By Gordon Chu | March 2, 2010

It’s no mystery that Western culture has infiltrated its way to the China market. Go down any of the many streets in Shanghai that are lined with little boutiques for women clothing, and don’t be surprised to see, “As seen on ‘Gossip Girl’” plastered across the store window. Also not surprising is anytime our program “Hello! Hollywood” has any mention of “Gossip Girl”, we get outstanding ratings and views on both television and online.

The fact Blake Lively and Ed Westwick (stars of ‘Gossip Girl’) are already household names in China without ever having a single program of ‘Gossip Girl’ on-air is a testament to just how much and to what degree American television has been pervasive in the China market. The reason why is the only way to see these two on-air is online where millions of the Chinese youth spend their time downloading and consuming much of their entertainment today. This underbelly of China’s media market is often overlooked and misunderstood; and has a significant role in how China’s market will evolve and continue to thrive.

Welcome to the Underbelly

I think it’s best to start from the beginning. To lay the dirty truth for what it is and have a no-holds barred attitude towards how American television finds its way to China.

No surprise here, it starts with the Internet. Let’s use NBC’s “Heroes” for purposes of an example. Ten-minutes after the premier in the States, our favorite show is quickly available on the many P2P and BitTorrent sites that roam the world wide web.

With much luck and anticipation, hordes of Chinese college students pull down the program (preferably with Closed Captioning) and start the arduous process of translation and subtitling. Note – this is not some mechanical process that is taken lightly. In fact, it’s much more of an art than a science to many of these ‘teams’ of translators. They say they are making it ‘better’, more local for consumption by the Chinese market – personally, I appreciate it when anybody takes pride in their work.

Several hours later, these teams populate Chinese P2P sites and, voila – you have Hiro, Claire, and Sylar (characters of ‘Heroes’) battling it on your very own computer screen, perfectly subtitled, only hours off the press in the United States.

The Chinese government has made it very clear they are cracking down on these sites and have made it abundantly public their intentions to do so (even as recent as December 2009). And while there will be efforts to shut down many of these P2P sites, you simply cannot ignore the fact that there is a void in the China market. And as they say, “When there is a will, there is a way.”

Signs of the Time

So, this phenomenon with illegal downloads of American TV programs online – what does this really say about the China market.

Quality over Quantity

For one, the truth of the matter is that Chinese TV is simply not that attractive for many Chinese consumers (mainly the youth). For years, state-controlled television was often associated with bad programming. Is this always the case? No. Is this a good litmus test of the general consensus? Possibly.

With over 3500 television stations in China, one has to think there should be an abundance of attractive programming that viewers would. Rather, we see quite the opposite with millions of Internet users herding to these illegal P2P sites only to watch the grainy quality of “Heroes” on a 13.5 inch laptop screen. In China, quality trumps quantity. Hands down.

Censorship is not the Issue

I will be very frank about how I feel about the government’s position on cracking down illegal downloads. To them, I say kudos.

This crackdown is not an issue of censorship in any form or matter. Any of the programs that are illegally downloaded can easily be edited accordingly to fit the strictest of SARFT rules. Censorship is meant for communications over much bigger issues like Tibet / Taiwan – and should not be mentioned in the same breath with the likes of “Gossip Girl” or “Heroes”.

The truth of the matter is the government’s stance against illegal downloads is a way to exhibit soft power to the rest of the world. China recognizes that in order to be a world leader, it has to play nice and know all the rules of the sandbox. In this case, piracy and intellectual property is a very big deal for the rest of the world and the Chinese government is handling this perfectly – directly and indiscriminately.

Efficient Markets

The fact there is these kinds of issues in the market is a classic business school case of inefficient markets. One thing I can say about my experience working in China thus far, the Chinese are resourceful. They are most definitely not the ones to settle for mediocrity and will always find ways to supply what the market wants. In this case, good entertainment.

I do believe the Chinese media market will have to evolve to meet the needs of the people – especially as it pertains to television and the Internet. However, there are several important factors that will dictate how the market will evolve. Each of them have significant influence for better or for the worse.

For starters, television is the one platform that the Chinese government has control over. There’s no escape to that nor does it really matter. It’s a matter of fact and is absolutely fine as a media company working in the China market. With that being said, television will continue to be the dominant platform.

Secondly, the fact is that television is still the predominant and preferred platform for advertisers. They have a very strong hold of the market share of advertising buy and will be so for as long as I can foretell (not to say that the Internet will put a sizable dent into that share). As for my own philosophy, the market will go where the money goes.

Lastly, the momentum of a multi-platform play will eventually find its way to China. The lines between television, Internet, and mobile will increasingly be blurred and the philosophy of isolated silos of how media is consumed will be a thing of the past. Television, online, and mobile will be synonymous with the idea of consuming entertainment – and despite all the amounts of restrictions we can implement to control this trend, momentum trumps all. And this will not be an exception in China.

The good thing about each of these driving forces in China today is it will ultimately lead to better quality of content, better options for brands, and a better viewing experience for viewers / consumers. We can see glimpses of this already with even the flood of advertising dollars being poured into China today and how quickly television programming has evolved even within the last two years. Online video portals like Youku and Tudou are now crossing over and becoming much more consumer facing that they have been in the past. We see examples of how mobile phones have evolved despite the noticeable absence of 3G technology and how it seamlessly extends from its big brother, the Internet.

Growing pains now, but good for the overall market in the future.

Conclusion

After spending much time in China, I’m always surprised by how far American TV has been part of the Chinese culture. The hit US show, “Friends” is often used as an English-learning tool for many university students. Stars from “Prisonbreak” are icons in China and often frequent the television waves in the form of commercials.

No matter how we slice or dice it, American television has made a permanent footprint in China. It may not be entirely the programming themselves, but the culture and variety of programs that the Chinese viewers are drawn to. And for content providers and advertisers, this is something we can all rally behind.