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CHINA (PRC FIRMS): An Introduction to China

China became the first major economy to resume growth since the outbreak of COVID-19, and under the influence of COVID-19, online entertainment has experienced a meteoric rise in popularity and revenue. E-commerce, online education, live webcasting, short video and other new media business models have ushered in a new round of rapid development. All current signs point to the future of media and entertainment being digital, and the content of online entertainment is becoming more cross-combined with the characteristics of information, networking and education.

In the same vein, the media and entertainment industry in China is undergoing a period of rapid and monumental change in legislation. Lawmakers, government authorities and entrepreneurs are hard at work to keep up with everchanging technology. Accordingly, it is critical for both potential and current participants in this industry to understand how legal trends may impact the viability and sustainability of proposed operations.

To ensure the healthy and orderly development of the media and entertainment industry, China enacted a series of laws over the past year, such as the Civil Code of the People's Republic of China which came into effect on 1st January 2021. The third revision of the Copyright Law was passed and came into effect on 1st June 2021. In addition, the Beijing Treaty on Audiovisual Performances, which was signed by China in 2012, came into effect on 28th April 2020.

The Civil Code enhances legal protection for personal rights, expanding the scope of protection for the right of likeness, specifically including the rights and interests related to the pen name, stage name and voices of natural persons into the scope of legal protection, and further clarifying the protection of personal information and privacy. As a result, celebrities have a greater ability to defend their rights when they are infringed. For example, unauthorized production, use, or disclosure of a celebrity's likeness, even if not for profit, constitutes an infringement of the right of likeness under the Civil Code.

The revised Copyright Law effective from 1st June 2021 highlights the following changes related to the media and entertainment area: (a) It revises the definition of “works” and changes the provision of the forms of works in different fields from closed to open; (b) It replaces the concept of “cinematographic works and works created by virtue of an analogous method of film production” with that of “audiovisual works” to adapt to the emergence of new genres of works; (c) It enlarges the concept of broadcasting rights reasonably by adding “communicate to the public a work by wired means”, thus covering all “non-interactive communication” behaviours such as webcast, scheduled website communication, and real-time rebroadcasting; (d) It vests the producer of the sound recording with the right to be paid for communication to the public by wired or wireless means or broadcasting to the public through technical equipment; (e) It also provides for punitive damages and increases the maximum statutory damages to CNY5,000,000.00.

The Beijing Treaty on Audiovisual Performances further improves the level of legal protection for performers. By clarifying the definition of “performer,” it expands the scope of protected performances. It also specifically provides for the transfer of performers' rights and establishes national treatment for the protection of rights of performers from other member countries signing the treaty. For example, the treaty provides a legal basis for a singer from a member country to prohibit unauthorized communication on the internet of his/her audiovisual performance in China.

Due to the influence of COVID-19 and technological innovation, the development of the media and entertainment industry in China is facing challenges.

Firstly, the pandemic continues to cast a shadow over the sector. This is reflected in the decline in film and television production, the increase in risks in film and television projects, the uncertainty in the offline performance market, and the slowdown in international cooperation in film and television investment and production.

Secondly, industry changes bring confrontation between old and new formats. The trend of media integration challenges the film industry's product style, business model, and management system. The duopoly in the short-video industry forces other short-video enterprises to seek new opportunities in small towns and rural markets as well as overseas – an example of why competition in emerging industries still needs to be improved.

Finally, changes in international relations threaten Chinese domestic firms’ operations abroad and international cooperation projects. TikTok is one example. It is one of several Chinese apps that have been under scrutiny or even banned in some jurisdictions.

Nevertheless, there are opportunities that coexist with the challenges. The Chinese government has adopted proactive policies in response to COVID-19. New technologies have developed rapidly in various industries and remain highly competitive. As what the industry guidance policy encourages, innovation and production of high-quality content will be a key for media and entertainment enterprises to make a breakthrough in the next few years.