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Monday, June 25, 2007


Two decades, perhaps less, how long before China becomes a force in worldwide entertainment? Competition with the U.S. is inevitable. The Dragon will expand into global entertainment with the cinema – the King of Mass Media – as its ultimate target.

China is currently spending billions on a massive branding mission to make its companies and products as well known as Apple, Coke and Sony. The Chinese Communist Party (CCP) has a derived national development agenda termed “Advanced Product Force” which is intended to promote communistic social harmony while employing capitalist business practices.

To accomplish this act, the CCP must be forward thinking economically while maintaining control over China’s 1.3 billion inhabitants who are diverse in terms of language, customs, social development and prosperity.

An example of the implementation of the Advanced Products Force is the Haier Group, a large Chinese durable goods manufacturer who has spent two years and tens of millions of dollars developing a line of flat panel LCD products. Haier finalized an agreement with the National Basketball Association to runway their HDTVs at basketball games and NBA promotions across the U.S. Haier is focused on consumer electronics, a difficult global market to penetrate and one where branding is essential, especially now that prices for LCD TVs have dropped so much that consumers choose brands (Sony, Panasonic) over price.

The Chinese realize that producing a quality product and marketing it require very different skills. Along with electronics, they are zeroing in on industrial and consumer durable goods markets and the entertainment industry, which has significant national import. Entertainment products have high margins, long life cycles and tremendous export value. For example, the U.S.’s arts and entertainment export revenues run neck-and-neck with its aerospace industry. Entertainment (particularly the cinema) is at the cutting edge and pushes the envelope with regard to digital imaging, microchip and computer processing advancements, connectivity development and other high-end technologies. With over one-fifth of the world’s population, China is also aware that a vibrant entertainment industry connotes a country’s prosperity, influence and social sophistication, which will prompt the nation to develop a homegrown cinema industry over importing Hollywood films.

Piracy is rampant in China with first-run Hollywood movies available from street vendors in DVD format in every city and town. Although cinema attendance has been shrinking, an agreement between Warner Bros. and Dalien Wanda (a Chinese developer) may lead to the opening thirty new multiplexes over the next two years. As the Chinese population prospers, people will opt to view a movie at a cinema over a low quality DVD.

Leaving behind the Hong Kong chop-socky films of the 70’s and 80’s, modern-era Chinese cinema began developing in the 90’s into the well financed, sophisticated, fantasy laden morality plays of today. Films like Crouching Tiger, Hidden Dragon (2000) and Hero (2002) have had wide international distribution and earned critical acclaim, but the U.S. studios maintain control over global movie distribution. The Chinese know they need to open up to more Hollywood-produced film imports, but they want to develop and control the production side and internal distribution while slowly exporting Chinese made films and cultures to the rest of the world.

As a new member of the World Trade Organization, China has had joint ventures with Hollywood, producing films shot entirely in China that are scheduled for release in both countries. Films made exclusively for distribution in China are also scheduled for production, which should nurture the Chinese film industry and provide the CCP a reason to clamp down on piracy.

For the last decade China’s economy has been growing at an unprecedented rate, but to continue growing, it will have to develop new products in addition to taking market share away from well established and well financed global competitors.

Their strategy is to move up the economic food chain into high yielding, high tech products and services. The entertainment industry is high yielding, but also high risk. Evidence of this is China’s development of its island Macau into a world-class gaming and resort destination. Almost all of the Las Vegas casino/resort developers have or are constructing mega-casinos in Macau, which exceeded Las Vegas in terms of monthly casino gaming revenues in January 2007.

The CCP is using the “leap frog” effect, leaping over old technology in order to develop China’s economy, which is most clearly seen in mobile communications. In 2003, there were 269 million cell phones in China, 498 million are expected by 2008. The Chinese will “leap frog” in all products and markets they enter, certainly in the entertainment industry. Modern cinema sound technology will aid the Chinese in this endeavor. Any movie can now be screened in native language if the soundtrack is mastered with a DTS timecode. This timecode is synced to a formatted DVD soundtrack which is then played back during film’s presentation, meaning a film in Mandarin can be exhibited at a U.S. cinema in English, eliminating the cost and nuisance of subtitling.

Reshaping a feudal, agrarian society into a high tech manufacturing and services economy over several decades is unprecedented, but the trick to it is developing, instituting and managing a new and youthful socio-economic phenomenon before it matures and the pace of growth slows dramatically. If the CCP imposes on individual expression or human rights, it could lead to the stifling of economic growth and civil unrest. Contentious policies have yet to foster widespread discontent. For example, Chinese citizens are allowed to protest against government policies, but only as individuals, not organized groups.
A society’s maturity and influence is measured in large part by its arts and entertainment, and in the 21st century this means electronic arts and entertainment; cinema, music, gaming, sports and literature at the core and supported by high-end audio/visual components and the Internet. China’s formal debut in global entertainment will be its hosting of the 2008 Summer Olympics. That’s when the world will get a preview of how the Chinese will try to influence global entertainment.