Chinese consumers are likely to enjoy more readily available music cassettes and video tapes at lower prices as foreign investment flows into the nation's audio-visual product market and enhances competition.
Effective January 10, new rules issued by the ministries of Culture and Foreign Trade and Economic Cooperation will open the market to foreign companies, another step in China's commitment to the World Trade Organization.
Under the new regulations, overseas investors will be allowed to enter the market by forming joint ventures with up to 15 years' duration with Chinese partners.
Foreign investors, although limited to minority shareholding, can be involved in sale and rental of audio and video products.
In addition, domestic consumers will have the chance to see more Hollywood feature films: 20 foreign movies will be given access, up from the current five, starting next year, said industry sources. Foreign investors, who team up with do-mestic partners, also will be able to build and operate new cinema houses on a minority-stake basis.
Liu Guangxi, executive deputy director of the Shanghai WTO Research Center, meanwhile, warned consumers of a possible negative impact .
"Chinese productions that win plaudits abroad do not always reveal the true conditions of Chinese life and culture," he said.
Liu, a participant in the WTO negotiations for 13 years, said, "Cultural activities should not be simply regarded as 'common goods' when adopting marketing strategies, since there are many other technical aspects involved."
An influx of foreign money and products, however, will likely help enhance domestic film production and management skills, Liu noted.
A Shenyin & Wanguo Securities analyst, who declined to be iden-tified, said the introduction of foreign investment could help improve distribution for audio-video products and lower prices.
"Sales channels still are not smooth, due to many intermediate links in the distribution process," said the analyst. "This leads to high operating cost and prices, and ultimately, pirated copies."
The new policy will likely bring both postive and negative impacts on domestic firms.
"Domestic companies will sharpen their competitive edge through cooperation with foreign partners," said Zhu Jie, general manager at state-owned Shanghai Maya Audio Video Co. "Meanwhile, we face pressure from foreign coun-terparts, who are good at analyzing market, systematic planning and adopting flexible measures."
(eastday.com December 27, 2001)
