The Almighty Dollar
All right, you may ask, but how do all these broadcasters work? Well, to start with, they are all somehow attached to the government on some level. Either they are part of the Central Government like CCTV, or they operate under the auspices of provincial, city or town broadcast bureaus. How tightly they are controlled depends on where they are and to whom they answer. Their funding comes in the form of government subsidies and more and more from advertising revenues. In a way, these groups are not unlike the PBS Network here in America. They are supported by government subsidies, instead of corporate grants and public endowments, but they all look to secondary advertising revenues to grow and prosper.

Returning to a point I made earlier in this article, to understand how any of this works requires that you first understand the compromises China has made in its political philosophy in order to achieve its economic goals. The Chinese explain the return of Hong Kong with a slogan: One country, two systems. What that means is that it's permissible to adopt capitalistic ways of doing business as long as the result is deemed to be for the long term good of the country and the party. Hypocritical? Confusing? You bet, but that's the way it is.

Looking at a few more numbers should shed some light on what is happening in the Chinese broadcast industry. Begin with this, China has a population of over 1.5 billion people and within that society nearly forty percent of the households now have televisions. Further consider that now the Chinese economy is growing by leaps and bounds, many of the people in those households have money to spend on products and services that advertisers want them to use or buy. Bingo! The very same thing that grew the television industry in the U.S. in the Fifties and Sixties is now happening in China; over 1.5 billion potential consumers sitting in front of television sets waiting to be entertained, informed and sold a better bar of soap.

Remember the old barter system where producers, advertisers or their advertising agencies would finance a program and give it away to stations in exchange for air time they would use to advertise their product? It is now a common practice in China. In exchange for the rights to broadcast a program you can split three minutes per half-hour with the station and sell your Golden Ox face cream, Great Wall beer or Flying Pigeon bicycle. Stations and network groups all over China are in a frenzy, swapping programming and advertisers, with the same intensity as commodity traders on Wall Street. Does this sound like Capitalism?

And where do all these advertising dollars (RMB) come from? A good deal comes from you and me. A recent article in the International Herald Tribune estimated that our trade deficit with China will surpass Japan's next year. The late Deng Xaioping would be delighted.

Chinese Business Philosophy
Returning to television, what's all this mean to foreign companies who desire access to sell their programs and their products in this ever expanding market? For the most part, I think this will be a very long and very difficult journey for the large majority trying to establish themselves in China. I believe many will try because the potential is so great, but I fear most will not achieve great success in the near future. My views are based upon my personal experiences in China, and my understanding of the society and culture. I have seen too many business ventures start with high expectations and smiles all around, only to die slowly in an ocean of frustration. I know that many large broadcast groups, both American and European, are negotiating for broadcast, satellite and cable deals within China at this time. I wish them success, but I will be truly surprised if they receive any substantial concessions from Chinese broadcasters or media groups.

I believe the Chinese side knows exactly what cards they hold and the huge potential of their own market. China will solicit help from the outside in order to build their industry, both in technology and financing, but forget about them giving away the farm. Remember, no matter how you view these broadcast groups, they are still under the control directly or indirectly of the Chinese government. They might appear eager to deal but they will always have a very specific agenda which is a mix of culture and politics. In China there is no win-win business philosophy. There has to be a winner and a loser. For a number of years in Hong Kong, there was an advertising campaign of television spots to promote a very expensive brand of French cognac. Though it was a series of commercials made over the years, they all conveyed the same theme. A Hong Kong or Chinese business man was closing a deal with a foreigner. The foreigner was always depicted as brash, loud and not very bright. In contrast, the Chinese business man was always cool and patient. The deal was negotiated and the foreigner gloated, thinking he had got the better part of the deal. Of course there was always the closing tag, where the Chinese business man disclosed his hidden agenda. His foreign adversary was always left stunned and embarrassed upon learning how he had been bested. The Chinese man then celebrated his victory with a glass of cognac and a smug smile into the camera. Doing business in China is difficult. The Chinese may at times walk like a duck and quack like a duck, but you've never met a duck as shrewd and patient as this one.