Well, if you have ever been to China you know that there is a lot of counterfeiting going on - fake purses, watches, shirts - you name it. You don't often hear the word counterfeit used for software (isn't usually pirated software?). My guess is that the term was introduced by the software companies to make it sound more criminal. Piracy makes us think of a 15 year-old kid who just wants to listen to some free music without the Man getting in the way. Counterfeit makes us think of sketchy criminals who are probably trying to get that same 15 year-old addicted to heroin.
Whatever you want to call it, in most places it is illegal (despite the protests of the software-should-be free crowd). In the past enforcement was weak and piracy was tolerated (Bill Gates famously said in 1998 that MS would tolerate Chinese piracy and once they got addicted would start to collect). But the goal posts have shifted considerably since then.
I don't claim to be an expert on the Chinese judicial system, but the sentences of 1.5 to 6.5 years for $2 billion in fraud seem a bit light by Chinese standards (the IHT reported last week about a certain Cai Wenlong receiving a suspended death sentence for embezzlement). But the fact that China is starting to seriously prosecute software piracy is a significant change of attitude in that country. Increased prosecution will do much more than DRM can ever achieve to discourage piracy.
I wrote in my 2009 predictions that increasing enforcement of cybercrime laws will radically change the information security industry. The software industry has understood that sufficiently motivated people can find their way around DRM and has been focussing on enforcement for a long time (through organizations like the BSA). In confronting cybercrime in general, it is much more difficult to push for enforcement since losses are spread so thin amongst so many different entities. Nonetheless I expect we will see more consumer organizations taking this approach in the coming years.