Live Issue... Will the WTO's ruling force open China's media market?

But what does the ruling mean for content owners trying to access China?

The ruling, which the Chinese authorities say they will appeal, orders the Government to ease some of its curbs on foreign films, music and print. It follows a complaint by the US. The ruling promises to open the doors to China’s market for overseas media companies to distribute their content. At face value, the ruling sounds fair and simple, especially since Beijing joined WTO eight years ago and made market access commitments.

But control of media and media content is not something China is going to want to give up without a fight, say some analysts.

Dave Carini, MD of Maverick China Research, says the authorities have already had run-ins with companies such as Google and Yahoo. “The more China’s media markets are opened, the more the Government will be forced to allow distribution of objectionable content, or else get into arguments with foreign media companies.” Not everyone agrees. Lawyer Greg Pilarowski, who focuses on the digital media industry, China, says it is “more of a commercial issue than a control issue”, putting it down to simple protectionism. “China can still have the same censorship, as long as it allows fair marketing and distribution of foreign goods.”

How big is the demand for US content? In the case of films, books and magazines, foreign offerings pose a competitive challenge to Chinese products. China limits the import of foreign films to 20 each year. It also requires that they be distributed through Government-run companies. But there is a vast illegal trade in pirated DVDs of Hollywood movies and easing restrictions on the distribution of DVDs is not likely to stop bootleg sales. “Ironically, Chinese consumers may not be interested in opening China’s media markets, especially if the Government cracks down on pirated content at the same time,” Carini says.

David Wolf, CEO of Wolf Group Asia, says many US media products won’t be relevant. “There is an assumption in New York and Hollywood that if you produce Western TV, magazines, films and books, Chinese people will want them. But they increasingly want to watch movies and TV shows, listen to music, and read books and magazines that are about them.The relevance of foreign cultural products is in decline.”
And even if the market is opened up, marketing and distribution of foreign media in China will remain a real issue. China’s distribution system is still underdeveloped, and Chinese importers are still learning how to market these products.

“Because China has been a very production-driven market, there is no real system for marketing cultural products, nor are there experienced, savvy people to market them,” adds Wolf.

“Until now, that hasn’t been a problem - if you sold it, they would buy. But for these industries to grow, they must communicate what makes their products worth buying.”

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This article was originally published in 27 August 2009 issue of Media.