Hong Kong distributors get China rights

CEPA amendment opens new door for companies

HONG KONG -- Beginning Oct. 1, distribution companies wholly owned by Hong Kong operators will be allowed to distribute video and sound recording products in China under a new supplement to the Hong Kong Closer Economic Partnership Arrangement.

The sixth supplement to the 2003 China-Hong Kong pact, signed Saturday, provides further liberalization of market access for Hong Kong audiovisual companies.

Hong Kong distributors will have to establish a company in China in order to distribute video and sound recording products, but the company will not need to be a partnership. Before the supplement, the Hong Kong partner could not own more than 70% of the company.

The distribution company will be able to distribute sound recordings and videos in China, including DVDs and VCDs, of approved Hong Kong co-productions. However, the new CEPA deal does not include videos of foreign-made motion pictures, which will continue to be subject to the import quota of 20 per year, according to the Hong Kong Film Development Council, the government department responsible for the implementation of the policy change.

"The new measures will create flexibility for Hong Kong video distributors," said Patrick Tong, managing director of Mei Ah Entertainment Group, "but since the video market in China has already been shrinking, the amendment has come a little late."

One of the major video distributors of local films and co-productions in Hong Kong, Mei Ah has distributed DVDs of films such as "Red Cliff" in Hong Kong. While it distributes the releases of sister company Big Media in Hong Kong, the video rights were licensed to domestic distributors in China.

"With the change of policy, there will be more autonomy for Hong Kong video distributors to decide whether or not we distribute our video products in China, but the decision will be based on market conditions," Tong said.

The new supplement also allows the post-production of China-produced films and Hong Kong-China co-productions to be done in Hong Kong, after the principal production entity has obtained the approval of China's State Administration of Radio, Film and Television.