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Chinese media protectionism and World Trade Organization (WTO)

By Amarendra Bhushan for CEOWORLD Magazine Updated:August 18, 2009

The World Trade Organization ruled this week that Beijing cannot force foreign-made entertainment to be sold through its state-run monopolies.

Media imports must be sold freely!!!!!!!!!!

Now American and other foreign companies must deal with Chinese government-run companies in distributing movies, books and music. This takes the profit out of the transactions, increases the government’s ability to censor content (for instance, only 20 foreign movies can be shown in Chinese theaters each year) and, thanks to the censorship and limitations, creates a fertile ground for content piracy and black market sales.

Beijing has said it will appeal at least some parts of the ruling. But if it loses, China will have to decide whether to bring itself into line with the WTO judgment. The alternative would be to maintain the illegal policies and simply bear the cost of any retaliatory measures the U.S. might one day impose.

Currently all foreign movies in China are distributed by the state-owned China Film Group Corporation, or a second company, Huaxia Film Distribution, which is part-owned by China Film.
China’s import quotas including an annual quota of 20 revenue-sharing films.
Chinese regulations demand that foreign films should not exceed one third of the total number of films distributed in the country.
China’s box office grew by 27% to reach $617.13m (RMB4.22bn) in 2008
Local films accounted for a 61% market share.
China has 60 days from the Aug 12 ruling to appeal or it will passed to a vote among WTO member countries.

Now a spokesman for the Chinese Ministry of Commerce has said that appeal will certainly go ahead.

“We think it was improper for the WTO not to reject the U.S. request,” the spokesman, Yao Jian, told a news conference in Beijing. “Based on the WTO schedule, we are preparing the documents necessary to lodge an appeal.”

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