“To Construct A Copyright Investing and Financing Platform Is Crucial to Promote the Development of Copyright Industry”

Issue 32 By Kai Wen, China IP,[Copyright]

On October 24-27 2009, the 2nd China International Copyright Expo was held in the China National Convention Center in Beijing’s Olympic Park.

Different from century-old expositions, the two-year-old copyright expo has another big mission besides the “generating of orders” and to explore the development of China’s copyright industry. The copyright industry, or “cultural & creative industry”, is a new emergence in China, especially in specific embryonic trades, such as animation and network game. 

The development of copyright has been the focal concern of Ms. Li Heng, President of the International Copyright Exchange Center (ICE), which sponsors this copyright expo.
China IP: We know that the first China International Copyright Expo was successfully held in 2008. Was there anything special for you to hold the expo last year?

Li: The idea of holding an international copyright expo came up in 2007. However, after full consideration, we found the time was premature. People even didn’t understand the real meaning of copyright. They just related it to piracy and anti-piracy, but didn’t know copyright should follow the law of market with industrial operation. I thought in 2007, only about 20% people understood the real meaning of copyright and the copyright industry. The situation became much better the following year. More video websites began to pay for video copyright. In addition, the 2008 Olympic Games made people more clearly realize the importance of respecting copyright to the cultural & creative industry. In my opinion, the 2008 financial crisis was another contributor: many investors began to shift their attention from real estate and energy industries to the more lively and low-risk cultural & creative industry.

So we began preparation since last spring. We put it after the Olympic Games, because we thought it was the right time.

China IP: “Copyright” is still a very abstract concept for most people. How does the Expo interpret this concept and make people understand?

Li: ICE clarifies this concept into three levels. First, it adheres to a sole purpose - “communication, cooperation, innovation and development”. Second, every ICE has a theme. In 2008, it was “Copyright creates wealth”, telling people that copyright is not simply an anti-piracy issue, but brings unlimited wealth - “Copyright equals to wealth”. This year, the theme is “Copyright changes the world”, expecting that via this platform, everyone will know that cultural & creative industry can be quantified and will influence their lives in various ways. Third, we externalize the abstract concept and exhibit it by trades. Every trade presents visitors with various campaigns and activities, such as the China Internet Literature Festival, China International Sound Culture and Art Festival and the China International Digital Music Festival. Every festival presents several particular activities, such as “selection of good traditional writers”. This year, we paid more attention to game industry. We hold a China Digital Entertainment leadership Summit and present awards to outstanding game producers. Surely, the most eye-catching part for this year’s ICE is the “Investment and Financing Fair”.    

China IP: The first ICE won the “WIPO Gold Prize for Copyright Originality” issued by WIPO for the first time in China. Why didn’t you get the prize this year?

Li: Actually this is a prize, awarded every two years. I think the highest honor for last year’s ICE is the “Copyright Olympics” appraisal given by Mr. Michael Keplinger, Deputy Director General of the WIPO. WIPO’s participation also fills us with great confidence.  

China IP: What are the major changes for this year’s expo compared to the last year’s?

Li: There are many changes. Most obviously is the size of the exposition. Last year’s copyright summit was joined by about 300 guests. This year, this figure was over 500. It could be higher if we didn’t control the number (laugh). The exhibition area was 5,000 square meters last year. This year, it was 22,000 square meters, with a big booth for National Copyright Administration of China to review the 60-year development of copyright, since the founding of the People’s Republic of China. We can also expect many invaluable collections in this Expo. Last but not least, this year’s Expo covers all kinds of copyright industries. Exhibition units include enterprises, countries (such as Korea) and cities (such as Hangzhou).

China IP: With the emergency of the global financial crisis, the IP pledge loan has become a hot topic since the end of last year. From the several targets of this year’s ICE, we spot a very special target called “to effectively construct a copyright investing and financing platform”. And we find that you repeatedly emphasized the importance of it. Could you please introduce us this target and the reason for setting it?

Li: The financial crisis is not the original reason for us “to construct a copyright investing and financing platform”, but the catalyst for the process.   

Several years ago, we were totally ignorant of the crucial importance of copyright investing and financing. We thought the public service of copyright, such as registration, protection and popularization was of much more importance. Then in 2007, we realized that the real bottleneck for the copyright industry, or say the cultural & creative industry, was not the imperfect service, but the lack of an effective platform for right owners to finance or to attract investors to invest. Financing from banks is an approach, but it is very difficult. Therefore we (Beijing International Copyright Exchange Center) decided to construct an investing and financing platform, so that right owners and investors can freely communicate via it, promote the adjustment of funds and push forward the development of copyright industry in a faster and healthier way.

In the cultural & creative industry, copyright financing with which people are most familiar is the financing for films and television plays. However, this is only one sector of the industry. Through the Expo, we hope to expand the realm of financing to all sectors, and to construct an effective investing and financing platform. 

China IP: Specifically, by what approach do you construct such a platform?

Li: At present, three main approaches have been underway or under preparation. First, we are going to establish a Copyright industry cultivation fund, circulating 500 to 1,000 million Yuan every year at an early stage. Second, we will help right owners interface and raise funds from financial institutions via our platform. Third, we will directly invest in some projects.    

These approaches have been acclaimed by all sectors of society. In this Expo, we have specially held an “Investment and Financing Fair”, bringing right owners and capital holders together to effect their cooperation. This is also a particular measure to achieve the targets of this Expo.

China IP: Have you encountered any difficulties in constructing such a platform?

Li: Surely we do. Financing has two procedures: evaluation and pledge. But now we don’t have an authoritative and effective evaluation system. More unfortunately, copyright is an intangible property. Its evaluation is much more complicated than that of patent or trademark. Without an effective evaluation system, pledge will always be on the shelf. This is the biggest bottleneck for us at the moment.    

We have been thinking about breaking through this bottleneck. Since 2007, we have held seminars with experts from financial institutions and some administrative departments of industries. We are recently working on the evaluation systems, and hope to establish a complete and effective system within this year, and provide it to the administrative departments and financial institutions.

A Similar evaluation system was established before. However, we think it was far from the “direct interface” requirement.

China IP: To construct this platform, do you have any example to follow?

Li: No example. We are making innovations based on the practical situation in China. We know we are walking on a tough road, but we believe we can make it, because we have a clear business model, a trustworthy and professional team, and many opportunities for practice. We can find cooperation with all social circles. 
China IP: Can you tell us the differences for investors between investing in the real estate industry and in the cultural & creative industry? What are the advantages for the latter?

Li: I have checked a lot of information and conducted a massive amount of research. I think the greatest strength for investing in the cultural & creative industry is its “sustainable and unlimited development”. “Sustainable” has two meanings. On one hand, it is not susceptible to macro policies. I have a good friend who was investing in real estate and energies in the past few years. In 2007, the change of macro policies gave him a hard blow, and one of his projects brought a very low return rate. Thereafter, he began to shift attention to the cultural & creative industry and made some investments in it and now is ready to be on stock. On the other hand, the cultural & creative industry is a young industry and foresees several decades of booming years. With or without an economic crisis, people’s demand for culture will never go low. Therefore, investment in the copyright industry guarantees you a stable and higher-than-expected return.          

China IP: China’s copyright protection is still full of flaws. Do you think it will affect investors’ enthusiasm?   

Li: It surely will. But in my opinion, investors shall always be armed to protect their own rights, especially using and integrating the existing technology. We will give them assistance as well. For example, we have cooperated with the IP Committee of the All Chinese Lawyers Association, and constructed an effective and professional rights-safeguarding platform. Investors can find partners via this platform. In one word, investors shall take defensive measures at the very beginning, instead of reacting when piracy issues arise.

China IP: Thank you for the interview!

Li: Thank you!

(Translated by Hu Xiaoying)

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