Chinese makers of digital video disc players and foreign holders of patents on DVD technology have settled a dispute over the size of royalties to be paid by the Chinese side.
The Shanghai-based China Audio Industries Association (CAIA), representing 90 percent of China's more than 100 makers of DVD players, said Thursday it signed an agreement last month with the 6C group of foreign electronics giants.
"It's the result of compromise by both sides," said Jin Zhenglong, deputy secretary-general of the CAIA. "The agreement will improve the credibility of Chinese DVD player makers and will contribute to their growth in the long run."
Though specifics have not been disclosed, sources in the 6C group - which consists of Hitachi Ltd., Matsushita Electric Industrial Co., Mitsubishi Electric Corp., AOL Time Warner Inc., Toshiba Corp. and the Victor Company of Japan Ltd. - said the royalties will be about US$3 to US$5 per player.
The group had demanded that Chinese companies pay US$20 a player, arguing that by evading royalties, Chinese makers had gained an unfair price edge.
When and how the royalties will be paid will be announced at the end of May or early in June, according to the Chinese side.
The 6C group launched a global drive in July to ensure that makers of DVD players pay licensing fees to use patented technology. The program reached China this year.
Domestic manufacturers agreed to pay but complained that US$20 - one-fourth of a player's retail price in China - was too high.
They also argued that the chips they used were made by Taiwan companies such as MediaTek Inc. and Acer Laboratories Inc. that had already paid royalties.
The 6C group set a deadline of March 31, threatening to start legal proceedings against the Chinese companies if agreement was not reached by then. The deadline was later lifted.
The CAIA's Jin said the electronics group had recognized that Chinese manufacturers could not afford royalties of US$20 per player and had lowered its demand.
A smaller fee will be paid for machines sold on the domestic market than for export models, he said.
"The royalties won't affect domestic DVD prices much, but they could make exports more difficult," said Huang Junjian, vice general manager of SVA Information Industry Co., which exported more than a million DVD players last year.
China is a huge manufacturing center for the electronic devices, producing 14 million of last year's global total of 26 million units. More than 10 million made-in-China players were exported.
Huang said SVA, Shanghai's largest manufacturer of electrical appliances, is developing an enhanced video disc player with much better definition to "offset losses from the royalties."
(eastday.com May 11, 2002)
