WHY A LACK OF TV TALENT SHOWS COULD STOP THE RISE OF CHINA

This may reek of hyperbole, it may strike you as overly dramatic, it may sound like me departing from my usual optimism, and you may be right on all counts. But deep inside I believe what I am about to say is true and will have an impact on many aspects of doing business in China.

Beijings announcement that a sweeping and thorough new regime of restrictions, censorship and retrenchment on media content and consumption and its desire to dictate what is and is not proper for the Chinese public to consume could have the unintended consequence of stopping Chinas breakneck development of the last 20 years in its tracks.

This, not the real estate bubble, not tax and land protests, not the underground banking or reverse merger fiascos or the polluted air, water and land, this could be what sets China back 10 years on its road to being a true, not paper, global power.

The most striking instance occurred Tuesday, when the State Administration of Radio, Film and Television ordered 34 major satellite television stations to limit themselves to no more than two 90-minute entertainment shows each per week, and collectively 10 nationwide. They are also being ordered to broadcast two hours of state-approved news every evening (ed. note in primetime) and to disregard audience ratings in their programming decisions. The ministry said the measures, to go into effect on Jan. 1, were aimed at rooting out excessive entertainment and vulgar tendencies. New York Times, October 27, 2011

THE BIG PICTURE

There are many reasons that are likely behind the move:

-The Arab Spring
-The pending change of leadership
-A general discomfort with the voices of change, reform and accountability online
-The online reaction to the rail crash in Wenzhou
-The lack of control on microblogs and blogs
-CCTV feeling the sting of competition in a market driven media environment

We can focus on the reasons behind it later. Here we can focus on what it may mean.

China has made ! it clear that in order to sustain growth, wealth and the health of the nation it must shift from a commodity export driven economy to a consumer and services economy while also producing higher-value add goods (a la Germany).

The new restrictions have the potential to stunt Chinas growth because you cannot have a consumer and services economy without people and the market choosing which TV Shows, movies, apparel, makeup, web sites, microblogs, insurance companies, cars et. al are best for them. And in todays China the Internet and TV are the main vehicles for the market testing ideas and consumers buying or rejecting them.

In a consumer/service driven economy you cannot dictate peoples tastes, cultural mores, and desires. That is the very DNA of a consumer/service economy.

This decision will also make it harder for Chinese companies to innovate. If you cant be creative in making shows, music, movies, internet services and content that people want to watch and use supported by advertising products people want to buy, then you might as well go back to Mao suits and 24/7 CCTV propaganda. No innovation for the domestic market means no Chinese brands abroad.

So how could all of this impact Chinas continued development in a major way?

Lack of market driven products and services + lack of choice, freedom, expression, digital tools and content = no innovation = no consumer and services economy = China stagnating = no legitimacy for the Party = massive unrest = the possible end of the rise of the dragon.

Will it play out that way? I cant say for sure. But I do believe it is a possibility.