IN the Beijing suburb of Haidian, the Chinese domestic software industry is flourishing. The Beijing Experimental Zone for the Development of New Technology is filled with software developers and retailers of all sizes. Some of the goods are legally registered, some are pirated. Price is the best indicator of authenticity. As Sino-United States trade tensions mount over the pending Special 301 sanctions for China's violation of intellectual property rights, Chinese software companies have the same problems with piracy as their US counterparts, but feel the US Government's action is inappropriate. 'The American Government thinks that applying this kind of pressure will solve the problem, but they're wrong,' says Liu Qiuyun, deputy director of the Institute of Computer Science and Technology at Beijing University. 'It will make matters worse. We have to work together. It takes time.' The institute works closely with Beijing University Founders Group and was also responsible for developing the Chinese version of Word Perfect in co-operation with the Jin Shan Company. Mr Liu said that Chinese Word Perfect, or WPS, was probably the most highly pirated software product in China, making it difficult to estimate losses. Founders Group does not have exact figures, but estimates losses in the tens of millions in its software division alone. The company was established under the auspices of Beijing University in 1986 and is credited with transforming the newspaper publishing industry in China. Founders is one of the Chinese companies that will seek a listing in Hong Kong this year. The company manufactures electronic publishing systems, communication equipment, transmission networks, office automation systems and computer software. With current net assets of 400 million yuan (about HK$364 million) and 1994 turnover of 1.8 billion yuan, the losses incurred as a result of piracy have not been so damaging. 'It's all relative,' said Wang Xiaoqing, a lawyer and deputy director of Founders. 'If you're in those markets, you know copyright is a problem, but China is a developing country. You can't expect legal changes to happen so quickly.' Both Mr Wang and Mr Liu believe that the US approach to the copyright problem is unreasonable. 'When we buy software from the US, we protect it dearly, despite constant requests to make copies. If anyone understands the value of intellectual property, we do,' said Mr Liu. Both agree that the existing National Copyright Law, promulgated in 1992, is not properly enforced, but claim that companies should expect this. 'Right now, China simply does not have enough trained personnel who specialise in copyright law and software. 'If foreign companies can't accept that, they should think about their future in China,' said Mr Liu. One of Founders' more commonly copied products is software that produces Chinese fonts. The price of the package is 8,000 yuan. Pirates sell the same product for 800 yuan. In an attempt to stop this, Founders established an anti-counterfeit department to search dealers illegally selling their product. If a company wishes to file a suit in court over a copyright violation, the product must be registered with the Software Registration Centre under the Ministry of Electronics. A decision on whether 301 sanctions will be implemented will be made later in the month. According to an official at the US Embassy, there is currently a dialogue taking place between the embassy and the Ministry of Foreign Trade and Economic Co-operation.