that for the tape.

And a video of Oliver Stone's Nixon? A snip at Rmb50 in an alley not far from Shanghai's historic Jinjiang Hotel, where Tricky Dicky, Henry Kissinger and the late Chinese Premier Zhou En-Lai were midwives at the birth of modern Communist China in 1972.
Indeed, it's difficult to walk down a Chinese street and not see something that bears a strong resemblance to a Western consumer product: Kelloo cornflakes in Guangzhou, the aptly named Fony Walkman in Qingdao or Colgare toothpaste in Shanghai.

Meanwhile, soldiers of the People's Liberation Army and police officers of the Public Security Bureau look on, oblivious to or uninterested in the trade war between China and the United States over intellectual property infringements.

Copying someone else's designs is nothing new in Asia. But unless China acts soon to stamp it out, the US has pledged to impose crippling import duties on $3 billion worth of Chinese exports to the US.

China has three weeks to act before the sanctions come into effect; meanwhile, US officials are combing the sweatshops of southern China for further infringements.

Across the whole of Asia, copying other people's products is estimated to be a $US10 billion ($12.5 billion) business.

What 1980s visitor to Bangkok didn't muse over a fake Calvin Klein or Chanel T-shirt or a gold "Rolex" watch of unknown origin?

Visitors to Hong Kong's Golden Arcade computer alley can buy Gameboy and multi-game disks for $US10. Microsoft 's Windows 95 sells for about the same -an unforeseen roadblock in Bill Gates's information superhighway. It's likely few Asian laptops are running an entirely legitimate program.

Taiwan built a computer industry around mimicking IBM and Macintosh. In Hong Kong, Lacoste decided it made better business sense to join forces with a group calling itself Crocodile than to continually take court actions.

The Conde Nast publishing group also seems to have tired of court skirmishes, allowing Hong Kong Tatler, Thailand Tatler, Singapore Tatler and Malaysia Tatler to arrive each month in the salons of the region's great and good, its deluxe goods ads making a millionaire of a Hong Kong-resident Indian.

Regional governments periodically go through the ritual of getting a bulldozer to crush an offending batch of watches or CDs.

Last year, China even sent People's Liberation Army storm-troopers into several factories in Guangdong to close them, including some linked to the PLA and senior government officials.

But anecdotal evidence suggests the problem in China, Asia's worst offender, is getting worse. Traders are even more open and dismissive of token efforts to shut them.

One trader, a Mr Huang in Guangzhou, simply gave the universal hand signal suggesting a bribe when the AFR asked about police standing nearby.

At the same time, China's anti-Western rhetoric is getting louder, suggesting that continual American pressure on China is another tactic in holding China back. A Western diplomat in Beijing says "it hasn't fully occurred to the Chinese that if they want to play in the world game, there are rules to play by".

China plays lip service to such rules. Mr Wu Ruiming, foreign affairs director of Guangdong Commission for Foreign Economic Relations and Trade, says companies can "set up here and trade with the full backing of the law". Many companies would like to believe him. Few do.