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By Christine Seib
July 24, 2006
CHINESE companies are stepping up their counterfeiting activities by
more than 1,000 per cent each year, putting money spent by European
businesses on research and development at risk, experts have told
British chief executives.
The warning came as a survey by Hay Group, the management consultancy,
found that more than half of British business leaders expect Chinese
infringements of intellectual property to hit their business within
the next five years.
Andes Lam, practice leader in Asia for strategic risk assessment at
Marsh, the world.s largest insurance broker, came to Britain to
address the broker's blue-chip clients on the risks of using Asian
He estimated that there had been a 1,000 per cent increase in
incidents of counterfeiting of computer and electrical components in
China in the past year. This is up from a European Commission estimate
of an 800 per cent increase in 2004.
Mr Lam said that too few European companies with products built in
China took time to ensure that their suppliers protected their
intellectual property. Although designer goods were still the items
copied most frequently, the theft of technology was rising rapidly, he
"The first thing you should do when you find a good contractor is to
screen both their IT and physical security systems," Mr Lam said. "One
of our customers, an Asian business itself, had invested a lot of
money on R&D to be the leader in their market, but before they'd even
announced their design, they saw the exact same product been shown by
Meanwhile, the Hay Group survey found that British businesses expected
sales to China to be worth 10 per cent of their global revenues --
equivalent to =C2=A3200 billion a year -- by 2009.
However, the executives surveyed said that there were several barriers
Poor protection of intellectual property, the complex Chinese legal
system, unequal treatment of foreign and domestic companies,
corruption and excessive bureaucracy were all perceived to be
stumbling blocks to British companies achieving business success in
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