I. Challenges

As a country with 5,000 years of civilization and a market economy system just established, China will certainly face challenges after it opens the culture market as promised in the WTO agreements.

China has witnessed the rise and development of its cultural market in the past 20 years. In respect of scale, it had 276,812 cultural business units with an employment of 1,237,788 people and capital of RMB36.7 billion at the end of 1998. In respect of organizations, it had 2,144 management organizations with managing staffs of 10,595 people, and 1,249 supervisory organizations with more than 20,000 full-timers and part-timers. In respect of legislation, China has promulgated the Copyright Law, the Regulations on Administration of Audiovisual Products, the Regulations on Administration of Entertainment Places, the Regulations on Administration of Commercial Performances and the Regulations on Administration of the Publishing Industry, more than one hundred administrative regulations and many local rules. In respect of economic structure, the mainstay in the cultural market includes State-owned economy, private economy, joint-stock economy and much involvement of foreign capital, basically forming a multi-ownership pattern. It is worth noting that since the early 1990s China has approved foreign capital to enter its cultural market, which not only enriched audiovisual products, art performances, films, etc., but also expanded the market scale and played a role in meeting requirements of different cultural consumers. China will further open the cultural market under the rules of the WTO, which will bring about new challenges and opportunities for the government and cultural enterprises and institutions.

1. Impacts on Government Roles

With the expanding market access, Chinese cultural market will absorb a large amount of foreign capital and even more private capital. With passage of time and development of economy, China will face more pressure to further expand market access for foreign cultural products. This will exert much pressure on governmental departments at different levels, which have got used to administer State-owned economic units with administrative orders. How to identify functions and effects of culture in a socialist market economy; how to get familiar with the WTO rules, to regulate the market and to develop the culture industry according to these rules; how to guide investment directions of foreign capital and private capital; how to control foreign cultural products and business activities and so on are all new tasks faced by governments at different levels. China has a social system and ideology different from those in western countries and there are a big disparity in their understanding and management of culture. The Chinese government's culture management mechanism is somewhat different from the WTO rules. Revising or abandoning the previous management methods and trying to master new rules might lead to conflicts of notions and disparity between real effects and expectations in cultural management.

2. Impacts on Outstanding Cultural Traditions

Chinese culture has a long tradition and is very colorful. As early as 2,500 years ago, the Chinese people had begun to study astronomy and geography and developed their unique aesthetic philosophy centered on the idea of "harmony between man and nature". In the Chinese history there were many eminent philosophers, politicians, militarists, scientists, litterateurs and artists , who produced a tremendous amount of books and valuable ideas. In the socialistic market economy, economic globalization and China's WTO entry will bring in many foreign cultural products into China. Some foreign cultural products widely make use of modern science and technologies and thus enjoy advantages in terms of high entertainment, visual value and knowledge value, and low production cost and price; and people are curious for foreign cultures. Therefore, these products are sure to be well received by many culture consumers and will grasp a big market share in a certain period. When consumers appreciate foreign cultural products, they will get to know foreign culture and arts, at the same time they will subconsciously be influenced by the idealistic connotations contained in these works and some people will even develop the notion that foreign culture can better embody human's individuality and ego than Chinese culture. In the 1980s, 90% CD programs in Chinese sing and dance entertainment places were from abroad. It took relevant authorities 10 years to fundamentally change this situation.

3. Pressures on Domestic Cultural Enterprises and Institutions

At present, the cultural market mechanism in China is not perfect and the cultural industry does not have scale yet. On the one hand, the culture industry has weak production capacity, lacks sufficient funds, good quality and managing professionals. On the other hand, the demand for cultural consumption is booming with a big market potential. Spot checks found that in 1990, direct cultural consumption of China's urban households averaged RMB112.09 per capita. While in 1996, the figure jumped to RMB374.95, up 22.29% annually and much higher than GDP growth rate of the same period. Another survey showed that the per capita cultural consumption makes up 15.4% of his/her total income, while in western developed countries such as Britain and the United States, the figure is about 30%. From this we can see that Chinese cultural market has a big potential.

According to predictions of relevant departments, the potential consuming power of culture will be RMB550 billion in 2005. With China's entry into the WTO, much foreign capital will flood into the country's cultural market and most of the capital will come from multinationals and companies with a strong capital support, advanced technologies and experienced managing staff familiar with market rules and operation of cultural business. While China is still transforming from the planned economy to the market economy and Chinese cultural enterprises have much work to do -- they have to learn how to make full use of the country's rich cultural resources and learn from foreign companies while competing with them.

II. Opportunities

In a long period, China's WTO entry will bring about opportunities for its culture industry.

First, WTO entry will change people's way of thinking and help them form a clearer picture of the nature, function and role of the culture market and culture industry. By Marx's definition, industry refers to industrial departments or industries that are engaged in production of material goods. In modern economics, industry encompasses enterprises, institutions and departments that are engaged in production or other economic activities of the same nature. Undoubtedly, cultural units fall into an industry. One of the big differences between GATT and WTO is that the GATT rules applied to trade in merchandises, while, in addition to goods, the WTO covers trade in services and trade-related aspects of intellectual property. Trade in services worldwide features expanding scope, imbalanced regional distribution, different proportions in GDP (70% in developed countries, 35% in China and an average of 40% in other developing countries), a multi-ownership pattern in service markets and prevalence of protectionism.

The cultural market has functions of both a commodity market and a service market because its commodities include tangible products and intangible services as well. It not only boasts other markets' functions liaison, regulation, resource allocation, information spread and revenue distribution, but also has its special functions of entertainment and education.

Second, the WTO entry will increase people's knowledge about significance of legal administration and speed up the process of legislative work. China lacks legal measures to guide and guarantee smooth development of cultural activities. However, the WTO rules require the government to adopt law-biding and transparent administration.

Third, it will speed up adjustment of policies governing the culture industry. China had 337,772 units in the culture industry, employing 1,767,431 people and creating an added value of RMB13.355 billion. A big gap still exists between culture and other industries either in terms of scale or in terms of profit due to problems in cognition, management system, laggard industrial policies, poor industrial structure and irrational exploitation and utilization of cultural resources.

The culture industry calls for a better industrial mechanism, multi ownerships and harmonious cultural development among different regions. Therefore, China should beef up efforts in formulating suitable policies governing the culture industry, reduce restrictions on market access, adjust industrial structure, optimize allocation of cultural resources, promote effective competition within the industry and encourage the entry of foreign capital.

Fourth, China's accession to the WTO will urge the government to streamline the market order. At present, the country's cultural market does not have a good order and the short supply of cultural products and services is the major reason. The gap between supply and demand provides an opportunity for lawbreakers to carry out illegal activities, which lead to market disorder. In view of this, it is urgent for the government to improve relevant policies and encourage active involvement of multi-ownership investments so as to increase the supply of lawful cultural products. At the same time, the government should tighten market supervision and continue publicity and education of cultural legal system to raise awareness of culture consumers. What's more, it is necessary to launch professional trainings and raise the overall quality of cultural business managers.

(Source: yindw.com.cn)