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Software firms tackle piracy in China

Fresh approach to ease Sino-US relations

In a bid to encourage Chinese officials to crack down on rampant software piracy in the country, foreign critics are working hard to sell the notion that legal software is good for China's economy.

"It's seen as the foreigners' way of taking money out of the country without necessarily building factories or other obvious ways of adding value to the economy," said David Wolf, president and CEO of Wolf Group Asia, a consulting company in Beijing.

"You've got to put [the issue] in terms where the Chinese recognise they benefit as well," Wolf said.

This week, the BSA (Business Software Alliance), an antipiracy group largely comprised of US software companies, including Microsoft, released a 28-page report it commissioned to show the importance of China's software and IT services industries to the country's overall economy.

Among the economic benefits highlighted in that report, it said IT-related tax revenue will add 13.3bn renminbi (about £970m) to the Chinese government's coffers this year, more than twice the revenue generated in 2003. In addition, demand for IT services and products, including software, will add one million new jobs in China between 2003 and the end of 2006.

Antipiracy campaigners aren't the only ones touting the economic advantages of a crackdown on pirated software. US Commerce Secretary Carlos Gutierrez touched on the same themes during a recent speech to students at China's Chongqing University.

"One study projects that if China cut its software piracy rate down from 90 percent to 80 percent by 2009, it would generate the equivalent of £3.7bn in taxes, in tax revenues that could be reinvested back in society," Gutierrez said at that time.

In addition, China would gain 2.5 million jobs by reducing software piracy, Gutierrez said.

These messages are being delivered at an important time. The US and Chinese governments sit down next week for the next round of US-China JCCT (Joint Commission on Commerce and Trade) talks in Washington DC Among the topics set for discussion during that meeting, the question of IP (intellectual property) protection, including software piracy, is expected to top the agenda.

There are signs that the campaign for greater IP protection is making progress in China. The office of the USTR (US Trade Representative) has praised China's efforts to improve legal protections for IP, but said more work needs to be done to enforce existing laws.

Vice Premier Wu Yi is currently visiting the US ahead of the JCCT talks. She is travelling with a delegation of Chinese businessmen that is expected to sign deals worth billions of dollars with US companies.

Included among those deals are agreements signed on Tuesday between Microsoft and two Chinese PC makers, Tsinghua Tongfang and TCL, to use only licensed versions of Windows XP. While the value of those deals was not disclosed, they are expected to be worth millions of dollars in licensing revenue for Microsoft.

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