For example Nike's mainland profits have been falling since they peaked in 1997.

But the sportswear giant also estimates that mainland counterfeiters export 150,000 shoes to markets in Europe and Africa and also use the brand to sell slippers, baseball hats and other apparel.

Gillette is one big name that was uncertain how to react when the anti-pirate panel was formed but realised it faced a global threat.

'Some people were afraid to join because they don't want consumers to know they are having a serious counterfeiting problem,' said Philip Yang, corporate affairs director of Gillette China.

'But this is a serious problem and the counterfeiters are getting more and more sophisticated every day.

'The packaging is often so sophisticated you cannot tell them apart from the real thing.' Some counterfeiters are even using machinery to print the code data on the bottom of packets. Gillette traced imitation alkaline batteries being sold in Russia back to Guangdong. They were made with zinc carbon.

Hiring a team of investigators, it traced the manufacturers to a township near Chaoyang in Guangdong and persuaded officials to stage a raid last April but although some goods were confiscated there were no prosecutions.

'The officials there then reported they no longer had any problems with counterfeit battery production,' said Mr Yang.

But investigators suspect three million fake batteries are being made a year with the labels of Duracell, Kodak, Panasonic, Philips, Toshiba and Sony.

On Christmas Eve, Gillette helped organise a second wave of raids involving 230 investigators and officials on 50 factories, only to discover they had been foiled again.

'We arrived at a printing factory and found it empty. In a dormitory for 30 persons, the lights were still on and the tea was still warm. One investigator said he was there 24 hours earlier and it was operating,' Mr Yang said.

The owners had installed a network of hidden closed circuit television cameras inside and outside the factory. They may also have been tipped off as the local authorities had been informed 24 hours earlier that a raid was imminent.

Many pirate plants are owned by local officials.

Inside the factory, the squad found two new US$1 million printing machines used for printing fake labels.

Existing laws make it difficult to prosecute anyone. They have to be caught three times before there can be a criminal case.

In its biggest catch so far Nike last month seized a shipment of 5,000 shoes from Fujian to Guangdong.

Procter & Gamble has managed only one prosecution. That was against a manufacturer of fake Rejoice brand shampoo who was caught three times in Yiwu, a trading town which has sprung up in Zhejiang province.

'Although we are putting more resources and management efforts into fighting the problem there is no improvement,' said Patrick Wang, Nike's representative in Beijing.

Often products are made in tiny and unsanitary workshops. Bestfoods found that its Skippy brand peanut butter was being made in a filthy warehouse.

This has resulted, said Bestfoods president Joseph Johnson who chairs the committee, in the number of personal-injury cases from the consumption of counterfeit goods doubling since 1997.

Mainland counterfeiters now have a new incentive to scour the world to find other goods to copy and export.

'With the export tax rebates of up to 17 per cent, they can even export goods at below production costs and still make money,' said Dietrich Ohlmeyer of German firm Henkel.

Counterfeit factories also have cheaper labour costs than multinationals and ignore labour laws, forcing workers to do 12-hour shifts with only one day off every two months.

Beijing now seems more receptive to the idea of action against counterfeiters. Perhaps it is because the threat is coming closer to home - even brand-name mainland firms are having their products ripped off.

The panel of foreign firms hopes the new attitude will result in an anti-counterfeiting law, the clarification of standards for criminal liability under the criminal code and revisions to the product quality law.

They want Beijing to set up a central enforcement agency and data base to help bring legal action against repeat offenders.

Multinationals face a growing sophistication in their fight against brand-name piracy writes JASPER BECKER from Beijing.