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Canon shoots at Chinese pirates

Although the printing and imaging giant is enjoying booming sales growth in the country, counterfeit goods are costing it millions. It's taking aim with several new initiatives.

Printing and imaging giant Canon is trying to come up with a way to avoid taking the bad with the good in China.

Last year, the company's sales in the massive Eastern country grew by 51 percent over 2002--more than double the growth rate in the overall Asia Pacific region (excluding Japan), which itself dwarfs the rate of increase in the United States and Europe, said Fujio Mitarai, president and CEO of Canon.

The country has also become a vital manufacturing hub for Tokyo-based Canon, which has invested $1 billion there to date, setting up eight production plants that pump out everything from printers to office copiers. Mitarai officially opened on Friday the largest of these facilities, a Suzhou-based $100 million factory.

But there's a dark side to the country's vast sales and manufacturing potential: Last year, Canon conducted 363 antipiracy raids with governments around the world--and 243 were in China.

According to Nobuyoshi Tanaka, Canon's general manager for corporate intellectual property, fake Canon goods seized during the operations included machines such as calculators, cameras and photocopiers, along with consumables like inkjet cartridges, laser printer toner and rechargeable batteries.

Such counterfeit consumables translated to about $22.6 million in lost revenue in China for Canon last year. On a global level, the damages amounted to "several hundreds of millions of U.S. dollars," Tanaka told reporters at a media conference in Shanghai.

Beyond the monetary losses, piracy also led to rising complaints about Canon machines, which were often damaged as a result of inadvertent use of fake supplies, the company said.

All this has caused the company to take action. To strengthen its antipiracy efforts this year, Canon plans to embark on a regional consumer education program, which includes an advertising campaign throughout Asia.

"We will also enlist the support of authorities in taking legal action to protect our brand. These include raids on counterfeiting factories," said Yoroku Adachi, Canon's president in Asia.

Tanaka said that in China's mainland, Canon is working with government departments such as the Public Security Bureau, the Quality Technology Supervisory Bureau, and the State Administration for Industry and Commerce, to crack down on counterfeit syndicates and retailers.

In addition, Canon is part of China's Quality Brands Protection Committee, an industry consortium consisting of multinational technology and nontechnology companies battling the piracy plague. The group's members include Microsoft, Hewlett-Packard, Intel, Nike and Unilever.

On the consumer front, Canon said the packaging of counterfeit consumables has evolved to a stage at which holographic stickers--once thought to be the copy-proof hallmark of genuine goods--can now be imitated. "Consumers have difficulty identifying genuine products," Tanaka said.

To address this, Canon plans to provide customers with tools like the Trustgram to help expose bogus cartridges. When the cardsize Trustgram viewer is placed over the holographic sticker, the resulting color helps distinguish authentic supplies from bogus ones, Canon executives said.

Winston Chai of CNET Asia reported from Singapore.