Only 10 % of Chinese music sales are legitimate.

China must shut down pirate music factories and jail the perpetrators if it is going to keep its promise to address the $250 billion-a-year problem, according to music industry trade group the International Federation of the Phonographic Industry.

The IFPI estimates that only 10 percent of music bought in China meets copyright rules, and only a small fraction of China's 86 registered optical disc factories are producing legitimately.

"We cannot be satisfied with 90 percent piracy ... no matter the good intentions," IFPI chairman and CEO John Kennedy told Reuters in an interview.

"If the problem is properly addressed then you will have something like 25 plants (left). That takes a lot of political will to want to do that," said Kennedy, in Beijing talking with government agencies to get his message across.

"What we need is criminal prosecutions to put people in jail," he added.

China joined the World Trade Organization in 2001 and is generally seen as having fulfilled its commitments that it made at the time -- apart from fighting piracy. But while the central government seems committed to the changes, local governments have been criticized for failing to implement many reforms.

"There comes a point where you see no evidence that the carrot and diplomacy are working," Kennedy said. "And that's when people use the stick ... In the extreme that could lead to moving China up a priority watch list or even a WTO complaint," he warned.

Kennedy's trip comes just weeks after a similar visit by the new head of Washington's anti-piracy campaign. The U.S. says about 70 percent of the counterfeit products that enter the United States are from China, while piracy in general costs U.S. businesses about $250 billion in lost sales annually.

Chinese President Hu Jintao promised U.S. President George W. Bush earlier this month to take measures to protect intellectual property.

Kennedy said Beijing must move beyond rhetoric and toward action. Kennedy plans to visit China three times next year to review progress made by local authorities, hoping to see more concrete results than the previous annual trips produced.

(c) Reuters