CHINESE companies are stepping up their counterfeiting activities by more than 1,000 per cent each year, putting money spent by European businesses on research and development at risk, experts have told British chief executives.

The warning came as a survey by Hay Group, the management consultancy, found that more than half of British business leaders expect Chinese infringements of intellectual property to hit their business within the next five years.

Andes Lam, practice leader in Asia for strategic risk assessment at Marsh, the world’s largest insurance broker, came to Britain to address the broker’s blue-chip clients on the risks of using Asian suppliers.

He estimated that there had been a 1,000 per cent increase in incidents of counterfeiting of computer and electrical components in China in the past year. This is up from a European Commission estimate of an 800 per cent increase in 2004.

Mr Lam said that too few European companies with products built in China took time to ensure that their suppliers protected their intellectual property. Although designer goods were still the items copied most frequently, the theft of technology was rising rapidly, he said.

“The first thing you should do when you find a good contractor is to screen both their IT and physical security systems,” Mr Lam said. “One of our customers, an Asian business itself, had invested a lot of money on R&D to be the leader in their market, but before they’d even announced their design, they saw the exact same product been shown by a competitor.”

Meanwhile, the Hay Group survey found that British businesses expected sales to China to be worth 10 per cent of their global revenues — equivalent to £200 billion a year — by 2009.

However, the executives surveyed said that there were several barriers to trade.

Poor protection of intellectual property, the complex Chinese legal system, unequal treatment of foreign and domestic companies, corruption and excessive bureaucracy were all perceived to be stumbling blocks to British companies achieving business success in China.

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