EUOBSERVER / BRUSSELS - A European Commission annual report on customs detentions has shown that the vast majority of fake goods entering the 27-member union continue to originate from China, although last's year global economic downturn saw a decline in numbers.

In 2009, EU customs officials took action in 43,500 different cases where they suspected counterfeited goods were being brought into the EU, a fall on 49,000 cases in 2008, according to Thursday's report (22 July).

Officials were quick to attribute the decline, the first in a decade, to the general fall in world trade last year however, rather than reduced product piracy levels, with 64 percent of the IPR infringing articles originating from China.

Of the main categories of detained products, cigarettes accounted for 19 percent, other tobacco products 16 percent, labelled goods 13 and medicines 10 percent.

Despite the dominance of fake goods from China, a majority of counterfeit foods and beverages originated from Turkey, while a majority of fake medicine entering the EU could be traced back to the United Arab Emirates.

The report comes as the EU commissioner responsible for customs, Algirdas Semeta, prepares to discuss the issue at an international conference in Shanghai this September.

Brussels also intends to come forward with a legislative proposal by the end of the year to clarify and simplify the bloc's customs procedures, with the current legislation on IPR enforcement dating back to 2003.

De Gucht

In a separate but related event on Thursday, EU trade commissioner Karel de Gucht told journalists that European firms were becoming increasingly worried about doing business in China due to a lack of intellectual property protection.

Mr De Gucht told reporters at an EU trade event at the Shanghai World Expo that many of the concerns originated from Beijing's policy of 'indigenous innovation'.

By forcing foreign companies to register as Chinese companies before being allowed to participate in the country's public procurement market, the policy brought overseas intellectual property "into the open", explained the Belgian politician.

The comments come just days after two leading German industrialists voiced similar concerns directly to Chinese Premier Wen Jiabao at a roundtable discussion also attended by German Chancellor Angela Merkel.

EUOBSERVER / BRUSSELS - Two of Germany's leading industrialists publicly attacked China's business environment during a meeting with the country's premier, Wen Jiabao, over the weekend (17 July).

Jurgen Hambrecht, chairman of giant chemical company BASF, and Peter Loscher, chief executive of industrial conglomerate Siemens, added their voices to a growing clamour of criticism against Chinese rules that are seen as disadvantaging foreign firms.

Mr Hambrecht said foreign companies are frequently forced to transfer business and technological "know-how" to Chinese companies in exchange for market access.

"That does not exactly correspond to our views of a partnership," he told Mr Wen at the roundtable discussion in the northwestern Chinese city of Xian, according to German journalists who attended the meeting.

The strong statements are particularly noteworthy due to their public nature and delivery during a meeting also attended by German Chancellor Angela Merkel, in China as part of a four-day state visit.

Mr Loscher voiced widespread complaints about draft Chinese public procurement rules which are intended to support "indigenous innovation," a policy foreign companies fear could shut them out of lucrative government contracts.

The Siemens boss also called on China to remove investment restrictions in certain sectors, reported German daily Handelsblatt. At present, foreign companies can be required to form joint ventures with Chinese companies when setting up shop in China, as exemplified by the Shanghai Volkswagen Automotive company.

Mr Wen reportedly responded to the criticism by telling Mr Hambrecht to calm down, insisting that China remained committed to opening its economy. "Currently there is an allegation that China's investment environment is worsening. I think it is untrue," Mr Wen said.

But the comments from two of Europe's leading industrialists come on top of a recent survey by the EU's chamber of commerce in China which showed that foreign executives hold an increasingly gloomy outlook regarding China's regulatory setup.

The increasing fears of discrimination led the EU chamber's president Jacques de Boisseson to suggest firms may even consider pulling out of China altogether.

"Nobody should take for granted that European companies will continue investing whatever the business environment," said Mr De Boisseson.