By Duncan Hewitt in Shanghai

A long running trade feud between Chinese manufacturers of DVD players, and foreign firms who say they hold the patent on the technology, has found a partial solution.

After two years of talks the Chinese producers have agreed on a royalty fee which they will pay for every DVD player they export up to the end of this year.

Chinese firms will pay a fee reported to be around $4 (�2.70) for each DVD player they export - the agreement will be renegotiated next year.

The money will go to members of the 6C alliance, which includes Toshiba, JVC, Hitachi and Time Warner.

The figure is well below the $20 some firms had originally demanded but a lawyer for the alliance told the BBC the deal represented a step forward in adherence to copyright law in China.

There are fears though that with Chinese electronics producers already involved in a bitter price war in the domestic market, the royalty fees could push some state run firms into bankruptcy.

Bargain prices

The deal follows alarm among Japanese and European manufacturers at the massive inroads into their sales made by cheap Chinese products.

The row over DVD players has highlighted fears among companies around the world at the rapid growth of the Chinese electronics industry.

Chinese exports of DVD players and the cheaper VCD players reached almost 13 million units last year - their prices, between $100 and $200 dollars are less than half those of many Japanese products.

But Japanese and western producers have long argued that it has all been done using their technology.

The row recently threatened to boil over into a trade war, when European customs began impounding shipments of Chinese DVD players.

The alarm caused in China by this move may have helped to bring about the new agreement.

The Chinese companies may soon find themselves having to pay even more royalties as negotiations continue with other foreign producers, including Philips and Sony.