On April 17, the AQSIQ held a press conference in Beijing, declaring that its Information Center sold 30-percent stake in PIATS to the CITIC Group. But the agency said it would continue to promote the tracking system's electronic supervision code, because PIATS was an important tool in establishing an efficient supervision mechanism for product quality and food security.

Competition for survival

"From the beginning of 2005 to the end of 2007, the AQSIQ made many efforts to promote the services of PIATS, but the result is far away from its goal," said Long Gang, Deputy General Manager of Beijing Pan-Pass Information Technology, in an interview with China Business News. "It aimed to have several hundred thousand company members, each of which would need to pay 600 yuan ($87.72) in access fees every year."

Long said both small and large companies are engaged in creating anti-counterfeiting technologies. But for small firms that have a limited number of clients, the AQSIQ's behavior could squeeze the space for them, and they could lose their customers. And large companies could see their business volume shrink by 20-30 percent, Long said.

"Large companies may be able to remain standing, but the losses are still heavy," said Long. Hengxin Digital Science and Technology had to cut its headcount to eight employees from more than 70. Beijing Pan-Pass Information Technology, once one of the top firms in the industry, has seen its business volume drop dramatically, he added.

"Over the past three years, we companies in the anti-counterfeiting technology business have been talking with the AQSIQ, but it just takes a perfunctory attitude and speeds up its compulsory promotion of PIATS," said Guo Sheng, Deputy General Manager of Hengxin Digital Science and Technology, in an article in China Business News. "We feel that such a marathon will not have a result, so we decided in April this year to file the lawsuit on the first effective day of the AML."