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China grows more aggressive in thwarting counterfeiters software and DVDs, an issue that has long strained its trade relations with the United States. Chinese President Hu Jintao brought that message to his meeting with President Bush in Washington on Thursday. Customs figures show China made 63% of all pirated goods seized at America's borders in 2004, worth $87 million. firms fighting to enter China's booming but often-chaotic domestic market. Typical of millions of such stores across China is the Zero Hour audio-visual shop in Beijing. Here shoppers with $1.60 to spare can pick up a Brokeback Mountain DVD, or another Oscar-winning movie. Why so cheap? Because Hollywood gets zero profits on the sale. China is "doing a lot to stop counterfeiting," says Huo Wenhui, a guide at an exhibition on intellectual property protection at the Military Museum of the Chinese People's Revolution. Foreign companies have been hurting for years. The exhibition showcases fake products seized in Chinese markets that range from Johnson's baby lotion and Pfizer's Viagra to Taylor-made golf clubs and Adidas sneakers. Such rampant counterfeiting is "an inevitable step in China's development," says Chuck Qi, senior brand protection manager at the Chinese subsidiary of the sportswear giant. Over a million items of fake Adidas products are seized every year in China. But while the number of counterfeit cases rises, the average volume is shrinking, says Qi, thanks to China's recent move to push more intellectual property cases through the courts. "Criminal prosecution is the most effective way to deal with (intellectual property) problems," Qi says, as the counterfeiters fear exceeding a numerical threshold that could land them in prison instead of subjecting them to an administrative measure such as a fine. Rewards of up to $37,000 to be paid for tip-offs that expose an underground DVD/laser disc production line. centers. Special centers to open in 50 Chinese cities this year to handle domestic complaints on intellectual property rights infringement and provide consulting services. China's intellectual property rights action plan, issued earlier this year, lacks detail on how and when additional money and manpower will be directed to increased police involvement. "We wanted a clearer master plan from the Ministry of Public Security," Simone says. In January, a six-person intellectual property rights investigation team was established under the ministry's criminal investigation division. But plans to build equivalent teams in key cities nationwide will take time and local budget decisions, as China lacks a federal police system. "Do not underestimate how difficult this will be to establish," Simone warns. "It will take time to get the message through to the counterfeiters." Enforcing the government's message are prosecutors like Zhu Haiping of Yiwu City, in eastern China's Zhejiang province, the frontline of China's war on piracy. Last week Zhu's success in cracking a fake Colgate toothpaste operation worth $50,000 earned him an award from the Quality Brands Protection Committee, a coalition of over 140 multinational companies. "Criminals are constantly changing their methods, and so are we," Zhu says. "I am confident we can greatly improve (intellectual property rights) protection in China."

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