Business leaders tour China

Date: 31/10/1996

By Elizabeth Wise

LAUNCHING an unprecedented private sector drive into China, Trade Commissioner Sir Leon Brittan is taking 29 business leaders to Beijing next month for meetings with Chinese trade officials.

The high-powered group - the first of its kind from Europe to visit the Middle Kingdom - will include executives from the aviation, banking, insurance, media, music and telecommunications industries.

The key message from all those on the 15-17 November trip will be that China must now begin opening up its markets to outside competition, or face continued international condemnation.

For the music recording industry, two issues will be paramount: its representatives will insist that Beijing must crack down on rampant piracy of artistes' recordings and open up its own industry to joint ventures with European companies.

Polygram's president for the Far East Norman Cheng, EMI Europe president Rupert Perry and BMG senior vice-president Michael Smellie will accompany Brittan to demonstrate that Europe wants 'in' on the vast Chinese market.

International Federation of the Phonographic Industry (IFPI) officials estimate that the 10 million compact-disc players in China create an appetite for imports of some 7 million compact discs a year, in addition to the 23 million pirated disks circulating on China's domestic market.

The IFPI says Europe's music industry lost some 140 million ecu to Chinese piracy last year.

It argues that if European companies could get into the Chinese market, a legitimate industry would help stamp out the spiralling piracy which angers so many foreign governments.

“If we can create open access to that market, the market for legitimate recordings in China will grow very rapidly,” said IFPI director-general Nick Garnett, who added that European music companies were interested in getting involved in manufacturing in China not only for its domestic market, but also for sale in the rest of Asia.

“If conditions were right, anything could happen on that front,” he said.

The countries of southeast Asia - most notably, Malaysia, Thailand and Singapore - have a huge appetite for cassettes and compact discs. They could represent huge sales for European firms in joint ventures with Chinese recording studios.

The EU has, until now, largely been riding on the back of US efforts to get Beijing to crack down on piracy. The Union has signed up to the 1995 US-China intellectual property agreement, which has had some success but has not yet solved the problem.

Some EU officials say the Commission has not been in a position to conduct a high-profile US-style, China-bashing offensive, largely because certain member states do not want to run the risk of Chinese retaliation against their own economic interests.

Brittan has been conducting tours for business leaders to Japan for several years now, and coming home with some tangible successes.

The Commissioner's strategy is based on the theory that establishing private sector contacts and making friends in the lower, as well as higher echelons of trade ministries produces better results than US-style pounding and sanctions threats. His efforts have paid off on several occasions.

During this visit, Brittan will also discuss with Chinese officials their country's application for membership of the World Trade Organisation.

While maintaining a strict line that China should not be admitted until it agrees to a partial opening of its markets, Brittan and the Union are anxious to keep membership talks alive as a way of encouraging Beijing to make reforms which would allow EU industry to gain a foothold in the country.

“We believe the discipline of WTO membership will cement and accelerate Chinese reform,” said a Brittan aide.