New rules to help foreign media in China

14 August 2009

GENEVA: Film studios, newspaper publishers and other similar companies looking to sell their content in China could be set for an increase in revenues, after the World Trade Organisation ruled current regulations in the country were too restrictive.

Under the terms of the system operated by the Chinese government at present, the owners and producers of material under copyright are required to deal with distribution organisations run by the state.

However, the WTO said China was contravening a commitment it made when it joined the organisation in 2001 to provide greater access to creative materials from other countries, in line with the body's membership requirements.

A complaint from the US about the existing arrangements said that American firms were overly dependent on third-party bodies in China, hampering their activity in the Asian nation.

Similarly, it argued that the current regulations were increasing the costs for companies looking to import everything from DVDs to books, as well as limiting their sales and marketing capacity, and encouraging piracy among consumers.

For example, the China Film Group currently takes a large share of box office revenues for foreign movies, as well as charging studios for a range of other related services.

Richard Gelfond, chief executive of IMAX, the entertainment technology company, said "the ability of the Hollywood studios to distribute more freely will likely increase the marketing dollars available to promote their films and should lead to better box office."

However, the WTO did not outlaw the provision that a maximum of 20 foreign movies may be shown in cinemas each year, which, in the past, has meant that high-profile films like The Dark Knight were never made available to consumers in China.

Another area where the world's most populous nation was instructed to change its policy was with regard to its prohibition on foreign firms selling music over the web, with Apple's iTunes being one possible beneficiary of this decision.

Google, the online search giant, has previously launched a free music download service in China, as it attempts to tap into this growing market.

Yao Jian, of the country's commerce ministry, said "China will carefully evaluate the panel's report and does not rule out appealing on issues of concern to the Chinese side."

Data sourced from Reuters/Wall Street Journal; additional content by WARC staff