Those in Hollywood who have to interpret the two-steps-forward, one-step-back policies of the Chinese government have their work cut out for them. Unlocking the potential of that territory of 1.3 billion people may just be the biggest challenge of the next decade for Western media companies.If their foreign revenues are to grow, the increment will have to come from territories like China, India and Russia and no longer from western Europe. As of now, China does not even figure in the top 25 countries in terms of revenues repatriated by the Hollywood majors. Late last week the Chinese authorities, after much pressure from the U.S., finally decided to float their currency. That move could have a positive impact on the trade balance between the two countries and more generally suggests a responsiveness to U.S. concerns not seen until recently. On the other hand, moves on the media front in China have gone in the opposite direction, demonstrating the continuing skittishness of the authorities toward American pop culture. And this after innumerable — and I imagine tediously translated — dinners that the likes of Sumner Redstone and Rupert Murdoch have sat through for years in the Great Hall in Beijing. China’s all-powerful regulatory agency SARFT has decreed that the no new foreign (read Hollywood) movies will be released in August, effectively pushing back “War of the Worlds” to September, when it will unspool along with one or two other U.S. titles and some local pics. Only 20 foreign titles are officially allowed in each year, so this is not really a huge monetary issue. It’s just indicative of the protectionist mindset that prevails in China. On the TV and radio front, local Chinese companies were told recently they couldn’t partner with more than one foreign company, effectively stymieing a number of arrangements that players like News Corp., Viacom and Warners were planning. Other moves reflect similarly anti-Anglo stances: China frowns on American-isms on the public airwaves, just as the Gauls do; they’re monitoring sex and violence just as they do in India and a number of Mideast territories. The MPAA’s new boss Dan Glickman recently made his first official trip to Beijing in his new role, following in the footsteps of Jack Valenti, who probably had logged 50-odd visits over 35 years. On the piracy front, which has been the main focus of discussions with the Chinese since, well, forever, little headway was made. Just as soon as one CD factory is closed down or one DVD huckster is pulled off a Chinese street corner, another pops up. One Hollywood-based exec who deals in these murky international waters says, “It’s not just deciphering the edicts which come down, but figuring out how widely they apply, to whom and for how long, which takes us a lot of time and energy. For what should be an exciting opportunity, it’s too often wearying.” Consultants say the bowing and scraping is essential, and patience pays off in the long run. PriceWaterhouseCoopers says in its latest entertainment survey that Asia/Pacific, led by China, will be “the fastest growing region in the next five years despite the impact of piracy.” I’d suggest Hollywood needs to start thinking more outside the box on the issue of China if it’s going to get its hands on more of this moolah.
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