Pirated CD Sales Are Still Thriving in Hong Kong

The Happy Times store is so crowded that shoppers are having trouble squeezing in the door when a salesman makes his pitch.

“Come and have a look! Come and have a look!” he barks, waving video CDs of “Face/Off” and “Men in Black.”

Nevermind that these Hollywood blockbusters have only just opened in Hong Kong theaters. Nevermind all the threats of U.S.-China trade wars over copyright piracy.

Happy Times is selling the CDs for as little as 30 Hong Kong dollars (about $4) apiece. That is less than half the price of a movie ticket, and one-seventh the price of the legitimate video CD that isn’t yet available.

And there are the latest video games, from Tomb Raider to Quake. Not to mention questionable products such as Windows 98, a program that U.S. software giant Microsoft still has in development. You can get three for 100 Hong Kong dollars (about $14).

Hong Kong police mount impressive raids more frequently, and fines have been stiffened, but nothing seems to cow the pirates.

“The most frustrating element about the pirated goods is that they’re available openly in these shopping arcades,” said Woody Tsung, chief executive of the Hong Kong office of Hollywood’s Motion Picture Industry Assn.

They are even mentioned in some tourist guidebooks.

The American movie group estimates 200 million illegally copied films are sold each year in Hong Kong, many of them at huge malls like the Sino Center, home of the Happy Times store.

“We are not satisfied with the government’s efforts,” Tsung said in an interview. “The whole copyright bureau has less than 200 people, and they have to handle everything from pirated CDs to fake medicine.”

The government says the pirates are wily adversaries.

“They have many people watching the exits and entrances in case of a raid, and the bulk of the goods are hidden in storage to minimize the evidence in seizures,” said Kevin Leung, head of the Intellectual Property Investigation Bureau in the Customs Department.

“They also create hurdles for us by having their people start confrontations with the officers in an attempt to slow them down, so some can get away.”

At one computer mall recently, people began rushing out of the building several minutes before a vanload of police officers arrived, by which time most of the stores were shuttered. Clearly, there had been a tip-off.

The United States has repeatedly threatened trade sanctions if China does not shut down the factories that produce much of the counterfeit software.

There is plenty of evidence of efforts to crack down.

At the border that separates the newly reacquired enclave from the rest of China, signs warn of a $1,290 fine for each pirated CD brought in--up tenfold from two years ago.

China also has set up telephone tip lines and offered cash rewards for information leading to fake goods. In the first half of this year, Chinese courts heard 15% more piracy cases than in the same period in 1996.

China’s leading computer manufacturer has signed a deal with Microsoft to install legal Chinese-language Windows 95 software in its computers.

Hong Kong, meanwhile, has upped the penalties for selling pirated software to a $6,450 fine and four years in prison. Last year, 144 people were jailed, compared with only 18 in 1995, Leung said. The longest sentence was two years.

The legislature is writing new laws empowering authorities to seize counterfeiters’ profits and equipment--potentially a huge step forward.

The Customs Department said that in the first half of this year, 780 people were arrested and 1.42 million CDs seized. In “Operation Thunderbolt,” a three-day sweep in July, authorities said they netted 266,200 pirated CDs and arrested 100 suspects.

But the figures do not impress Kevin Henshaw, chairman of the Hong Kong branch of the Business Software Alliance, which combats piracy.

He estimates pirated business software in Hong Kong is costing the industry $130 million a year.

“It’s laughable because some of these places have been open for 10 years. It’s a real black eye for Hong Kong,” Henshaw said. “It’s one of the most blatant and obvious piracy centers in the world.”