China negotiates reduction in DVD player technology royalties

September 4, 2003

According to an article over at DigiTimes the Chinese
Ministry of Information Industry (MII) has negotiated with the 3C
alliance, led by Philips, for a reduction in DVD player technology
royalties paid by Chinese manufacturers.

By agreeing to lower the royalties to $ 3,50
instead of $ 5, the 3C alliance hopes to increase the willingness of Chinese DVD
player makers to pay the royalty. However, the alliance will still
charge an additional royalty of $ 0.50 per unit for the next three to five
years to make up for royalties not paid in the past:

Apart from the 3C alliance, the 6C alliance and 1C alliance claim royalty fees of US $ 4 and US $ 1 per unit, respectively, on DVD player production. The two other alliances, currently negotiating new royalties with the MII, are expected to be also willing to lower their fees.

China's royalty model, set up with the help of government negotiation, offers a good reference for Taiwanese producers of optical drives and government authorities, the Opto-Electronics & Systems Laboratories under the Industrial Technology Research Institute (ITRI) pointed out.