Hong Kong is losing its phoney war

Bootleg CDs and software are flooding the former colony, writes Stephen Vines

LAST Monday the Hong Kong authorities were claiming a breakthrough in the war against pirated software, having made the biggest-ever seizure of pirated compact discs and video compact discs. On Friday I joined crowds of bargain hunters besieging stalls selling pirated discs for less than pounds 1 each. "Prices have been going down ever since the raid," one shopper told me.

We were speaking in the shabby Kwun Tong Plaza, a building housing a warren of stalls which sell pirated software along with a host of other goods. Unlike the better-known Golden Centre, where tourists as well as local people often go for cheap pirated software, Kwun Tong Plaza is in the heart of a grimy industrial district which is bordered by sprawling public housing estates. This shopping centre is strictly for locals.

Golden Centre, a far bigger complex, is more closely watched by the authorities, and is regularly visited by companies seeking to protect their intellectual property. Last week stallholders looked blank when asked whether they had any pirated software for sale. The cycle of heavy enforcement, followed by business as usual, is one they have been through many times before, and they were philosophically resolved to wait for the next upturn.

Not so in Kwun Tong, where stallholders were shouting out their offerings in Chinese. "Just HK$100 for 10," yelled a young man brandishing a handful of VCDs. At that price each disc is selling for less than pounds 1. The busiest stall was selling pirated VCD copies of Titanic for just over pounds 1 - or so I was told. It proved impossible to get close enough to check. However, other recent Hollywood releases such as Men in Black, the comedy In and Out and the latest Bond movie were available for a matter of pence. Computer users could also have had a field day. The new Windows 98 program was on offer for under pounds 2. Microsoft Office and a CD-ROM containing 30 Norton utility programs for Windows 95 were available at the same price.

The Hong Kong authorities are deeply embarrassed by the flourishing pirated software trade conducted under their noses. The US has Hong Kong on its watch list of intellectual property rights infringers, and the local film and music industry is equally angry. At a recent film awards ceremony Hong Kong's Chief Executive, Tung Chee-hwa, found that instead of the usual orgy of self-congratulation, the winners subjected him to a barrage of criticism over the government's failure to crack down on the pirates. Within days there was a series of raids, producing last Monday's record haul.

On Friday the authorities announced another seizure, this time of over 2 million pirated VCDs and manufacturing equipment worth $HK116m (pounds 9.2m). About 500,000 of the discs were found on a boat from China and 11 crew members were detained. Customs officers seized another 1.7 million in an ensuing raid on a factory.

The problem is that one of those arrested in the crackdown was Gregory Pun, the head of the Customs and Excise Prosecution, Intelligence and Investigation Bureau: the man in charge of tracking down and apprehending the pirates. He is accused of taking bribes. "The Customs have tried their best to raid all the places selling pirate CDs. The raids have increased," said a spokesman. So what has been the result? "It's hard to say that the situation has changed," he admitted.

The police also feel they are fighting an uphill battle despite taking a special interest in eliminating the sale of obscene CDs, which were also on prominent display at the Kwun Tong Plaza. "We have to stop the source," said the senior police spokeswoman.

The Chinese authorities also claim to be cracking down on the disc pirates, but some factories are reported to belong to the People's Liberation Army. The Portuguese enclave of Macau has become another major source of pirated software. As one hole is plugged, another opens up, because the gains for makers and buyers are simply too high.

I asked one shopper in Kwun Tong what she thought about the morality of buying pirated software. "It's very cheap," she replied.