How Much Threat Will Globalization Bring to China?

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Last updated at: (Beijing Time) Sunday, July 21, 2002

How Much Threat Will Globalization Bring to China?

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In 2001, the News Group declared that its contents had covered three quarters of the world population; The Disney Company announced that it had successfully expanded its publication business to more than 100 countries using 37 kinds of languages; The American Online (AOL) Times Warner reported that its music business had spread to more than 70 countries through its branches and in the form of joint ventures.

During the negotiations on China's accession to the World Trade Organization (WTO), European and American countries persistently demanded that China comprehensively open the fields of service trade including publication, film and television. Although so far China has not promised to open its media market, in the long run, however, in line with the WTO principles of trade liberalization and national treatment, the gradual opening of the media market to a certain degree is an inevitable trend.

In the face of the media magnate of globalization, people are bound to feel worried about the threat the opening of the market would bring to the domestic media.

In the Process of Globalization, No Media Magnate Dares to Give Up the Chinese Market

The globalization of the media industry is inseparably related with the economic globalization in recent years. During the 1990s, there emerged the liberalization tide in the fields of national policies and international cooperation. The American 1996 Telecommunication Bill was regarded as a milestone in the history of telecommunication development, the result of which enormously boosted the elevation of the global competitiveness of US media enterprises. European media markets also speeded up integration along with the formation of the European Union (EU). EU requires that its member countries open their markets to one another, the communication market is one of the goals advanced by the EU. In 1987, the European Commission (EC) passed the famous Green Paper which gave a big fillip to the competition of the media industry. The economic restructuring from the central planned economy to the market economy and the change from the vertical transmission structure to the parallel transmission structure has increased the demand for communication and information. China's wire television industry has witnessed an increase of 10 million users since 1992, thus becoming the world's largest wire television market in 1998.

In addition, the development of new technologies has immensely boosted the globalization of media enterprises. The media industry is undergoing a technical revolution, centering on technical change, the various industries are carrying out the integration of interests. For media enterprises, the trends of integration of communication, Internet and television transmission mean both challenges and opportunities. Once the platform of integration is formed, global competition of content supplies will unavoidably become even more intense.

The development of new technology becomes a catalyst for media globalization due to the lowering of cost. As a new vector, the Internet has changed and will continue to change the nature of information commerce and our life. The Internet has broken down regional barriers, Media contents can reach global readers without establishing local institutions. Given this, the media industry can expand its international business through relatively low cost.

The entry of foreign-funded media is part of the globalization strategy of the whole company. Seeing China's favorable macro-economic situation and the impending open vast market, no magnate of any media dares to give up this piece of land.

Numerous Favorable Factors Do Not Mean That Media Globalization Is Definitely Logical

Although new transmission technology has greatly reduced the cost of long-distance information transmission, distinct regional market remains. Firstly, language and cultural difference is the hurdle that collective global management must surmount. Secondly, there exist different economic systems and policies of government control. Thirdly, media enterprises are faced with the uncertainty of technical progress, a misjudgment is likely to cause fatal harm.

Globalization is not simply a concept of the operation of media enterprises on the capital market, it demands that the investors hand out a solid financial paper. Therefore, it is not only those nervous people who are worried about our national industries, foreign-funded media enterprises also often nervously inquire when they can really make profits in China.

Media is a capital-intensive industry, the magnates of foreign media enjoy very great superiority in this aspect. But the demand of consumers is vitally important, the consumption of media products is closely related with culture. Researches indicate that under the circumstance of other given conditions, people tend to consume products of local culture or products close to local culture. Foreign-funded media will not only encounter the natural screen of language, but also cultural influence.

It is exactly the cultural nature of media products that make it possible for transnational media enterprises to exert a corrosive role on the culture of the host country, for this reason, media generally is an industry on which the government exercises a high degree of supervision and control. Overseas media which enter the Chinese market must observe China's policies. In regard to the control of evolution in policies and the pace of market opening, although foreign media use some native professionals, it is still impossible for them to completely eliminate inferiority in this aspect.

In addition, difference in the degree of market growth also requires that foreign-funded media make corresponding adjustment. China's media industry is still in the stage of mass media transmission, the masses are subsidized by the advertisers to view the popular content, rather than the users are required to pay for the specialized contents they purchased. In recent years, one of the important trends of the development of overseas media markets is specialization or market partition, the viewers are willing to pay for the information they need, at the same time, the advertising share of radio and television network flows in large amounts to the wire TV channels that specially serve a certain group of people. Different market stages require different modes of operation, foreign-funded media which enter the Chinese market need a process of adaptability.

From the News Group and the case of Dow Jones, it can be seen that globalization can be successful only when it is integrated with localization. The News Group adopts the tactics of decentralized management and centralized investment, behind its successful globalization tactic is its localized management. This point has been shown in the lowering of the degree of internationalization of Dow Jones in recent years. In the process of Dow Jones' expansion, the process from information service to the shift of the focus of publication is accompanied by the process from advertisement to the shift of the focus of subscription as well as the lowering of the degree of internationalization. In 1993, around 73 percent of Dow Jones came from the home market; six years later, this ratio rose to 92 percent.

Although the Time Warner and the News Group have obtained the right of settlement in China's mainland, the taking of real, bold decisions is still a matter of the relatively distant future. The adaptability stage of foreign-funded media has given Chinese media enterprises time and space, so that they can consider how to learn from their foreign counterparts and blaze their own road in light of China's reality.

By People's Daily Online

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