Bootleg copies of "Harry Potter and the Sorcerer's Stone" appeared in China's capital within days of the movie's U.S. release, the latest in a flood of pirated films to reach Asia.
The "Harry Potter" bootlegs show both an insatiable appetite for foreign films and the Chinese government's difficulty in closing the country's booming black market.
It's a particularly sensitive issue because China this month joins the World Trade Organization after 15 years of contentious wrangling with the U.S. over trade issues, including copyright protection.
To join the WTO, the Chinese government agreed to strengthen its copyright law and promised to enforce it.
But today videodiscs of "Hali Bote," the Mandarin name for the young wizard character, are selling in Beijing for the equivalent of $1.20 to $1.50 each.
The copies are fuzzy and scenes are missing, but the counterfeit videodiscs contain Chinese subtitles and provide the movie-starved masses with an opportunity to see the Warner Bros. hit before it plays in Chinese theaters next year.
Piracy is rampant in China, where nearly 90% of the movies sold on disc are counterfeit, according to the Motion Picture Assn. of America. Helping fuel China's underground video market is a pent-up demand for foreign pictures.
The Chinese government has long limited to 12 the number of foreign movies allowed into Chinese theaters each year, and it can take months before an approved film is shown.
Industry experts see some hopeful signs. Since mid-September, Chinese agents have raided 37 warehouses, seizing 1.2 million pirated video compact discs, the movie format dominant in much of Asia, and 365,000 illegal DVDs, according to the MPAA. More than 200 people were arrested.
"The Chinese central authority has made some attempts to live up to their treaty obligations," said William Alford, a Harvard Law School professor who specializes in China and the WTO. "But the problems are deeper, more profound and very hard to get at."
Once furtively sold on the street in cellophane wrapping, many bootlegs now are offered openly in neighborhood stores and by hawkers in the street. Customers stand over the peddlers' duffel bags or cardboard boxes and shuffle through the titles.
On a recent visit to a Beijing neighborhood video store that usually is stocked with hundreds of bootlegged foreign films, the room devoted to DVDs stood nearly empty.
"The authorities are coming by to inspect, so I moved the DVDs out for the day," the store manager said nonchalantly.
The manager, who requested anonymity, said nonetheless that the inspectors routinely ignore racks that are filled with pirated videos.
And speedy turnaround of pirated American films has become commonplace.
In August, high-quality DVDs of "Shrek" were available in China three months before DreamWorks released the official DVD. And in 1999, illegal copies of "Star Wars: Episode I The Phantom Menace" arrived in Asia two days after the film opened in U.S. theaters.
Technology and an organized pirate network are overwhelming authorities. Scores of Internet sites allow users to download pirated copies of "Potter" and other recent Hollywood releases, including "Heist," "Shallow Hal" and "Monsters Inc."
Advances in Tech Help, Hurt Film Companies
"In the digital age, movies can easily be stolen in one country, transmitted to a second country where they are replicated ... and then distributed to countries all over the world," said Ken Jacobsen, head of the MPAA's global anti-piracy unit. "The Internet just exacerbates the problem."
For Hollywood studios, digital and disc technology is a double-edged sword. Studios reap millions from the sale of DVDs to film fans eager to replace their video collections with discs offering extra scenes.
But disc technology also is a boon to pirates, who can easily produce and distribute DVDs and video compact discs.
Mechanized factory lines can stamp out an optical disc in seconds, allowing pirates to produce thousands of counterfeit copies a day. As little as five years ago, it would take pirates hours to dub a single bulky videocassette tape.
More than 20 million pirated optical discs of Hollywood movies and 4.5 million illegal VHS tapes were seized worldwide last year, according to the MPAA.
The trade group estimates that more than $3billion a year is lost to piracy worldwide, an alarming figure for film studios that collect more than 50% of a film's revenue from foreign box office receipts.
"This goes to the heart of our business, particularly with these technological advantages," said Jeff Blake, president of worldwide marketing and distribution for Sony Pictures Entertainment. "[Piracy] just can't be ignored or accepted any longer."
A few years ago, China was one of the world's biggest exporters of pirated movies, industry experts said. Now, most illegal discs are produced in Taiwan and Malaysia and then shipped to China and other overseas markets, the MPAA said.