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China clamping down on pirated Olympic merchandise

BEIJING—Chinese officials assert that they're tackling the Olympian problem of product piracy, and in one area they've made noticeable headway: Very few vendors in China sell fake trinkets, T-shirts and knickknacks related to the 2008 Summer Olympic Games in Beijing.

Markets here brim with phony Gucci handbags, bogus Burberry coats, knockoff Nikes and pirated DVDs of Hollywood blockbusters. But vendors who hawk pirated Olympics merchandise do so furtively. Authorities offer a simple, if not entirely plausible, explanation. They say Chinese people spontaneously report violators because they want to protect a symbol and an event that will showcase their nation to the world.

"The Olympics symbol is more famous than the brands you know, such as Adidas or Coca-Cola," said Liu Yan, the deputy director of legal affairs for the Beijing Organizing Committee for the Olympic Games. "The symbol is beloved by our population. ... The passion to protect it is much greater than to protect brands like Adidas."

Under intense pressure from the United States, its largest trade partner, China is beginning to make headway on piracy, requiring last month that computer makers install legitimate copies of software, such as Microsoft Windows, in their products.

Still, some U.S. lawmakers wonder aloud why China can't whip up as much passion to protect renowned foreign brands as it does for products bearing the five multicolored rings and the running-man symbol of the 2008 Summer Olympics.

"Here's the simple message: Nobody pirates the Olympics logo. You've got a logo that's well protected," Sen. Lindsey Graham, R-S.C., said during a visit to China in late March.

Like previous host cities Sydney, Australia, and Athens, Greece, Beijing created a special legal framework to protect Olympics logos and symbols, expecting licensing and sponsorship fees to pay much of the cost of the Games. Under a 2004 decree, those who pirate the logos and symbols can face up to 10 years in prison on criminal swindling charges.

So far, instances of piracy have been low and no one's been jailed, Liu said. He credited anti-piracy efforts such as the use of watermarks, holograms and special tags.

Limited distribution is also a factor. Only 60 stores and sales outlets in China are authorized to carry Beijing Games products, which include badges, garments, handicrafts, pens and other items adorned with the Olympic rings or Beijing Games mascots: Beibei the fish, Jingjing the panda, Huanhuan the Olympic flame, Yingying the Tibetan antelope and Nini the swallow, known together as The Friendlies.

By Chinese standards, Olympics products are costly. But they sell.

"I came in and bought this T-shirt for my son," said Yao Changhan, a shopper from Shenzhen in China's far south who was purchasing a $20 garment.

Belying the assertion that Chinese are too patriotic to buy fake Olympics goods, Yao said counterfeits would sell if they were available and "of good quality with a cheaper price."

But Li Han, a young visitor from Shandong province, said he wouldn't buy phony Olympics products because "the Beijing Olympics are such an important event."

"The government has always been much tighter about the Olympics because it's the Olympics. There's a certain amount of national pride going on," said Joseph Simone, a partner with the law firm Baker & McKenzie's office in Hong Kong.

"The cynical view is that `Well, if you can protect the Olympics products, why can't you protect Prada and Gucci?'" Simone said.

But he said China was making slow progress: "This is going to take a long time. They've just woken up. Last year, there was a 28 percent increase in criminal convictions of IPR (intellectual property rights) violations."

China has offered no shortage of action plans and campaigns to fight piracy.

The government announced in April that it would set up centers in 50 cities to handle piracy complaints. Commerce Minister Bo Xilai said 300,000 government employees and inspectors were involved in anti-counterfeiting campaigns.

President Hu Jintao, during a meeting in mid-April with Microsoft founder Bill Gates in Redmond, Wash., said anti-piracy action "is not only needed by China as it opens up more to the outside world and improves the investment environment, it is also needed as we strengthen our innovation ability."

The huge emporia in China's major cities also are taking action, albeit limited.

The Shanghai city government has ordered the famed Xianyang market, an anything-goes hub of counterfeit luxury goods, to shut by June 30.

In Beijing, many shops that once openly sold pirated DVDs now display only limited pirated merchandise. Some post sentinels at the door to warn of police inspectors.

Nine out of 10 DVDs sold in China are illegal copies, costing Hollywood $2.3 billion a year in lost revenue, according to the Motion Picture Association of America.

The Bush administration says rampant piracy, distribution barriers, sheltering of domestic industry and hidden policy mechanisms contribute to lopsided trade. The United States posted a $202 billion trade deficit with China last year, its biggest with any nation ever.

At Beijing's Silk Alley, a seven-story mall that abuts the U.S. Embassy, a red banner over the main entrance now proclaims: "Protect Intellectual Property Rights and Promote Innovation and Development." Some of its 1,000 vendors told local journalists they'd taken an oath to stop selling fake products.

A walk around Silk Alley found booths selling fake Giorgio Armani clothing, Timberland shoes, North Face jackets, Ralph Lauren shirts, phony Patek Philippe and Rolex watches and all manner of other bogus goods.

Even as anti-piracy campaigns abound, citizens are more aware of China's reputation as a haven for knockoffs. Before a weeklong holiday in early May, a spate of newspapers picked up a Henan province news account that customs officials in Paris had stopped a Chinese tourist and confiscated a fake Adidas bag.

Subsequent stories said European nations could imprison or heavily fine Chinese tourists who were toting fake merchandise. The stories sparked a flurry of follow-ups, and the state Xinhua News Agency warned Chinese not to carry fake products to Europe.

Then journalists discovered that the initial article may have been bogus. The reporter said he heard the story from a tour guide, but wouldn't name the person or the tour agency.

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(Knight Ridder Newspapers special correspondent Fan Linjun contributed to this report from Beijing.)

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(c) 2006, Knight Ridder/Tribune Information Services.

PHOTOS (from KRT Photo Service, 202-383-6099): CHINA-PIRACY

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