Sino-Foreign Production JVS in the Dustbin

BEIJING --- In an interview carried in the Financial Times, SARFT General Office Director Zhu Hong made a rare public admission that SARFT will not be approving any Sino-foreign joint-venture production companies 'in the near future.'

As noted in CMM over the last two years, the policy to issue licenses for such companies announced in late 2004 (and heralded by western media players as the breakthrough they had been waiting for) was never designed to attract international investment and expertise into China's TV production sector, but rather to further delay it.

Indeed, so onerous were the terms [49% cap on foreign stake, minimum of US$2 million investment, no import license, etc] the only companies to bite were the US majors, already deeply down on their foray into China and desperate to claim first entry status at any cost.

Viacom led the way with senior reps publicly hyping breakthrough JVs with Beijing TV and Shanghai Media Group before SARFT had even officially announced the introduction of the policy.

While joint-venture production companies did get added to the list of approved foreign-invested ventures and SARFT completed the missing administrative procedures with the State Administration of Industry and Commerce, the individual deals announced months earlier did not progress from 'projects' to 'companies'.

In fact, the joint-venture policy died with the appointment of new SARFT Minister, Wang Taihua. He immediately started rolling back many of the policies instituted by his predecessor, a period that may now be fondly remembered as 'the golden period of opening' in China's broadcasting industries, a distant time when the idea of opening was, at least, seriously considered deep inside SARFT's Fuxingmen HQ.

Of course, much has been learned in the process, most of it by SARFT. By promising the chance to legalize China operations, it also encouraged a significant number of smaller grey players (companies carrying out production work under different licenses) to come out of the shadows. Bad luck, but you should have known!

In recent months, SARFT managed to formalize its long standing ban on foreign animation in primetime, reduce the percentage of foreign animation at other times and stop imports of popular Korean dramas completely (under the policy of 'welcoming world culture'). Last month, its propaganda interference led to Time Warner giving up on its theater business (despite actually having legal joint-ventures).

In this context, the official demise of JV production companies as noted to the foreign press is merely a rather fitting way to round off a good year for those seeking to protect Chinese TV.

With the Olympics ahead, few can imagine that controls over PRC TV will be loosened in the short term, so the challenge for SARFT planners in 2007 is to chase Viacom and other former foes into the far less certain waters of New Media. As the following articles suggest, 2007 is shaping up to be the content control war of the century (See 2.1, 8.1, 8.4. 9.3) and our money is on foreign content being one of the first casualties.