Only lack of capital and low technology and business management capabilities are bigger hindrances for Chinese software vendors, according to a wide-ranging study of piracy in the country.

The government’s Intellectual Property Center and the China Software Industry Association carried out the survey of 230 software firms, 270 organizations and 1,000 users, the Xinhua news agency reported.

Almost 40% of software firms said piracy was a problem, while 14% cited it as a big problem. By comparison, only 7% cited international competition as a brake on their development.

It’s not hard to see why piracy is a major issue in China – while 78% of firms said they bought software through reputable sources, that still suggests over a fifth of firms are happy to dip into the black market. And those firms that do buy legitimate software often proliferate it beyond the terms of their license.

The situation with consumers is even worse, with only 27% of consumers saying they bought their software through legitimate channels.

The high levels of piracy were encouraging vendors to turn away from mass market products, said the survey, and to concentrate on enterprise products and solutions which are less likely to be pirated.