The EU's trade chief called on Beijing yesterday to do more to stop the pirating of foreign brands in China, warning that it also threatens the profits of successful Chinese companies.
On the third day of a five-day visit to China, Peter Mandelson called intellectual property theft the "top issue" for Europe in its trade relations with China.
Mandelson met in the morning with officials of China's State Intellectual Property Office to inspect Chinese efforts in the field. He urged them to improve enforcement of anti-piracy laws, make it easier to prosecute violators and toughen punishments.
"It's the biggest problem for companies trying to do business here," he said.
Many of China's lively street markets are awash in counterfeit European goods such as Gucci bags, Lacoste shirts, and counterfeit DVDs that often hit the streets while movies are still in theaters.
He called China the source of more than half of the counterfeit goods intercepted at European borders last year.
But Mandelson warned that Chinese innovation also will be nipped in the bud if action isn't taken, saying China's own infant film industry was being strangled.
"Tolerating intellectual property theft is a dead end for China," he said. "If China continues to look the other way, this will come back and bite the Chinese."
Mandelson also urged China to follow through on earlier pledges to clean up markets like Beijing's notorious Silk Alley, where such goods are openly sold.
Mandelson noted an increasing Chinese willingness to address the issue and welcomed the establishment of a network of 50 intellectual property rights (IPR) complaints centers in China charged with assisting aggrieved companies in identifying and addressing cases of IPR theft.
"However, nothing will ultimately substitute for better enforcement of Chinese counterfeiting laws on the ground," Mandelson said.
Mandelson is in China to push its leaders on IPR protection and on removing market barriers to foreign imports and companies.
He warned on Tuesday that failure to do so could harm wider relations between the EU and China, whose trade ties have grown rapidly.
China is the EU's second-largest trading partner, after the US, while the EU is China's top trading partner.
China has thus far largely deflected Mandelson's criticisms on trade barriers.
Commerce Minister Bo Xilai (
Mandelson said piracy is no longer confined to luxury clothing and bags, but now includes the broadcast of European programming by Chinese state TV without royalty payments as well as "fake food, drinks, electrical appliances, medicines and birth control pills, many of which are making their way back to the developed world."
State media said in August that nearly half of the media products such as books, films, music CDs and software bought by Chinese consumers last year were pirated.