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Monday, May 23, 2005
U.S. movie group warns China of piracy fallout

The industry group representing the major Hollywood studios said on Saturday it has warned Beijing of an increasingly restless Congress and possible trade consequences if China does not do more to fight piracy.

Dan Glickman, a former agriculture secretary under the Clinton administration, said he delivered the message to heads of various government departments in Beijing this week during his first visit to China as new chief executive of the Motion Picture Association of America (MPAA).

"We said they need to do something or there would be trade related problems. ... There's consequences if they don't get it down," said Glickman,

The MPAA estimates about 95 percent of all DVDs sold in China are pirated, costing the industry $280 million last year.

It has been working with Chinese law enforcement authorities for several years to close down factories that produce pirated DVDs and stores that sell them, and has generally praised the level of cooperation it receives on specific enforcement cases.

More recently, it has also begun taking on offenders in China's relatively new court system, winning all 10 of the cases it has brought to date against various factories and stores.

It is in the process of preparing a new round of such cases, said the association's Asia director, Mike Ellis.

But any headway in closing down offenders marks a small gain in a country where pirated DVDs often appear on the streets just days after a movie's theatrical release, with disks costing around $1 each.

By comparison, the approval process for release of legitimate movies on DVD can take up to four weeks, Ellis said.

He added that Chinese officials showed a willingness to try to streamline that process in talks this week. But even so, such products, carried in stores like Carrefour, cost three times as much as pirated versions or more.

The MPAA is also frustrated with a Chinese quota system that limits to 20 the number of foreign films that can be imported each year on a revenue-sharing basis, Glickman said, adding that Chinese officials showed less enthusiasm for change in that area.

To get around the quota, some studios are starting to experiment with joint ventures with Chinese counterparts, both on an individual film and broader production basis.

Warner Bros. recently became the first major studio to form a movie making joint venture last year, after China relaxed laws on such investments. Sony has also gotten in on the act, helping to produce last year's hit "Kung Fu Hustle," which broke Hong Kong box office records and was a modest success in North America.

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