Music in Asia is a blessing and a bane to the beleaguered music industry: Asian markets have been some of the most lucrative for the digital music industry in terms of usage, with a huge proliferation of digital-friendly artists and young people in places like Japan, China and India scrambling to download tracks from the Internet to their mobiles and PCs and mash them up with other tunes. But they’re also some of the worst places for piracy and illegal file sharing. In China alone, the IFPI estimates that it has lost some $400 million in revenue annually to illegal CDs.

BusinessWeek takes a look at how one major label, Universal Music International, is trying to tackle the problem by forging ties with local music labels. One of UMI’s unique selling points to the locals appears to be its distribution network: UMI can offer a smaller label the chance to break into other Asian markets.  For example, a Taiwanese star singing in Mandarin potentially could sell more music in Mainland China. It sounds like a good plan, except that in markets like China, UMI’s Asia-Pacific President Max Hole estimates that some 80 to 90 percent of CDs are still pirated copies, and “online piracy is almost total.”

More encouraging are countries like Japan, where piracy hasn’t taken such a major grip, and mobile phone operators have made somewhat of a killing in the mobile data space. One of Universal’s signed acts, a group of medical students singing under the name GReeeeN (geddit?), had over 2.5 million downloads of their latest single, Aiuta, and their debut album sold 400,000 units in three weeks after its June 27 release.