Analysis of Chinese Broadcast & Production Market
Analysis of Chinese Broadcast & Production Market
1. Internal PRC Background
Broadcast & Production
The Chinese State-owned TV sector is facing unprecedented challenges as it grapples with the concept of "competition". Technological advances are threatening its monopoly over delivery of media content.
Despite this, the State TV sector is still protected today, and does not perceive the need to enact radical management reforms or to co-ordinate investment in new economy ventures (a view not shared by some sectors of the government - see below, Section 2). Profitable TV stations are, however, some of the last bastions of the "gold rice bowl" mentality, in offering secure jobs to relevant personnel. This position is, however, soon set to change.
While TV stations currently control 100% of the broadcast industry and over 90% of the production industry, they are inherently incapable of retaining their non-broadcast assets in the long term or successfully releasing them into the market as independent companies in the short term.
For these reasons, foreign companies are left without suitable partners or suitable legal structures to enable them to invest in China's production industry and are reduced to a series of sideways moves, such as opening technology or equipment-related companies that do not tap crucial local talent resources.
Advertising
The advertising industry (led by TV advertising) is one of the most successful sectors in modern China and it has continued double-digit growth even throughout the Asian economic crisis.
The major international advertising agencies have followed (not led) their international clients into mainland China and have sought to mould the China market in the image of their international systems. However, the lack of efficient regulation, under-developed research resources and the "guanxi" dominated business environment make conventional western planning appear conservative and uncreative.
For these reasons, international agencies have never truly adapted to the dynamics of the marketplace and have failed to exploit opportunities that are similar in nature to the US market in the 1950's when advertisers took far greater direct control over media content and direction.
In reaction to media independents that have succeeded in achieving value-added exposure for their clients, many international agencies have established "program syndication" units and other specialist companies that are designed to develop "Chinese" solutions. Again, however, the structures and strategies inherited from the parent companies have proved inefficient in the Chinese marketplace.
2. Opportunity
Broadcast & Production
The Chinese broadcast administration is now demanding the separation of production and broadcast resources without, however, offering practical methods to achieve this. Relevant reports in the Chinese press on this subject can be made available.
Notwithstanding the above, the legal regime in this area in China is still highly restricted and constitutes a significant barrier to entry for foreign investors.
Advertising
As WTO accession approaches, the number of international companies embarking on conventional media campaigns on the mainland will increase dramatically. These late entrants will have the benefit of learning from the mistakes of their predecessors and advertising will be one of the key business functions to be out-sourced to specialist companies.
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