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To: Stoctrash who wrote (26511)	12/11/1997 3:13:00 PM
From: Ed's Head	Respond to of 50808

FredE: I'm a gettin kind of thirsty, to much salt I guess. good luck c-ya!

To: Stoctrash who wrote (26511)	12/11/1997 4:01:00 PM
From: DiViT	Read Replies (3) \| Respond to of 50808

Demand keeps pirates afloat on newer shores ÿ 12/11/97 South China Morning Post Page 3 (Copyright 1997) ÿ A crackdown on illegal CD production in the mainland appears to have brought the problem under control, but has pushed the pirates into Hong Kong and Macau. Last year's crackdown closed more than 40 factories and forced all new plants to gain a licence before going into operation. The 33 plants now producing CDs, VCDs and CD-ROMs are monitored to ensure production is legitimate. Despite this, there is still a steady supply of pirated goods on sale in most cities in China. The problem is worst for VCDs, which make up more than half of the pirated goods on offer. Most of the Hollywood studios have licensed their films to be distributed on VCD in the mainland. Nevertheless, most big releases can be found in Shanghai. That is because with the distribution of Western music and films in China severely restricted by official channels, both political and trade barriers, the black market is often the only way for people to find the products they want. The government also is artificially reducing the supply of legitimate products by refusing to grant new licences or allow existing plants to install new lines. Keeping the lid on production makes it easier for inspectors to control plant operations - and means the plants run 24 hours just to meet legitimate orders. The policing is so effective that the manufacturers of replication equipment to make the discs are having trouble supplying machines to the mainland. Even in licensed factories, there may be a production run or additional line that is making illegitimate copies. According to the International Federation of the Phonographic Industry (IFPI), the body representing the music industry, official plants are meeting only about 60 per cent of demand, leaving a shortfall of about 100 million discs per year. Where are they coming from? Outside China, it seems. The Government's success in regulating its production simply has pushed the source of the illicit trade to Hong Kong, Macau, Malaysia and other parts of Southeast Asia. In the past year, the number of plants in operation has multiplied in Hong Kong and Macau. From perhaps seven in Hong Kong a year ago, there are now 40, the IFPI estimates. Others believe there could be as many as 200. A similar number are in operation in Macau. Even on the lowest estimates, there are several hundred million CDs, VCDs or CD-ROMs being produced in the SAR each year. "That's a phenomenal capacity," said Tom Robertson, vice-president of the Alliance Against CD-ROM Theft. Hong Kong's 6.4 million population cannot consume such large numbers of CD-ROM products and no one has much doubt where they are being sold. "They're being exported into China," said Bill Ford of Trace Optical, a company that supplies disc replication equipment. The problem is thought to be worse in Macau. "There are rumours that they are now sending around 200,000 {CDs over the border} every day," says JC Giouw, Southeast Asian regional director for IFPI. Legislation is being formulated in Hong Kong to deal with the problem. The SAR Government is proposing a licensing scheme for production facilities, similar to the mainland system. Also, discs could be stamped with a source identification code (SID). An individual SID would be given to each factory. Every disc stamped with the SID can identify the factory that made it. The legislation could be adopted as early as the middle of next year. But licensing might not solve the problem. "Even if you have legitimate lines, you can still have illegal production at those lines," said Mr Robertson. Much of the piracy is thought to be from licensed producers. Licences are sold for copyrighted music and films based on the potential for sales and the geography covered by the licensee. For example, a film studio may sell the rights to one company to produce 150,000 copies of a film for distribution only in Thailand and will base the price on that restriction. Once the film studio has provided its licensee with the master or "stamper" to produce the VCD , it has no control over how many actually are manufactured. An executive at a company distributing CD manufacturing equipment said it was common for those with legitimate licences to run off extra copies for black market sales. Instead of 150,000 copies, they may produce 250,000 copies and sell them in countries where they do not have authorisation. Further problems are predicted when operators bring back into production the 40-odd factories it closed last year. "China is going to have to maintain its vigilance," said Mr Robertson. Helen Johnstone