The CD and DVD factories in China are very profitable and each year they produce tens of millions of copies. In the 1990s China Records used a $2 million CD making machine purchased from First Light Technologies in Minnesota to turn out one CD every seven seconds at a cost of about 25 cents per CD. Many of the CD plants can also make CD-ROMS, digital audio discs and CD graphics.

Even legitimate businesses are involve in the counterfeiting operations The Suzhou laser disc factory reportedly ran off copies for the California-based Microlink Systems during the day and produced pirated copies at night. Some factories have ties with top military and government officials.

A survey in the mid 2000s found that 774 registered production facilities had a capacity to make more DVDs than they were licensed to produce. Some of these no doubt produced pirated DVDs The profits of products which have no tax or royalty payments are simply to high and easy for producers to ignore.

Other pirated DVDs are produced at black market factories, mostly in the southern province of Guangdong or smuggle din from Hong Kong or Macua. Organized crime is often involved in the production and distribution phases In some cases profit margins are higher and the risks are lower than with heroin.