According to a recent survey by the American Chamber of Commerce in China, 41 percent of U.S. companies said counterfeit copies of their products increased in 2005. Fifty-five percent said they were hurt by violations of intellectual property rights. That same percentage said enforcement had stayed the same and 7 percent said it had deteriorated. That's why the Chinese government recently introduced a program to establish counterfeit complaint centers in 50 cities. But many are concerned that it's the same old window dressing.
   DuPont's $1-billion figure includes all of those integrated supplier investments as well as a possible second line to be installed in 4-6 years. DuPont's initial investment may be as much as half that total. Protecting that investment's integrity is a concern for a chemical company like DuPont as much as it is for a motion picture company.
   "This is not an also-ran kind of plant – we're bringing the best we have that we'd build anywhere in the world," says Kmecz. "That's how we make money, by using the best technology we have. So there is cause for concern with intellectual property rights and how we'll protect that going forward. We've talked about a number of things, and haven't gotten down to the nitty-gritty. It's a difficult situation."
   It's made more difficult by the fact that only one of the 60 or so small producers in China right now uses the more environmentally friendly chloride process for making TiO2 (one that is encouraged by the NDRC, the Chinese equivalent of a planning commission). Many of the others, users of the discouraged sulfate method, would no doubt like to learn how to change their ways.
   Asked if the incipient gradual phase-out of certain corporate tax breaks in China affected Dupont's site selection process, Kmecz says no, because the company has known it was coming for some time. But at the same time, getting any tax breaks requires a lengthy process of establishing a business entity which requires state-level approval. The underground injection element adds a level of complexity.
   "There is no substitute for punching a hole in the ground," says Kmecz. "That's expected to be complete sometime this year, and needs to get rolled up in our permit applications and EIS. We're pushing pretty hard to get through that process. They have speculated that sometime in 2007 they're going to equalize the tax breaks that have been in favor of foreign companies. It's questionable whether we're going to make it before those things will come into play, and they've alluded to the fact that there's not going to be much grandfathering in this. This has caused some concern, but there is not a whole lot we can do about it, and we're in this for the long term. It affects our short-term economics, but when you look at life cycle costs, it has minimal impact."
   Minimal impact of another variety is also something new in China, as many wonder if the environmental responsibility push in China is for real. The answer is: It has to be. Ask any visitor to the country and you'll hear testimony ranging from darkened skies in the daytime to burning eyes and nagging coughs. Kmecz says that push and several incidents like the recent benzene plant explosion have had significant effects on the company's project.
   "As a result of that incident they've decided to tighten up on their permitting process," he says, exactly at the time when Dupont was getting ready to submit an application. "We were just ready to turn that in when they pretty much closed their doors and said they weren't accepting applications for 3-4 months, because they were reviewing permits to see if they were setting themselves up for future incidents."
   It's another bittersweet pill, he says.
   "Short term, not good," he says. "But long term, it will tighten up regulations in the chemical industry in China that have been pretty lax. Go around and look at the way they do what they do, and it's pretty common knowledge that they don't have a really good track record for responsible and sustainable operations. Dupont has a good track record at our facilities, and what this will eventually do for us is it will level the playing field regarding what we can do versus the competition."