WOULD you rather pay $98 for an original compact disc of your favourite Canto-pop singer or $100 for three Canto-pop compact discs of your choice, quality notwithstanding? Judging by the thriving trade in pirated compact discs in Hong Kong, the answer is clear - especially when the sound quality of those copies is almost as good as the real thing. The Hong Kong bureau of the International Federation of Phonographic Industry (IFPI) estimates that the Hong Kong recording industry has lost as much as $50 million in the past year because of compact disc pirates. And, as yet, they are nowhere near an effective solution to the scourge. ''We have been reporting such cases to the Customs and Excise Department and they have been making arrests but so far the biggest dealer we have caught only had about 10,000 compact discs,'' said IFPI (HK) executive director Patrick Wong Tsz-tin. ''But most of the others we have caught were small-time hawkers who only had a few hundred compact discs on them.'' Customs and Excise Department figures place the number of pirated compact discs seized this year at almost 42,000 compared with 10,000 for the whole of last year. Yet the IFPI estimates there are 150,000 pirated compact discs in circulation in Hong Kong at any one time. Mr Wong believes much of the problem stems indirectly from China's closed economy. ''It is very difficult to export albums into China. Each release is carefully scrutinised and has to pass through a board for approval before it is allowed in, and each year only eight to 10 releases are approved,'' he said. ''But the demand on the mainland is very big, so there's a gap. Some compact disc factories find that they cannot survive if they just stick to these 10 releases a year and so they are tempted into piracy.'' IFPI research figures show the highest output capacity in China is 54 million copies of pirated compact discs although the maximum number the Chinese market can absorb is three million. That leaves the bulk of the compact discs floating around Asia and Chinatowns around the world. The hardest hit have been big recording companies like PolyGram and Warner Music who, between them, have three of Hong Kong's four Canto-pop ''kings'' - Jacky Cheung Hok-yau, Andy Lau Tak-wah and Leon Lai Ming. (The fourth is Aaron Kwok Fu-shing.) There have been far fewer pirated versions of Western releases and they have been limited to bestsellers such as Whitney Houston's Soundtrack from The Bodyguard and Kenny G recordings. In the past, pirated versions only surfaced after the originals had been released in Hong Kong or Taiwan (for Mandarin albums). But recently pirated versions of new albums by Alan Tam Wing-lun and Vivian Chow Wai-man have been circulating even before theoriginals were released. A spokesman for Warner Music said sales of the company's releases had dropped by 20 to 30 per cent this year, largely due to the large number of pirated versions in circulation. ''With the Alan Tam and Vivian Chow cases, we have had to take a lot more precautions,'' the spokesman said. ''We have stopped releasing compact disc singles as was the practice before because we have found that once the compact disc singles went out as samples, it was just a matter of days before the song was pirated.'' Instead, local record companies are providing cartridges to radio stations whenever they want to plug a single. ''Only radio stations have cartridge players. But, in any case, pirates would not get very good quality sound if they made a master tape out of a cartridge,'' the spokesman said. In Hong Kong, it appears little can be done to tackle the problem. ''The IFPI is not empowered to make arrests. We can only keep the Customs and Excise Department informed of retailers we know who are dealing with pirate copies,'' said IFPI's Mr Wong. ''The Government needs to put more resources into the Customs and Excise Department if they want to fight compact disc piracy. There is just not enough manpower to deal with the problem.'' According to Mr Wong, many of the pirated compact discs are products from compact disc recording plants in Guangdong where such discs are displayed boldly on shop shelves and sold for as little as 16 RMB each. Individuals find little difficulty in hopping over the border to buy these compact discs and then re-selling them at $30 or more here. ''We are negotiating with the Chinese authorities to set up two task forces funded by the IFPI to crack down on these pirates. We hope to have at least 200 people in each task force, aided by a few IFPI officials to help identify pirated copies,'' Mr Wong said. One task force will be responsible for raiding retailers believed to be selling pirated releases while the other will make checks on recording plants. But one record company source who declined to be named said the task forces would have a hard job: ''Who do you think is running the racket? Compact disc pirates need sophisticated machinery and hence, strong financial backing. With such a lucrative racket, the presence of triad elements is inevitable,'' he said. ''But who would dare point a finger at them? The fines are paltry sums compared to what they can earn and they can always get a stoolie to take the blame. But if they know that you have given evidence against them, you're in for a bumpy ride.'' Another industry source said: ''It's not only the triads that are involved. We know of some county officials in the mainland who have shares in such operations. If that is the case, then it will be difficult to even get near the plants, much less make unexpected raids. ''Even if the task forces are effective, there is only a slim chance that they will be able to totally eradicate piracy. All they can do is just scare them a little.'' Meanwhile in Hong Kong, recording companies can only sit and wait for the situation to improve. Some have taken to including special gifts, such as bookmarks or note pads, with each of their releases but the Warner Music spokesman said that it did not make much difference to buyers. It is a losing battle the record companies are fighting. The more ''worthwhile'' the gifts, the higher the production costs, already between $800,000 and $1 million per album. ''There's no way record companies can match the low prices of the pirated compact discs when their cost is only about $6 per disc,'' Mr Wong said. As for the singers, they can only grumble and watch as their royalties go into these unscrupulous pirates' pockets. ''When a fan brings a compact disc cover from a pirate copy to sign, what do you do?'' asked one disgruntled singer. ''If you sign, you would be encouraging them to buy more pirated copies. If you don't, you're branded as stuck-up. First they rent out compact discs, now they make pirated versions. I don't know why I bother to sing any more.'' Insiders are already predicting a racket which could match that of the 70s when cassette tape piracy was rampant. ''The only difference was that the sound was of inferior quality so even the customers were dissatisfied and stopped buying. Besides that, most of the pirate plants were in Hong Kong itself so it was easier to close them down and confiscate the equipment,'' said the record company source. ''Perhaps the only way they can completely stop the problem is to halt all album production until this is sorted out. But who would be willing to pay such a high price?''