The laser disc covers displayed in the Xin Xing Cinema in Zhongshan Road bore a stamp showing Intersection had been cleared by the Guangzhou Movie Company to be shown in public.

Next to the stamp, another one from the original laser disc distributor says the copy should be for 'home use only'.

Hong Kong's laser disc wholesalers warn retailers about supplying China.

Ocean Shore Video, together with five major wholesalers which represent 90 per cent of those in the territory, said they were determined to stop the violation.

Raymond Yim Lai-kan, marketing manager of Ocean Shore Video Limited, said no discs would be provided to retailers caught supplying copies to China.

'We have long suspected that some of our retailers have taken our laser discs to the mainland secretly. We even have a name list. Our letter aims to warn them about exporting our labels illegally,' Mr Yim said.

Peter Tsi Ka-kei, chief executive of the Hong Kong, Kowloon and New Territory Motion Picture Industry Association, estimated that the local film industry was losing $20 million every year because of smuggling and piracy.

'A movie copyright is sold for about $100,000 in Southeast Asia. Just for movie rights, I reckon we have lost more than $100 million in the past five years. This includes the rights to have the films shown in cinemas including theatrical rights, laser discs rights, and cable television rights.' Under new laws, manufacturing, exhibition and distribution of laser discs will be under tight government control.

'I can see how hard the officials are trying to cope with the situation but many people will keep flouting the law,' Mr Tsi said.

Mr Yim also doubted whether the law could protect Hong Kong distributors.

'I don't think the new law will help. Everybody knows publicly broadcasting home-use laser discs is wrong. Beijing can pass whatever law it likes but people just continue infringing the copyrights,' Mr Yim said.

Editor-in-chief of City Entertainment Chan Pak-sang said laser cinemas in China were popular because they generated high profits for a low investment.

'You just need a room and a laser disc projector. You don't even need a screen since you can use the wall to show the movies.' Lam Chung, who has worked for more than 10 years in Hong Kong's movie business, said: 'The operator only needs to pay minimum overheads like labour and maintenance and can earn more than $9,000 every day with 100 seats in one cinema, selling tickets at $15 and having six shows.' Chai Hua, a spokesman for China's Ministry of Radio, Film and Television, admitted there had been a lack of control, but said such cinemas had come under the control of the Ministry of Culture on September 11.