In what is seen as a clear move to reduce its reliance on Western formats, China has announced its intention to develop its own audio-video compression standard rather than adopt the MPEG (Moving Picture Experts Group) standard that is dominant across the globe.

As a major manufacturing hub, China is keen to avoid the licensing fees that manufacturers and content providers must pay to the MPEG Licensing Authority (MPEG LA), which represent 18 patent holders, for the use of the compression standards. Upon the completion of the new standard, known as AVS and expected to be prposed as the national standard in 2004, companies that sell AV equipment to Chinese consumers will pay for the new format's licenses.

AVS licenses are expected to run to 1 yuan per device, which is much lower than current MPEG fees. Multinationals, meanwhile, are already getting on board – Microsoft, IBM and Philips are reported to have already signed up to take part in the new standard's working group.

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