Asia Experiences: January 2009

Sunday, January 25, 2009

China's P2P Revolution?

I came across this article which discusses the recent success of some Chinese peer-to-peer (P2P)file-sharing services. In the U.S. successful lawsuits by the music and film industries have limited the ability of companies to profit from operating P2P services whose existence is based on encouraging illegal "sharing" of copyrighted music and movies. On the other hand, some Chinese P2P companies are attracting venture capital and advertising income. Although China's laws on copyright are similar to those of the U.S., penalties or damage awards are usually very low. Consequently, P2P companies can take the risk of being sued and, even if they lose, treat any resulting damage awards as a cost of doing business.

The article also mentions that, to avoid censorship problems with the Chinese government, some of the sites control the content offered (concentrating on "safe TV content") rather than operate as a mere platform for users to share files. Also, from the author's description of some of the sites (e.g., QQ Live & Tudou) they sound much more like video streaming sites (similar to rather than P2P services.

The author apparently views all of this as a great thing, ending with the statement: "Hopefully the Chinese will be able to prove that this method of TV distribution is viable, is profitable and is in the interest of both the rights holders and consumers."

Screenshot of Tudou video sharing site. Tudou was found liable in one lawsuit against it and ordered to pay RMB 50,000 (U.S. $7100) in May, 2008 (see this article). Apparently (after the lawsuit?)Tudou started partnering with some content companies to offer content legally in return for sharing advertising revenue.

I don't think there's any doubt that P2P is a viable method of distribution for TV shows and other content and, when done illegally as described, certainly quite profitable to the companies facilitating the illegal conduct. If this can be done in a legal manner with content owners (and authors) getting a share of the profits, that'd be a much more equitable arrangement. However, if they can get away with illegal distribution and profit to a greater extent by doing so (by avoiding payment to content owners), there doesn't seem to be much incentive for legal P2P distribution. The article doesn't mention whether any Chinese P2P companies have tried to negotiate deals with content owners, but I why would they if they can make much more money operating illegally without serious adverse consequences even if they are sued? Even though damage awards tend to be very low for copyright infringement in China, it seems the only way to force business to start operating legally is to sue them (just as it has been in the U.S. and elsewhere).

Saturday, January 24, 2009

Asian Film Industry 2008

I wrote about China's film industry in 2008 earlier this month and, according to this article, the rise in box office revenues occured throughout Asia in general. Its problematic to speak of an Asian film market since the Asian region of the world is made of many countries with largely different cultures and languages, but in general it seems that general economic growth of recent years has spurred growth in the film business.

The South Korean market has tapered off after a decade of growth although its film market still generates substantial revenue, especially compared to larger Asian countries. Malyasia experienced the biggest increase (24%) in 2008. China certainly seems to have the greatest potential for future growth. Although its market has grown exponentially over the past 5 years, its still smaller than that of India, Korea and Japan.

There are signs that Chinese movies are becoming increasingly popular in other countries and there is clearly still much room for continued domestic growth in a nation of 1.3 billion.

Cooperation among Asian film companies may also lead to greater crossover in Asian markets.

The recent big-budget blockbuster, Red Cliff ($80 million budget), was the result of financing from investors in Taiwan, Hong Kong, China, Korea, and Japan, with the greatest share of funding coming from Japanese company Avex.

The combined financial resources as well as marketing power from these types of deals certainly have the potential to reach much wider audiences across Asia as well as beyond.

Universal Healthcare for China

Dr. Ming Wang forwarded me a link to a New York Times article which reports that the Chinese government has announced a plan to institute universal healthcare by 2012.

China Announces Subsidies for Health Care
By EDWARD WONG

BEIJING — China announced Wednesday that it intended to spend $123 billion by 2011 to establish universal health care for the country’s 1.3 billion people. . . Xinhua, the state news agency, said the authorities would “take measures within three years to provide basic medical security to all Chinese in urban and rural areas, improve the quality of medical services and make medical services more accessible and affordable for ordinary people.”

The article indicates that the Chinese government might be doing this, in part, to stumulate its economy by encouraging Chinese to spend more. Since many Chinese have little or no health coverage, they tend to save a large portion of their income in case they need it to cover medical expenses which, although still cheap compared to the U.S., are rising rapidly in China.

Regardless of the motives for doing so, it will certainly involve a huge commitment by China to accomplish this goal (China announced it plans to spend $123 billion by 2011).

Its a bit ironic that China, with a 1.3 billion population and a smaller economy than the United States, is at least aiming for universal healthcare while the U.S. has so far been unable to do so. Of course, the U.S. population are not big savers so the security of universal healthcare isn't likely to result in increased consumer spending as China is hoping for. However, I think there are other very good reasons that the American healthcare system needs substantial reform. Maybe we can follow China's lead on this one.

Or maybe, Americans will just have to start going to China for cheaper medical treatment.

Monday, January 5, 2009

Chinese Box Office 2008

A short article from Variety Asia Online says that the mainland China movie industry had an increase of 27% in box office revenues for 2008 (worth about U.S. $622 million). Chinese films were responsible for slightly more than 60% of that income according to the China Film Bureau .

The biggest grossing film in China last year was Red Cliff, a historically-based epic about the Battle of Red Cliffs in ancient Han Dynasty China. The film made U.S. $45.3 million in China and over U.S. $102 million worldwide. Red Cliff also has the distinction of being the most expensive Asian-produced movie with a budget of around U.S. $80 million.

Other top grossing films were CJ7, Painted Skin, American-produced The Forbidden Kingdom, Kung Fu Dunk, If You are the One and Forever Enthralled.

Interestingly, increasing numbers of Chinese people are going to movie theaters to watch movies even though pirated DVD copies can be easily and cheaply purchased. This is probably due to the fact that as China's economy has grown, more people have disposable income and are willing to pay more to see a movie in a theater for the entertainment experience (going-out, group-oriented activity) rather than watching pirated copies at home.

Friday, January 2, 2009

U.S. & China: Economic Interdependence?

I haven't posted anything here since returning to the U.S. last year and resuming my relatively normal work routine, but decided to start posting again. So, as I find the time and something of interest strikes me, I'll post it.

For starters, I read this article from the International Herald Tribune describing how the American (and worldwide) economic slowdown is impacting China. If we think we're hurting here in the U.S., it may be worthwhile considering how much worse off many Chinese workers will be as a result.

While Americans have been irresponsibly overspending in recent years which has certainly contributed to the problems currently being experienced, that spending has helped create millions of mostly low-paying jobs in China. As American consumer spending decreases, the number of workers employed in Chinese factories is also decreasing and resulting in increasing unemployment.

President-elect Obama and the U.S. government is certainly faced with a serious challenge in revitalizing the U.S. economy. However, the problem is not solely a domestic one. The American economy has a huge impact on much of the world, including the current century's growing economic superpower, China. In the past few decades, China has been able to bring a few hundred million people out of extreme poverty. If that trend reverses, the Chinese government may face even greater challenges than the U.S. With its huge population, China's first priority must be to provide jobs in order to avoid the type of economic calamity that in its long history has caused numerous peasant uprisings ultimately leading to forced changes in government.

Maybe this is all just another example of increasing globalization, illustrating that there can be negative as well as positive effects. If so, international cooperation would seem to be crucial to resolving such major economic problems. Let's hope that President Obama's campaign message of "change" will include his playing a leading role in fostering such cooperation among the United States, China and other countries. If Obama and other world leaders can't solve the problems, maybe author/globalization-guru Thomas Friedman ("The World is Flat") can come up with something - I imagine we'll have to wait a new book for his solutions though.

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