Speaking to Bloomberg.com, John Kennedy, chairman of recording industry organization the IFPI, said we’ve started the process and as far as we’re concerned we’re on a track to litigation.

A new Chinese law that fines distributors of illegally copied music and films over the internet up to $12,500 dollars may be used in the case.

The organization claims that around 90% of downloadable tracks in China are illegal, with annual sales of pirated music reaching almost $400 million.

Yahoo China is run by Alibab.com, of which Yahoo owns 40%.

Last year seven record labels including EMI, Sony BMG and Warner filed a civil suit against China’s most-used search-engine, Baidu.com.