Illegal DVDs in China: Here to Stay

Much as Western, Korean and Japanese entertainment companies bemoan infringement on intellectually property rights, illegal DVDs and CDs in China are here to stay. While progess can be made in other corners of the IP universe -- business software, for example -- the government will do nothing to stem the flood of pirated videos washing over towns and cities across the nation. The government's intention to appeal the recent anti-China WTO ruling concerning the PRC's import and distribution regime for books and films is no surprise. The defense of its decision, however, was uncharacteristically abashed. "We think it was improper for the WTO not to reject the US request," a spokesman, Yao Jian, told a news conference in Beijing. "Based on the WTO schedule, we are preparing the documents necessary to lodge an appeal."

Beijing knows it doesn't have a case. But nothing will change. Why not?

First, on the Western side, no one has advanced a win-win business model to deliver digitized entertainment to the masses, one that: a) generates incremental revenue for Western producers and b) offers prices low enough to compete with product available in illegal shops (ultra-cheap, no more than $1) or on the internet (free).Theoretically, this shouldn't be too difficult. Due to unrealiable quality standards of bootlegged disks and slow download time on unlawful websites, Chinese consumers would be willing to pay, say, $2.50 for a high-quality DVD and perhaps a bit less for the virtual version. True, China margins would be low than in the West, but, at this point, any return is better than no return at all.

Second, content producers are caught between a rock and a hard place vis-a-vis Chinese government mandates. Even if it liberalizes distribution restrictions per WTO regulations, the Party's censorship arm will sanction only a narrow range of content in legal channels, both digital and bricks and mortar. These neutered commercial entities could not compete with illegal brethren, an array of individually-owned outlets, many with with thousands of titles, organized in category-specific formats similar to what one finds at Blockbuster. (To boot, there is now a well-known "hierarchy of copy quality." The lowest is DVD-5, then DVD-9, then DVD-Blu-ray.)

This begs the question of Chinese censorship and what is, and is not, allowed. Anything that is inconsistent with the government's role of promoting a "harmonious society" will be verboten. The "natural hierarchy" of the "wu lun," five key relationship "dyads" that dictate human intercourse, will be maintained. Fathers should not be sassed by sons. Teachers must be respected by students. The Party must never be challenged by "alternative centers of authority" or any group "demonstration. " Furthermore, explicit or extra-marital sexuality is always banned. This is driven by both the sensitivities of a genuinely conservative population and the Party's patriarchical responsibility to "protect" the moral standing of the masses. (When Ang Lee's artistic "Lust, Caution" hit theaters, blatant edits elicited nary a peep of protest.)

Importantly, the CCP limits its moral purview to official channels. Its tacit "don't ask, don't tell" commercial policy tolerates a thousand points of sinful light. Ultra-violent video games are pervasive in internet bars. Illegal DVD shops sell anything and everythiing. China's digital universe is chock-a-block with porn -- straight, gay and anything in between. It's an open secret that inexpensive hair salons provide "extra service" for a small fee. Prostitution "rings" are well-advertised on cyberspace. And most hotels are happy to proactively arrange "massages."

As long as it remains in power, the government will never liberalize censorship rules or entertainment distribution. But it will not crack down either. In Western eyes, this is profoundly hypocritical. However, to Chinese, the Party is not two-faced; it is pragmatic. In China's high-context, morally-relative cultural universe, "understatement" -- i.e., knowing when to turn a blind eye to transgression -- is both a skill of advancement and contributor to social order. Authorities realize denizens of the Middle Kingdom, torn between Confucian regimentation and upwardly-mobile ambition, are emotionally repressed. They crave "release." As long as "sin businesses" remain non-scaled, so long as they pose no threat to centralized authority, they will be accomodated. The Party's "Green Dam" plans, intended to control access to unpalatable internet sites, elicited howls of indignation. Any efforts to clamp down on Western entertainment would be equally explosive, given the watered-down menu available via legitimate channels.

Is this so bad? Certainly, to foreign content providers, it is indefensible. That said, illicit entertainment has, in unquantifiable yet important ways, enhanced the relationship between Chinese and Western people. The Han love our pop culture. The urban masses are infatuated with Despearate Housewives, 24, Prison Break, Lost, Ugly Betty, Michael Jackson, Mariah Carey and all things hip hop. Our values of self-expression and individual opportunity are projected, daily, onto millions of television and computer screens. They are the most powerful antidote to a new generation's increasingly sharp-edged Chinese nationalism.

Western entertainment executives are our most potent cultural ambassadors, despite their forced pro bono contributions to global harmony.