China to open up film imports by March 2011, with new WTO timeline

China and US Ambassador to the WTO said in a document last week on the WTO website that the two countries have agreed that the reasonable period of time for China to implement the WTO rulings shall be 14 months from the 19 January 2010.

In December 2009, the WTO rejected China’s appeal and ruled that China must stop forcing US content owners to use state-owned companies to distribute movies and books. The original challenge was brought in April 2007 by the US against Chinese monopolies on imports and distribution of American entertainment goods on the mainland.

The implementation means that China will adjust its import policy on film, audio-visual products and reading materials. China will be allowing US and other foreign countries to introduce film, music, online games and books to China, and will allow China-US joint ventures to distribute music goods on the Internet.

However, as the ruling did not address China’s import quota of 20 revenue-sharing foreign films a year, China is likely to maintain its import quota while allowing more distributors to handle foreign entertainment goods.

Industry players in Beijing believe China’s implementation on WTO rule will not bring major changes on the number of imported films to China, at least in the coming two years.

“Currently in China, people know what kind of US films will sell and what other US films will not. Even if the quota is abolished, the change will not be so drastic. Now that the quota is still there, the impact will be much minimized,” said Beijing-based film distributor Johnny Liu.

“The good prospect is we might see more diverse smaller films into the market, as well as more competitors to distribute films in China market,” Liu said.

Other industry players point out that China could still use the censorship and other minor measures to block foreign films. For example, traditionally, China holds the “National Film Promotional Month” in summer and Xmas season. During the month, or so-called “black-out”, no Hollywood films will be released. Besides, China regulates that each cinema offer more screening time for local films than foreign films in a year. Local cinemas do not have a total liberty to show foreign films only.

Industry players believe that audio-visual market, including music records and DVDs, are likely to receive more impact with the possible open-up policy. “We don’t think it would affect local record industry so much. On the other hand, the open-up will boost the market for concerts and performances of international artists. We think it will bring more competitors to the market and will likely lower the cost of holding international performances,” said Song Ge from Taihe Rye Music