Private firms embrace WTO decision

China likely to appeal ruling to open film, DVD markets

BEIJING -- With this week's WTO ruling that could signal the beginning of the end of state control of film and DVD import and distribution, private companies are hopeful that they might soon compete for a piece of China's booming boxoffice.

For most of the past eight years, since China's accession to the WTO in 2001, China Film Group has controlled most of the 20 import licenses that grant foreign films the right to a modest slice of their boxoffice earnings, usually about 13%.

As China's boxoffice booms, hitting $635 million in 2008 after five years of double-digit growth, private Chinese film companies applauded the WTO ruling that could help them expand into a segment of the business from which they have been largely excluded.

"The ruling will be of most benefit to the audience, which will have a greater choice of what to see, but it will also benefit everybody else on the movie industry food chain, from the private distributors to the theater chains to the companies selling popcorn," Geoffrey Chan, COO of Bona International Film, said in an interview.

Before CFG consolidated its control import licenses, Bona once used an allotment belonging to the Changchun Film Studio to bring "Pirates of the Caribbean" to China's big screens. "It proves we've always had an interest," Chan said.

While Bona has no immediate plans to get back into theatrical distribution, Chan said, "As a distributor, we're always ready."

Wang Zhonglei, president of Huayi Brothers, another leading private media firm, called the ruling good news for private companies.

"We would like to join in. The game was unfair, but I believe complete competition is coming," Wang told the Xinhua news agency.

China has 60 days to lodge an appeal with the WTO in Geneva.

While Hollywood was the driving force behind the U.S. complaint that led to the ruling and has been the most vocal in celebrating victory, the biggest changes if the ruling is adopted could come for filmmakers from Europe and other Asian countries.

No longer would French and South Korean films, for instance, have to fight as hard with the big Hollywood pictures that typically have been granted the lion's share of the annual import licenses.

Lin Xiaoxia, associate professor at the Beijing Film Academy, defended the policy that has allowed CFG -- and behind it the Film Bureau of the State Administration of Radio Film and Television -- to control what China's audience gets to see in cinemas.

"Film in China can be hardly a pure commercial product. Its educational and social functions are still important. It's understandable China takes measures to protect the film industry from being invaded by foreign products," Lin told Xinhua, adding that, despite evidence that Chinese films are doing well at the boxoffice, he believed China's industry is "too weak" to compete.

The American Chamber of Commerce China also hailed the ruling but cautioned patience, saying that "China and the U.S. share a complex trade relationship where differences naturally occur. Though the immediate impact of the latest WTO ruling is difficult to gauge, it should contribute to freer, more open markets over time."