Wang, Shujen, and Jonathan Zhu (2003). “Mapping Film Piracy in China.” Theory, Culture, and
Society 20 (4):97–125

      Identified as one of the most prominent media issues of the “digital millennium,”1 global entertainment piracy is a complex issue with important economic, political, cultural and theoretical consequences. In 2002, revenue losses due to copyright piracy totaled $9.21 billion. It has been most severe in Asia where China alone saw a $1.85 billion loss.2 This multidimensional and multifaceted issue is inextricably linked to the processes of media globalization.
　　　In this paper we will map the scope and dimensions of film piracy (in the form of optical disc piracy) in Mainland China. The fact that film and its ancillary products are not only commodities, they are also forms of national and cultural expressions, renders it necessary to critically review the issues at hand from policy, institutional as well as cultural perspectives.
　　　We focus on film (in the form of optical disc such as VCDs and DVDs) piracy partly because of the dominant position Hollywood occupies in shaping the ever-shifting landscape of “global culture,” and partly because of the leading role the Motion Picture Association of America (MPAA) and its international arm Motion Picture Association (MPA) play in lobbying and influencing not only the making of U.S. trade and foreign policies, but also those of other countries. The research focus also acknowledges the unique weight the Chinese government places on film for ideological, historical and cultural reasons. Such concerns have certainly translated into the PRC policies regarding the import of Hollywood films, as well as the discrepancy between theatrical and home video import policies (see later discussions). It has certainly become a sore point in, and a source for, annual trade and diplomatic confrontations between the U.S. and China on copyright and piracy issues.
 Having been designated as a “Special 301 Priority Foreign Country”3 by the United States Trade Representative (USTR) three times in the past decade (1991, 1994, and 1996) and subsequently subject to potential trade sanctions for its failure to contain copyright piracy and to provide market access to the US copyright industries,4 China has proved to be one of the most challenging markets for the US copyright industries.5 With its ever-enticing billion-plus market6 and a fast-growing economy, however, China occupies a unique position in the global economy and, consequently, holds considerable negotiation leverage vis-à-vis the U.S. and the international trade regimes.
    Meanwhile, the copyright industries in the U.S. are one of the fastest-growing segments in the national economy, and are the leading economic sector in foreign sales and exports.7 As mentioned, the annual losses due to piracy are estimated at $9 billion in 1999, $8.1 billion in 2000, $8.4 billion in 2001, and $9.21 billion in 2002 (see USTR 2001 and 2002 “Special 301” Decisions). Of these, $2.1 billion in 1999 (23 percent),
$1.08 billion in 2000 (13 percent), $1.5 billion in 2001 (18 percent), and $1.85 billion (20 percent) were estimated losses in China alone, the greatest of any single territory. Piracy in China has therefore been viewed as an especially acute problem in this “information economy,” given that what is being traded globally are increasingly copyrights to the intangible entertainment and informational goods.
   In this paper we aim to examine the question of film and optical disc piracy in China in light of current theory regarding globalization (e.g., Hardt and Negri, 2000; Deleuze, 1995; Sassen, 2001; Harvey 2000 & 1990), the state (e.g., Sassen, 1998 & 1991; Hsing, 1998), and power (e.g., Giddens 1994, 1991, 1990, 1987; Beck, 1994). The analysis of piracy in China will focus on cultural/media policy and history (including film distribution system), technology (the all important hardware-software-content dynamics), market (supply and demand imbalance), networks, and power.

Globalization, Technology, and the State: Multiple Networks

…control societies function with a third generation of machines, with information technology and computers, where the passive danger is noise and the active, piracy and viral contamination.
    Gilles Deleuze (1995:180; emphasis added)

　　　From maritime to cyberspace, from the use of force to digital decryption, piracy has always been around. The difference today is the unprecedented ease, rate, and velocity afforded by the extraordinary developments in digital technology. The same digital technology that makes possible instantaneous global financial transactions also provides optical disc and Internet pirates with the ultimate capacity to copy, distribute, and profit with exceptional quality, speed, and reach. This technological development and the current state of capitalism are inextricably linked. Indeed, Deleuze (1995:180, see also the above quote) views this technological development as being rooted deeply in a “mutation of capitalism,” a capitalism that is no longer concentrative, proprietorial, or directed toward production, as capitalism in the 19th century tended to be. It is instead directed towards “metaproduction” that sells services and buys activities. It tends toward “informatization” (Hardt & Negri, 2000:9), information and markets. Furthermore, with the advancement of digital technology, spatial boundaries are rendered ineffective, while speed is increasingly the ultimate determinant for global success. It is precisely this specific global informational economy that provides both the copyright industries and piracy networks with the necessary environment to thrive in and prosper.
　　　The difference lies partly in the fact that piracy networks can by-pass those state and international regulations (albeit those promulgated in a general climate of deregulation) that the legitimate businesses in most cases would have to abide by.8 Piracy networks thus move much faster in a smoother environment and consequently hold certain advantages (most importantly speed) over legitimate businesses. This is however not to suggest that piracy networks operate in a code-less or code-free space, as they are governed by different, albeit much more flexible, sets of rules and codes that dictate their complex operations of production and distribution.
　　　That said, however, piracy networks as part of the “shadow” economies9 are very much part of the formal economy. They operate through and around formal institutions such as the state, its regulatory and enforcement capacities, and its sovereignty. In the case of film piracy in China, for instance, one might ask how pirates and their networks figure in the film distribution system and how they are related to local and central political bodies and relations. What are the relations among the various components of pirate networks (e.g., hardware manufacturers, production line distributors, software retailers, etc) and those between the legitimate and the illegitimate distribution networks? Are power relations more or less stable? When the U.S. government, for example, has to resort to repeated annual threats of trade sanctions to keep designated foreign countries in line with intellectual property rights agreements, which side holds the power and why? Are the offenders necessarily powerless? When local enforcement seems to be the key to curb piracy (see the opening IIPA quote), and when state intervention in this case seems to be more critical than ever, is the power of modern state necessarily diminishing as is widely speculated?
　　　These tensions underscore the urgency and the new configurations of the state in a global economy. They also highlight the operations and complex intersections of multiple networks, each with its unique and shifting sets of relations and configurations: global regimes, the state, regions, MPAA and MPA, production line distributors, hardware manufacturers and retailers, consumers, pirates, among others. The existing theoretical frameworks (e.g., political economy and certain recent writings of globalization) where the focus tends to be on the dichotomy between the center and the periphery, the local and the global, are therefore inadequate in examining the increasingly complex issues of information, technology, and the global economies of space and signs. Sassen (1998:202), for example, points out some of the problems of the recent literature’s focus on the “national-global duality,” that such duality inevitably leads to propositions about the declining significance of the state in relation to global economic actors. It also leads to emphases on, for example, industry outputs, instantaneous transmission capacity, and the inability of the state to regulate those outputs, while ignoring the production process involved and the infrastructure necessary for that capacity. A better framework would then be to view globalization as conceptually reconstituted “in terms of a transnational geography of centrality with multiple linkages and strategic concentrations of material infrastructure” (p.214, added emphasis). Globalization can thus be seen not as an inevitable condition, but as specific processes embedded in and dependent on those linkages and the material infrastructure. After all, “globalization” as “a noun of becoming” (Frow, 2000, p. 174, emphasis added) should be treated as such, and as a continual evolvement of ‘processes’ where the planning, intervention, changes and anomalies are taken into account.  The dynamic and interconnecting relations between the state and the global, consequently, deserve and require serious examination since they set up the “contents” and “conditions” of the global. As Sassen (2000) has pointed out, the two key elements in the formulation of the conditions and contents are “the degree of economic globalization’s embeddedness in the national and the specificity and social thickness of the global,” because the global economy is “something that has to be actively implemented, reproduced, serviced, and financed.” It points to the need to do case studies, as every site will be a different configuration of linkages. Film piracy in Mainland China, for example, is the product of a unique set of legal, political, cultural, and economic conditions and processes, which are vastly different than those in Hong Kong and Taiwan, even though the three constitute Greater China and those piracy networks that operate in the region are inextricably linked.
　　　To focus on China, then, is not to endorse a reactionary (re)turn to the “local,” one that celebrates an essentialized and fixed locality that is not touched by global flows. It is instead to view globality and locality, as Hardt and Negri (2000:45) have suggested, as both regimes of identity and difference, and as “different networks of flows and obstacles in which the local moment or perspective gives priority to the reterritorializing barriers or boundaries and the global moment privileges the mobility of deterritorializing flows.” In other words, it becomes dubious at best to maintain that one can somehow re-establish local identities that are outside of the global flows.
　　　To focus more specifically on film piracy in China, in this case, is an effort to dissect and understand the complex processes and the multiple linkages of the deterritorializing flows of global filmic products and images, as well as the processes by which they are reterritorialized in various loci through distribution and consumption. Film distribution and piracy are what constitute the links and relations of these networks of circulating images, products, and capital. They are also the connecting lines that bridge some of the gaps among these otherwise separate entities. To focus on piracy and distribution, then, is to add the middle part to an otherwise dichotomized attention to the macro/global/production and the micro/local/reception aspects. This is also to take the actor-network theory approach in emphasizing the concepts of the network, of translation and transformation that are very much a part of the circulation and transportation (e.g. Latour 1999; Law 1999), and finally the concept of both human and non-human actors (i.e. their positions in and relations to the networks) and issues of agency. By focusing on translations and transformation, we might be able to see how the links between two loci are made and how they are transformed or deformed in that process (see Law 1999, and Latour 1999). By examining actors or “actants” (Latour 1999:18), both human and non-human, and how they are hooked up with some of these circulating entities (e.g. piracy networks), one might understand how they achieve, and what might have provided them with, their subjectivities, reflexivity, actions, and intentionalities.
　　　To use the notion of “network” to examine issues of globalization, piracy and the state, one emphasizes how the elements in a network are able to retain their spatial integrity “by virtue of their position in a set of links or relations” (Law, 1999:6, original emphasis), and how regions are constituted by networks. It is out of what he terms as “double dissatisfactions” regarding social scientists’ tendency to define a trajectory or a movement by focusing on oppositions between two notions, micro and macro, agency and system (or individual and structure), that Latour (1999:17) proposes the Actor Network Theory and the concepts of framing and summing up as a way to pay attention to these two dissatisfactions. In this sense the social possesses the property of a “circulating entity.” The network in ANT then is referred to as the “summing up of interactions through various kinds of devices, inscriptions, forms and formulae, into a very local, very practical, very tiny locus” (p.17) where no interaction is not framed (p.19). Finally, in revisiting the Actor Network Theory (ANT), Latour (1999:15) further differentiates between the concept of “network” as used in ANT and the word “network” now popularized in the world of information technology. The latter means, “transport without deformation,” whereas the former designates “a series of transformations – translations, transductions.”
　　　It is in this framework of the multiple networks that we would examine and problematize film piracy in China as circulating and intersecting networks where the foci are transformations, deformations, and translations.

Film Piracy in China

 China’s geographical, technological, economic and political environments as such have made it not only a desirable market for pirated goods, but also an appealing production and export base for makers, distributors, and exporters of such merchandise, with wide-ranging implications and consequences. Its threats to the transnational copyright industries are substantial. When viewed from the perspective of being a lucrative market for pirated goods, the consequence of piracy in China takes the form of revenue losses in one single territory. From the perspective of being a production and export base for pirate networks, however, potential losses can be far more immense and damaging.
　　　Although the motion pictures industry is not the one that bears the heaviest copyright revenue losses in China (see Table 1), it is however one of the most visible in anti-piracy actions in China (and in Asia in general). The Motion Pictures Association (MPA) works closely with the Chinese customs in investigating, raiding and cracking
down on pirate factories and smuggling. Table 2 is an example of such MPA involvement in 2000. In the IIPA reports, MPA is the only foreign organization listed as having participated in similar raids and investigations.

Table 1. People’s Republic of China:  Estimated Trade Losses Due to Piracy (in millions of US dollars) and Levels of Piracy: 1995 – 2002

INDUSTRY 1995  1996  1997  1998  1999  2000  2001  2002
       Loss/Level Loss/Level Loss/Level  Loss/Level Loss/Level Loss/Level Loss/Level Loss/Level

Motion  124.0/100% 120.0/85%  120.0/75% 120.0/90% 120.0/90% 120.0/90%  160.0/88% 168.0/91%
Pictures
Sound 300.0/54% 176.8/53%  150.0/56% 80.0/56% 70.0/90% 70.0/85% 47.0/90% 48.0/90%
Recordings
Business 488.0/96% 507.5/95% 987.9/96% 808.4/95% 437.2/91% 765.2/93%  1140.2/92% 1593.3/93%
Software
Applications
Entertainment 1,286.0/99% 1,380.0/97% 1,409.4/96% 1,420.1/95% 1,382.5/95% NA/99%  455.0/92% NA/96%
Software
Books 125.0/NA 125.0/NA  125.0/NA  125.0/NA 128.0/NA  130.0/NA  130.0/NA  40.0/NA

TOTALS 2,323.0 2,309.3 2,792.3 2,553.5 2,137.7  1,085.2  1,506.6

Sources: Compiled from 2003, 2002 and 2001 IIPA Special 301 Reports, People’s Republic of China (pp. 19, 32 and 26, respectively).

Table 2: Administrative Copyright Enforcement Statistics in China (Motion Picture Association) 2000

Actions
2000 MPA
Number of raids/searches conducted
636
Number of administrative cases brought by agency
631
Number of defendants found liable (including admissions/pleas of guilt)
631
Ratio of convictions to the number of raids conducted
99%
Ratio of convictions to the number of cases brought
99%
Number of cases resulting in administrative fines
440
Total amount of fines levied
N/A
US$0-$1,000
401
$1,001-$5,000
37
$5,001-$10,000
2
$10,000 and above
0
Total amount of restitution ordered in how many cases (e.g. $XXX in Y cases)*

Source: IIPA 2001 Special 301: People’s Republic of China (p.33)
*Note that the total amount of restitution was left blank in the original document.

　　　
　　　In this section we map the film piracy issues in China, with a focus on optical disc piracy (e.g., VCDs and, more recently, DVDs). Film piracy in China is embedded in complex and intersecting settings, both internal and external. These factors have indeed provided the necessary soil for piracy to take root. The mapping then would be situated in these specific spatial-temporal contexts: film import policies, film distribution system, Sino-American relations, technology developments (hardware and software dynamics), market conditions (supply and demand imbalance), copyright regulations and enforcement, and finally spatial organization and networks.

Film, Policies, and Distribution
 To understand film piracy, one may start with the political, ideological and cultural significance film holds in Chinese society, as it informs cultural policies, which in turn shape the cultural environment in general, and market structure in particular. Film in China is viewed as one of several existing “cultural markets”10 and has always been deemed as a product of “the political, economic, military, and cultural invasions of the West,” and thus viewed as carrying with it “a deep colonial branding” from the very beginning.11 It has therefore always been the government and the Party’s mission to indigenize and nationalize the film industry. After the Communist revolution in 1949, China started building its own “independent national film system” and banned American films entirely in 1950. The protection of film industry thus occupies a special priority in China’s cultural policies. With the establishment of the Sino-US relations in 1979, Hollywood sought to re-enter the Chinese market and had done so through the 1980s (Zhao & Schiller, 2001). But it was not until the releasing of Warner Bros.’ The Fugitive in November 1994 were American films systematically allowed into China.12 With this development however there still remained an unofficial de facto quota of 10 revenue-sharing foreign films per year,13 a topic with great significance to which we will return later.
　　　As mentioned earlier, film piracy in China is partly a by-product of the overall foreign film (read: Hollywood Majors’ productions) import regulation and distribution system. Under the auspices of the Ministry of Film, Radio and Television, theatrical distribution is a government monopoly operated through China Film Corp. The long-practiced unofficial de facto quota of 10 revenue-sharing14 films per year became hence the center of much contention between the Hollywood majors and the Chinese government, and much competition among the majors themselves. Even though the quota has been very recently raised to 20 per year upon China’s entry into WTO (Groves, 2001) and China Film will soon lose its distribution monopoly with rights open to competitive bidding by other designated domestic distributors,15 it is still not enough to trigger investment to build screens and to restore the cinemas. This de facto quota also has implications for piracy because it limits the number of films in circulation and because the films lag far behind U.S. release dates. First, even with 20 films per year it would still be hard to satisfy the demand from the increasingly savvy Chinese viewers who are well tuned to global entertainment. Furthermore, with the 20 or so films that do pass through the lengthy review/censorship process, the PRC releases are usually months behind their U.S. releases.
　　　The home video (including VCDs and DVDs) import, on the other hand, is controlled through a different channel than the theatrical release: the Ministry of Culture.16 Starting in 1997, China allowed the import of American videos.17 Even though what is recorded on video is also in film, the medium is considered new (as opposed to the older and more ideologically loaded medium of “film”), and the procedures and regulations for approving home videos for domestic distribution are faster and more lenient. Between 1997 and 2000, for example, the Cultural Ministry approved the import of over 800 home video titles (averaging 200 titles a year), compared to 10 theatrical releases a year.18 Although the Home Video review process is faster than that of theatrical releases, it is still lengthy. When given a choice between renting a legitimate yet dated copy of VCD for RMB $2 to $3 (about US$.25 to $.35) and purchasing a pirated copy of newly released film for roughly RMB$5 to $15 (about US$.60 to $2 depending on the location), a consumer usually chooses the latter.19
 
The USTR Special 301 Episodes
 In China, the development of a copyright related legal framework and anti-piracy policies is closely related to the market economy reforms and China’s insertion into the global economy. As the following discussion will illustrate, the success of bilateral or multilateral copyright agreements still lies in the effectiveness of local implementation and enforcement of these agreements and treaties. The complex process itself inevitably involves much interpretation, translation, and maneuverings at various levels. It accentuates the crucial roles the state plays in transnational copyright governance. Thus, while the state sovereignty might be eroding in some aspects, new state powers are also being created.
　　　Following Deng Xiaoping’s Open Door Policy in the late 1970s, the US, along with other western countries, started to pressure China to adopt more protective IP laws.20 By the early 1990s China already became a lucrative market for foreign investments. The pressure for full protection of foreign rights increased (Jayakar, 1997). It is not a coincidence then that the USTR placed China on the Priority Watch List in 1989 and 1990 to “encourage it to commence a law reform process” (1999 Special 301 Report: PRC, p.2). Responding to the pressure and realizing the need to conform to international standards to be part of the world economy, China in 1990 incorporated international standards and enacted its Copyright Law of the People’s Republic of China. The law however was considered incompatible with the Berne Convention and in 1991 USTR named China a Priority Foreign Country. On September 30, 1992, China’s Berne-compatible regulations went into effect and in October 1992, China joined both the Berne Convention and the Universal Copyright Convention. The copyright framework in China was by then comparable to that of other countries (Jayakar, 1997). With legal framework in place, the copyright industries began to attribute the high level of piracy in China to the lack of enforcement. Before long, more “aggressive and deterrent enforcement” became the focus of anti-piracy campaigns and “the key to reducing piracy in China” (2000 Special 301 Report, p.26).
　　　With the move toward a global information society, the IP rights regime has also been increasingly globalized through the World Intellectual Property Organization (WIPO), the World Trade Organization (WTO), and Trade-Related Aspects of Intellectual Property Rights (TRIPS). While these multilateral organizations, treaties, and agreements are comprehensive, and seek to ensure that their member-nations provide standardized IPR protections, they rely heavily on state laws to conform to the treaties and agreements to ensure the effectiveness. Concerned transnational copyright holders would still have to work through the state on copyright protection issues. Bilateral and unilateral measures such as trade sanctions and retaliations are thus often deployed to improve the IPR protection. The United States, for example, has relied on multilateral approaches for overall legal and regulation guidelines and directions while using bilateral and unilateral means to ensure the proper enforcement on the local level. Special 301 is one such measure.
　　　According to Special 301, created in 1988 by Congress when it passed the Omnibus Trade and Competitive Act of 1988 (that amended the Trade Act of 1974), the USTR will identify countries that fail to provide adequate and effective intellectual property rights protection and equitable market access to American businesses. Those that are designated “Priority Foreign Countries” are the ones with the greatest adverse impact on U.S. products. They are therefore subject to trade sanctions at the end of an ensuing investigation. “Priority Watch List” and “Watch List” are two other categories that do not involve immediate trade sanctions.21
　　　If Special 301 can be characterized as a retaliatory measure, then the Generalized System of Preferences (GSP) program would be a reward system. GSP is another unilateral trade tool that has been used by the U.S. to ensure local enforcement of copyright laws. It provides unilateral, non-reciprocal, preferential duty-free entry for over 4,650 articles from roughly 140 beneficiary countries, which is an important incentive for foreign countries to provide effective IPR protection (among other such conditions to provide market access) to U.S. copyright industries. In the case of China, the Most Favored Nation (MFN) status has also been used as an incentive for China to maintain the proper functioning of its copyright regime (See Jayakar, 1997).
　　　As was mentioned earlier, China was designated as the Special 301 “Priority Foreign Country” in 1991, 1994, and 1996 (See Table 3). And each time a threatened trade war was avoided at the last minute after lengthy and frustrating negotiations and mutual threats. After China was named the “Priority Foreign Country” in 1991, for example, lengthy negotiations ensued resulting in the Memorandum of Understanding on the Protection of Intellectual Property (MOU) in January 1992, two hours before U.S. retaliatory measures were to be implemented.22 Similarly in 1994 USTR Mickey Kantor placed China on the Priority Foreign Country list and threatened $1.08 billion in retaliatory tariffs on Chinese products. The Chinese government retaliated by threatening sanctions against the U.S. Once again, a threatened trade war was averted by a last-minute signing of the China-U.S. Agreement Regarding Intellectual Property Rights (the IPR Agreement) on February 26, 1995.23 Finally, in 1996 USTR for a third time placed China on the Priority Foreign Country list and issued a retaliation list, comprising over $2 billion worth of products. China then published its own retaliation list, identical to that of the U.S., subjecting U.S. products to 100% tariffs. On June 17, 1996, hours after the
deadline, the US and China agreed on a set of announcements and averted yet another threatened trade war. This agreement then subjected China to monitoring of its compliance with the 1995 and 1996 agreements under Section 306 of the U.S. Trade Act. China remains on the Section 306 Monitoring list ever since.

       Table 3: China’s Status under Special 301 Review
      
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
306
306
306
306
306
306
PFC*
WL
PFC
WL
WL
PFC
PWL
PWL
PFC: Priority Foreign Country
PFC*: Priority Foreign Country (subject to 306 Monitoring) 24
306: 306 Monitoring
PWL: Priority Watch List
WL: Watch List

Source: compiled from USTR Special 301 Decision reports

 The Chinese anti-piracy efforts to a certain extent coincide with the Special 301 agreements and negotiations. Right at the time when the USTR first put China on the Priority Watch List in 1989, China founded the National Anti-Pornography Working Committee. The Committee changed its name to “The National Anti-Piracy and Pornography Working Committee” (NAPWC) in February 2000. The committee is the leading anti-piracy organization in China with 15 institutional members from major communication, transportation, cultural, and informational branches of the government.25 The NAPWC’s 2000 Report categorizes China’s effort in curbing piracy into four stages: Phase I (1995) saw the establishment of the title verification system: the SID code.26 Phase II (1996) highlighted assaults on underground optical disc factories. Phase III (1997) focused on curbing smuggling, with the customs playing indispensable roles. And finally Phase IV (1998-present) emphasizes international collaboration and inter-regional cooperation.
 With China’s entry into the WTO, it is estimated that there will be slight growth of 5% to 15% of the legitimate optical disc market.27 Anticipating the entry, however, it is also believed that pirates would increase their activities before the formal entry into WTO.28

The Hardware – Software Dynamics
　　　The Video Compact Disc (VCD) is a little known quantity in the West, but in the Asia-Pacific region, it is the dominant format for recorded video entertainment. The VHS business29 has more or less been killed off by piracy while most of the Asian territories have become disc-based markets (Screen Digest, 2000).
　　　The VCD development has proved to be one of the most serious and unexpected challenges to the major studios and those transnational electronics makers that hold, determine, and monopolize video and audio entertainment formats and standards. As the following discussion will demonstrate, the unexpected VCD rebirth in Asia has not only re-drawn the film distribution maps, both legitimate and illegitimate, but also redefined the power relations among various global as well as local players by reversing the flow of global video technology format and standardization. It has indeed become one of the most fascinating cases of a reterritorialized space where the state, local manufacturers, and consumers collude to in a way defy and resist globalization and standardization, while transform and translate a passing, and indeed obsolete, technological development to fit local needs.
　　　Philips and Sony (and later Matsushita and JVC) developed the VCD technology in 1993 to record video on compact discs. It was cheap, digital, convenient, and seemed to be setting the standard. Even from the beginning, however, Philips was well aware of the pending arrival of high-density Digital Videodisc (DVD) and the threat it would bring to VCD. With its greater capacity and a better picture, the DVD standard did replace the VCD three years later.30 VCD however lived on in much of East and South-East Asia and became the best-selling format. Its cheaper prices (some are sold for less than US$40, see The Economist, 1999) and the digital quality were reasons why VCD stayed on, but there is no denying that VCD piracy (i.e. software) had a major influence on the hardware development, and vice versa. According to a report by The Economist (1999), by 1998 China alone had 500 VCD manufacturers.31 Table 4 documents the remarkable number of VCD units produced in China in the past five years. The production peaked in 1998 with 18.5 million units being produced in one year alone. The profit became thinner and the production declined in 2000 and 2001 as the demand for VCD players slowed down (Asia Pulse, 2001) while that for DVD increased. In 2001, The State Information Centre estimates that China will export 16 million of VCD players and 3 million DVD players (Asia Pulse 2001). Further, Table 5 summarizes the user rate of VCD players in urban China. Thirty-six percent of the urban households now own VCD players. With the continued advancement of DVD technology and the lowering of prices, more and more urban households are replacing their VCD players with DVD. The State Information Centre in fact predicted that the VCD players and SVCD players would be mainly sold to the rural areas while DVD to urban areas.
　　　
Table 4: China’s VCD Player Production

1997
1998
1999
2000
2001
Units
15.7 million
18.5M
17.2M
14.5M
11.2M
Revenue
US$1.97B
$1.70B
$1.69B
$1.23B
$874M
Source: Dataques (2001)
TableBase? Accession#:1983464

Table 5: The number of VCD players in use per 100 urban households in China
Year
VCD players
1998
16.0
1999
24.7
April 1999
21.9
May 1999
22.4
June 1999
22.7
July 1999
23.1
August 1999
23.4
September 1999
23.9
October 1999
24.3
November 1999
24.6
First quarter 2000
34.6
Second quarter 2000
35.7
Third quarter 2000
36.4
Source: Asia Pulse, December 19, 2000
TableBase? Accession#: 2716388
　　　
　　　The developments in hardware-software are significant as they are one of the most important factors in film piracy. What follows is a list of questions pertaining to this intricate issue:
o The chicken - egg question.
　　　The developments of VCD hardware (i.e. players) and software (i.e. discs) are closely related. Depending on whom one addresses the question, it is hard to say if pirated VCDs stimulated the growth of the players, or vice versa, or if making such a distinction is even possible since many hardware developers are also involved in software designing and manufacturing. Some pirates believe that because discs feed the VCD machines, pirated VCDs actually stimulated the growth of the VCD manufacture industry.32 What seems to be a widely held belief is that the VCD manufacturers certainly push for piracy since it helps the growth of the industry. The so-called “bundle deals” 33 are a widely practiced promotional activity in China where manufacturers would include as many as 100 free VCDs as bonus to those customers who purchase a machine. Some of these discs are legitimate; many are not.
o Narrow margin for authorized replication plants and the problem of over-capacities.
　　　With the rampant VCD piracy in Asia, one of the strategies deployed by the Hollywood majors is to lower the prices of legitimate VCDs. As a result, however, profit margins for all involved are narrowing (see Screen Digest, 2000), hence increasing the temptation for authorized replication plants to use spare manufacturing capacity to produce illegal products. Furthermore, with the increasing efficiency of the production lines, some of the plants also face problems of over-capacity, resulting in over-production and export of illegitimate products.
o DVD improves the quality of pirated VCDs!
　　　One of the interesting and, to a certain extent, ironic consequences of the DVD development is that it actually helps raise the quality of pirated VCDs. The best quality of pirated VCDs is found in those that are recorded from a DVD master (Screen Digest, 2000). On the covers of pirated VCDs, in fact, many of them boast of “DVD version” to indicate the high quality of the recordings and to attract potential buyers. The days of the hand-held camcorder “cinema version” are long gone in major cities, as urban consumers are demanding higher quality of the pirated VCDs they purchase, which nevertheless come to the market slower than “cinema version.”
o The Supply and Demand Imbalance.
　　　Part of the VCD piracy phenomenon is a simple mathematical matter: the demand for VCDs far surpassed the supply. Both Zhang Hui Guang,34 Vice Director of NAPWC, and Jiang Ning Yuan,35 Managing Director of United East Audio & Video Co., Ltd. (UEAV), Warner Bros. Home Video and Columbia TriStar Home Video licensee in China, used the same formula to illustrate this important factor. On separate occasions, they indicated that there were approximately 40 million VCD players in China. If each comes with a demand of 20 VCD/year, there would be in total 800 million discs a year of demand. In 2000, the legal supply of VCDs was 200 million discs, which leaves 600 million unmet demands. UEAV, for example, releases 10 legal titles a month, which is insufficient for the market, herein lies the crisis of content supply shortage. Pirated goods thus provide an easy solution for the shortage of content sources.
　　　
Flexible Trans-Border Networks and Flows
 Even though this is a study of film piracy in China, it does not suggest that it is possible to isolate the issue and view it solely within China. It would also be seriously remiss not to examine the multi-leveled and multi-layered flows that take place intra- and supra-nationally. That pirated goods move at such extraordinary speed and efficiency around the globe is an indication of the network power pirates possess. Piracy in China operates in an inextricably complex market plexus (see Latham, 2000) where multiple networks intersect and interact. In light of earlier discussion of the global flow of goods and of the market plexus, in this section we will examine and problematize issues surrounding the ultra-fluid and flexible piracy networks in and around China.
o Above Ground --> Underground --> Overseas --> Back Again.
　　　The fluid piracy routes and strategies have reflected a highly sophisticated and flexible spatial organization. Zhang Hui Guang of the NAPWC described it the best when she summarized the movements of the piracy actions in and around China: it was first driven from above ground to underground; then from domestic/underground to overseas; and finally from overseas the goods are smuggled back into domestic underground.36 What these stages and routes demonstrate is precisely the working of flexible piracy networks and their connectedness and resourcefulness. These movements certainly correspond to Special 301 actions and the subsequent Chinese anti-piracy offenses summarized earlier.
　　　After being named a Priority Foreign Country in 1994, the following year marked the first phase of the “all-out offensive” to contain piracy (The NAPWC Report 2000:11). The focus of this phase of action is on regulating the authorized and legal replication plants’ aboveground piracy activities. Between 1992 and 1994 there were reportedly 19 replication plants with 40 production lines,37 with production capacity of 3 million VCDs per year. The aboveground and more or less open piracy activities by legitimate plants were therefore driven underground, which marked the second phase of anti-piracy offensive as well as the peak of underground piracy in 1996. According to the NAPWC, the second phase of offensive had successfully forced the pirates to take their facilities and activities overseas, but only to see finished and high-quality products flowing back into China through various channels. The third phase (1997) then dealt with such smuggling activities from overseas, while the fourth (1998 till present) involves international collaboration.
 In the meantime smuggling is no longer restricted to the coastal provinces. The entry points have indeed expanded to include those of inland provinces. A recent hot spot is along the China-Myanmar (formally Burma) border. Some of the pirated VCDs now enter China through Yungnan province that borders Myanmar (The NAPWC Report, 2000). On May 16, 2000, China seized and destroyed 250,000 VCDs along the Yungnan-Myanmar border, one of the most important VCD smuggling cases in recent months. The discs seized were copies of 75 different films, mostly Hollywood movies and a few Hong Kong ones.38
o Greater China and the Intra-Regional Flows.
　　　The development of VCD technology and of piracy is closely related to the intra-regional activities. Even more crucial are the flows among the Chinese Mainland, Hong Kong, Macao and Taiwan, or what is known as Greater China. Hsing (1998) has pointed out that while capital might not be as concerned about national boundaries in the global economy, it is still very much formed by cultural and institutional boundaries. The “Greater China Economic Circle” that has been the center of much recent scholarly and practical attention is also a “Greater China Piracy Circle.” The extraordinary fluidity and volume of piracy flows among the three territories are an indication of not just geographical but cultural proximity. A production line distributor who speaks the same language and understands the customs would be able to sell the equipment much easier than one that does not. A distributor of pirated products would be able to get a better grasp of the local tastes and needs easier than otherwise. The two local conditions in southern China that Hsing (1998:11) cited as having set the platform for interaction with transnational capital are also true for the operation of pirate networks: (1) southern China’s connections with the outside world through Hong Kong, and (2) the existence of a large pool of qualified labor.
　　　Greater China however is not the sole area where pirate networks operate. It is common knowledge that the process of piracy involves multiple locations. Currently, one of the popular routes entails a master from the US, a stamper made in Malaysia or Taiwan, replication in Hong Kong, distribution first in Mainland China, 39 and then going for the global markets.
　　　The emergence of Malaysia as a major player in the East and Southeast Asian piracy networks in the late 1990s is closely related to the activities in Greater China. When Mainland China and Hong Kong were cracking down on pirate productions and the export of optical media products in the mid- to late-1990s, pirates as well as production facilities moved to nearby Malaysia, an attractive destination for both production and distribution of pirated optical discs (see 2001 Special 301: Malaysia). Through the causeway between Malaysia and Singapore, pirated goods are trafficked to Singapore. Through Malaysia’s ports, pirated goods are further sent throughout Asia, Latin America, Europe, New Zealand, Australia, South Africa, and Canada.40
　　　Another example of the Malaysia connection is the VCD piracy map presented in Chart 3 of The World Is Not Enough, the James Bond film in 1999. The film had its world premiere in Kuala Lumpur, Malaysia, on November 19, 1999. Pirated copies were found in India, Pakistan, Thailand, and Hong Kong within a week, and in China within 10 days.
　　　
Chart 3: The World Is Not Enough
Piracy Map compiled from IIPA 2001 Special 301: Malaysia

　　　
Profiles
 Finally, during my research trip in China I encountered and interviewed a cross section of people on their consumption of pirated movie VCDs. They make very conscious decisions to consume pirated VCDs and are very clear about how such behavior empowers them. While monetary incentives are certainly a common motivation, there are other different and much more complex reasons behind their decisions. The following is a selected few that represents different backgrounds and preferences. For privacy and security reasons, they shall remain nameless.
o A group of graduate (Master’s) and undergraduate students in Beijing.
 For college students, both undergraduate and graduate, pirated VCDs provided them with a source of affordable film entertainment. On the college campus where I interviewed some of the students, there is a student-operated on-line movie and music service with extensive lists of contents. A student committee is put in place to be in charge of the Internet entertainment selections. The extensive film lists include those of the US, Hong Kong, Taiwan, and the Mainland origins. There are also channels featuring documentaries, television series, and traditional theatre pieces (e.g. Peking Opera). In the computer lab that I visited, there was a projector and a screen onto which the Internet movies could be projected. Most popular among this group of students are American and Hong Kong films. I found on the list during my visit in June 2000 some of the most recent Hollywood and Hong Kong releases (which indicated that illegitimate copies were used). In addition to these free on-campus services, pirated VCDs for private viewing are a major source for the students’ film entertainment. They rarely go to cinemas for movies, as tickets are too expensive. An average student ticket costs $15RMB (approximately US$2). An average Adult ticket costs between $25 and $30RMB (roughly US$3-4), depending on the film. A ticket for Titanic went as high as $80RMB (about US$10). When a pirated VCD sells in Beijing for about $10RMB (about US$1), the choice is obvious.
o A college professor in Beijing.
 Professor S is in his late 30s, teaching statistics. For his personal viewing, he prefers American action films. He often bases his decisions of which pirated VCDs to buy on what he reads in the newspaper or on the Internet regarding the latest and hottest Hollywood releases. When I interviewed him in June and July of 2000, he was searching for MI2 and U571, both new US releases. He found copies for $10RMB each for both films. He also buys computer and statistics software from the same pirate source. The legitimate SPSS program, for example, was selling for $12,000RMB (approximately US$1,500), but the pirated version costs only $8RMB (roughly US$1). Ditto with Windows products. An otherwise $1,700RMB (around US$200) worth of Windows 95 was selling in the pirate market for RMB$8. When I revisited Professor S in November 2001, he had already purchased the pirated version of the new Windows XP. He felt that he had no choice but to resort to the pirated copies. He and his classes simply could not afford to purchase the legitimate version. To him, pirated software is indispensable for the development of national higher education.
o An engineer in Shanghai.
　　　Mr. L is in his mid-40s and is an upwardly mobile white collar Shanghainese engineer residing in a working class neighborhood. For his work, he travels to Europe frequently and is therefore quite cosmopolitan. A very reflexive and self-conscious person, he sends his 14-year-old daughter to a private English cramp school after hours, hoping she would grow up even more cosmopolitan than himself. He proudly told me that Pudong, a newly developed financial center in Shanghai, east of Huang Pu River, is “the Manhatten of the East.” Mr. L also buys pirated VCDs and he loves American movies. When I told him pirated VCDs were selling for $15RMB each in a neighborhood of Shanghai where foreign businesses aggregate, he told me in his neighborhood they were selling for $5RMB each. His reasons for buying pirated VCDs instead of renting or going to the cinemas are price, speed and the need to be trendy and on top of the popular. Rentals are simply too slow, while going to the cinema too expensive. For him, he said, to take his family of three to the cinema, he would have to also take into account the cab fare, snacks, and ticket expenses, not to mention having to fight the Shanghainese crowd. To him it was simply not worth it.
o A sojourner Taiwanese businessman in Shanghai.
 Mr. K is in his late 30s and is a well-to-do Taiwanese businessman in Shanghai. He owns a real estate marketing company and employs 80 employees, both local and those he brought over from Taiwan. He is part of the large foreign business and investor phenomenon in China. He married a Beijing woman and has a son. Together they live in one of the most expensive and trendy neighborhoods in Shanghai where many of the expatriate business people aggregate. His new flat is designed by one of the most famous and sought-after interior designers in China. To him, Taiwan and China have already re-unified. Look at him, he said, he is the best example. In his spare time, he watches and collects pirated VCDs. When I interviewed him in summer 2000, he owned (and had already watched several times) the pirated Crouching Tiger, Hidden Dragon VCD, as the film was first premiered in Asia, months ahead of its US release. Mr. K’s collection includes films from all three parts of Greater China: the Mainland, Hong Kong, and Taiwan. He also has an impressive collection of arty American and European films. A film major in college, he is much more into collecting films and watching a variety of both commercial and independent arty films. To him, the price of pirated VCDs vis-à-vis that of a cinema ticket is not an issue. It is rather a matter of choice and availability of non-mainstream films. In his neighborhood, pirated VCDs are selling for $15RMB.
o A peasant couple and their high-school son in a Zhejiang Province village.
 Mr. and Mrs. W are former peasants turned physical laborers. They and their son live in a small and more or less isolated village in coastal Zhejiang province. The village is about a 6-hour train ride from Shanghai. They are in their late 40s with a teen-age son who is in high school. Mrs. W picks tealeaves for a living and makes around $10RMB (US$1.25) a day. Mr. W makes minimal wages delivering and pulling big rocks for a local cement factory. With Taiwanese relatives (“overseas connections”), they are still better off than many of their fellow villagers and they love watching Taiwanese and Hong Kong television series on VCD. Their son loves popular culture. He watches Hong Kong and American action movies. Mr. and Mrs. W told me these Hong Kong and Taiwan VCDs made them feel more connected to the outside world and to their relatives in Taiwan.
o A street vendor pirate in Beijing.
 Mr. Z is in his 30s and is part of the “floating population” (liodong renko) in Beijing. A former peasant from Anhui province in eastern China, Mr. Z and his wife and their toddler son share a tiny room in northern Beijing. He makes slightly above $1,000 RMB (around US$120) a month selling pirated VCDs. He sells movies, music and computer software. His major complaint about selling pirated VCDs is the lack of quality contents, especially those of major Hollywood films. Because most of his customers are recurring customers, he would have to accommodate their tastes and demands. He also gives them refunds when they happen to purchase a “cinema version” of VCDs (those shot with a camcorder in theatres and hence of poorer quality). When asked about the piracy networks and how they operate, he says he only knows the person who delivers the goods to him. According to Mr. Z, police cared more about cracking down on pornography than on pirated movies. In case of an arrest, he would be sent home without further punishment. And he would always return to Beijing where his son would have a better opportunity for good education.
Discussion
 
 In this section we will examine some of the theoretical implications. More specifically we will revisit the questions of network, power, and the state.

Networks and Boundaries
　　　When viewed in the contexts of networks and relations, film piracy in China represents precisely the intersection and transformation/deformation of various circulating entities. Because of the constantly shifting alliances and connections among pirate networks, and among the state, manufacturers, consumers, and a complex group of other relations, they also represent different topological possibilities (see also Law, 1999). The circulating nature of capital and digital technologies further accelerate the rate of realignments and changes of the topology.
　　　Because circulation and flows often involve directions, velocities, and forces, they result in the redefinition of boundaries (e.g. geographical, social, cultural). They also attest to the dynamic relations among various mechanisms of deterritorialization, dis-embedding, and those of reterritorialization and re-embedding. In the case of film piracy in China, such entities as global IP right treaties and agreements, legitimate and illegitimate border crossing images and products, international electronic developments and standards, have all gone through various transformation, deformation, and changes in their framed interactions with local sets of relations and forces.
　　　China’s conforming to global IP protection agreements and treaties (e.g. the Berne Convention, TRIPS), for example, is an act of translation, but one that involves lengthy, and framed, processes of negotiations, confrontations, and debates first among various PRC government branches, and then among the PRC government, the global trade regimes, and USTR, among others. The end product is a transformed and re-imbedded interpretation of international agreements that is contingent upon various levels and layers of local cultural, economic and political codes and specificities.
　　　The unique popularity and prevalence of VCD players in Asia further attests to important processes of reterritorialization, re-embedding, and most of all deformation. It is in fact a powerful example of the reversed flow of global electronics production. Philips, Sony and other transnational electronics corporations have been setting and defining the order of international audiovisual technology formats and standards. The VCD phenomenon in Asia is a rare case of defiance and triumph over major global corporations. Pirates and manufacturers, with the indirect blessing of the state and consumers, were able to turn a soon-to-be-obsolete technology around to their advantage and meet the local businesses’ and consumers’ interests, while actively and reflexively defining their position vis-à-vis the global economy. To combat VCD piracy, Hollywood majors had to go back to a technology they had long declared obsolete and produced VCD versions of their films for the Asian markets. Strictly speaking, Asian hardware manufacturing industries did define formats from options controlled by transnational corporations, VCD in Asia still serves as an important example of a reversed flow while defining a new global order according to local needs and interests.
　　　Finally, the windowing strategies (of sequencing films through different exhibition outlets and price differentiation approaches) long practiced by Hollywood, as well as the policing and classification of regional DVD zones by MPAA and DVD Copy Control Association (DVD CCA) to prevent foreign DVD markets from stepping out of line, have proved to be ineffective.41 Through the aid of digital technology and the operations in a more or less code-less environment, piracy networks are able to undermine and challenge the copyright industries’ critical need to command space and control time. Therefore, while Hollywood products are dominant in the global popular cultural landscape, the when, how and exactly what get to be distributed are clearly out of their control.
　　　
Power as Relations

One can say contradictory things about the modern state; on the one hand it is withering away, but on the other it is more urgent than ever…. That is how one can sketch and fill out the image of a state that, like a snake, is shedding the skin of its classical tasks and developing a new global ‘skin of tasks’.    
Ulrich Beck (1994:38; emphasis added)

　　　As mentioned earlier, film piracy in China challenges the way we think about power. It problematizes the loci of power and how they function. From the above discussion, it is also clear that the state still holds significant power in coordinating, negotiating, and enforcing codes on the circulating entities. The continuous saga of Sino-American Special 301 negotiations, and the resulting state-pirate tug of war, for example, illustrates some of the most fascinating dynamics and dialectic of control, power, and sovereignty.
 So far the existing literature on state sovereignty vis-à-vis global trade and IP regimes (e.g. Ryan, 1998; National Research Council, 2000) tends more or less to fall into the framework of what Talcott Parsons has critiqued and termed as the “zero-sum” concept of power.42 Power in this framework is defined in terms of certain mutually exclusive objectives in that one person or one group possesses power to the extent that a second group or person over whom the power is wielded would not be able to seize. To be part of the global economy, or to submit to global trade regimes, then, a state is viewed as giving up sovereignty and hence control over its regulatory, functional, and territorial boundaries.
　　　While it is hard to deny the necessarily hierarchical nature of power (see Giddens, 1977, collected in Cassell, 1993:220) where interests between the power-holders and those subject to that power often clash, power relations are rarely absolute and constant as demonstrated by the Sino-American negotiations and the state-pirate maneuverings. Parsons’ own framework of viewing power as a “non-zero-sum game,” and as a “relation from which both sides may gain,” instead provides a more adequate conception of power as a “circulating medium” generated within the functional subsystems of the society (Giddens, 1977, collected in Cassell, 1993:213). Power would then have to be viewed within the dynamics of those involved. In this sense power is not absolute, instead it has to be viewed in relations and, indeed, as relations.
　　　Similarly the Actor Network Theory provides a different way of seeing and approaching the world and understanding issues of power. Thinking topologically, therefore, one is able to see the “material resistance argument” that Latour (1996:370) advocates. Strength in this sense comes not from concentration and unity, but rather from “dissemination, heterogeneity and the careful plaiting of weak ties,” and is achieved through “netting, lacing, weaving, and twisting” of these ties. Such understanding has great implications for issues of power, networks, membership, boundaries, sovereignty, the state, piracy, and distribution.
　　　In such a framework, then, the constant negotiations between the U.S. and China, and the cat and mouse game between pirates and the state, can be more adequately examined. The fact that the U.S. has to rely on repeated threats of coercive sanctions does indicate an insecure, shallow, and unstable base of power. China’s decision not to deter the development of VCD technology could also be read as a resistance to the somewhat hegemonic global optical disc standards and practices (e.g. the DVD zoning practices). Finally, China’s entry into WTO and its collaboration with other global regimes or regional alliances are part of its effort in strengthening its power base and negotiation leverage. After all, order is produced by “assemblage” (Lee & Stenner, 1999:100), that parties meet and become “assembled” with others in a manner that would increase the power of all concerned and would yield a new entity that is more powerful or profitable than any participants acting alone.
　　　The crucial question is, then, whether the institutional order of the capitalist economy and the state have to be necessarily treated in zero-sum or “constant-sum” terms, “assuming that any increase in power in one sphere implies a diminution in the other” (Bromley, 1999:16). Given that power can be both competitive and collective (Bromely 1999), why could it not be viewed as both a constant-sum/zero-sum phenomenon in some aspects and a positive-sum one in others? In the case of both the copyright governance and TRIPS, and the Sino-American negotiations, for example, state power is not only indispensable and instrumental in implementing and enforcing international agreements, but also in reflexively negotiating and maneuvering its positions vis-à-vis transnational regimes and regional and domestic influences while shaping national information policies. Film piracy in China then brings into play complex relations of power and control.
　　　
　　　

Conclusion

　　　In the previous sections we have mapped the issues of film piracy in China in terms of cultural policies, film distribution and the ensuing market imbalance, Sino-American Special 301 negotiations, hardware software dynamics, and networks and flows. While it touches only the surface of a very complex issue, the above mapping has shed some light on the subject. 
　　　Theoretically we have taken a network- and spatial-oriented approach in examining film piracy in China. By emphasizing the circulating and network- and relations-oriented processes of globalization, we have re-framed the issues surrounding film piracy in China in the contexts of technology, power and the state. We argue that as a result of both the regulatory and theoretical fractures, piracy offers some of the most interesting and intricate insights into the matters of control, space, and the global economy. The fact that piracy networks operate in and around formal and “legitimate” copyright industries and institutions further challenges the way we see and theorize the regulatory and functionary capacities of the state.
　　　In other words, piracy brings out extremely complex issues of power vis-à-vis the state, Hollywood, transnational regimes, technology and the consumers. In one sense even though piracy has cut into the profit margin of the Hollywood majors, it has also reinforced Hollywood dominance in global image markets by circulating Hollywood products and consequently cultivating and creating an environment and demand for more such contents. Furthermore, while piracy challenges some aspects of the state power (e.g. law enforcement), it helps in others. It has, for example, helped the state machines by stabilizing the labor market via employment of various levels of workers (e.g. in retail, manufacturing, and transportation sectors, to name just a few), by contributing to tax revenues through various channels (e.g. hardware and software manufacturing and distribution), and by providing much needed and affordable forms of entertainment and escape to the increasingly anxious public in a society in transition.
　　　Meanwhile, while what are traded, desired, and consumed are still Hollywood movies, digital technology has offered consumers unprecedented power and autonomy. While Hollywood still determines the contents that are circulated in the global distribution and piracy pipelines, consumers are constantly negotiating and interpreting individual local existence by consciously selecting those products that best suit their interests. Furthermore, with the development of digital technologies and the subsequent reduction in the costs of information services and easier access to content, consumer sovereignty would no doubt increase (see Hoskins et al., 1997).
　　　Finally, issues of piracy have highlighted the central, indispensable and indeed highly intricate roles the state plays in negotiating on the one hand with international trade regimes and transnational corporations and on the other with piracy networks. The fact that bilateral and multilateral trade and intellectual property treaties and agreements require national implementation and enforcement has given the state certain leverage. The highly ambiguous and inextricable relations among the state, piracy networks, and Hollywood further point to complex and indeed chaotic nature of the current form of capitalism. The above case study demonstrates precisely such plurality of strategies, maneuverings, and manipulations all those involved deploy to acquire and maintain power.
　　　In sum, by focusing specifically on (1) the links and nodes of the networks (e.g. the state in transition, hardware and software manufacturers, state agencies, transnational regimes); (2) the directions, movements, and forces of the lines that connect the nodes and points (e.g. the operations of piracy networks; the mapping of routes; the reversal of global flows in the case of VCD); and (3) the re-alignment of spatial organizations and cooperation among various of networks and agencies (including those of the state, transnational regimes and corporations, and piracy networks); we have intended to re-conceptualize the loci of power, and how processes and mechanisms of reterritorialization have not only redefined boundaries, but also transformed, deformed, and even reversed the global flow of products, images, and ideas.
　　　
　　　
　　　
Notes
The authors would like to thank City University of Hong Kong for a generous research grant that funded this study. Shujen Wang would also like to thank Henry Geddes for reading and commenting on earlier versions of this paper.

1 See Jack Valenti, 2000
.
2 See IIPA Press Release, February 13, 2003

3 See “Copyright and Trade Issues,” IIPA website (www.iipa.com/copyrighttrade_issues.html) and later discussion.
4 The copyright industries can be divided into two categories, the “core” copyright industries and the “total” copyright industries. The industries include those that create copyrighted works as their primary product: the motion picture industry (television, theatrical, and home video), the recording industry (records, tapes and CDs), the music publishing industry, the book, journal and newspaper publishing industry, the computer software industry (also includes data processing, business applications and interactive entertainment software on all platforms), legitimate theater, advertising, and the radio, television and cable broadcasting industries. The total copyright industries encompassing the above mentioned core industries as well as portions of other industries which create, distribute, or depend on copyrighted works: e.g. retail trade, the doll and toy industry, and computer manufacturing. See “Copyright Industries in the U.S. Economy – the 2000 Report.”
5 See IIPA website (www.iipa.com) for its annual reports of “USTR ‘Special 301’ Decisions and IIPA Estimated Trade Losses due to Copyright Piracy and Levels of Piracy.”
6 By 2015, China will have 1.6 billion people. See Schwarzacher, 2001.
7 According to the “Copyright Industries in the U.S. Economy – the 2000 Report,” the real annual growth rate of the core copyright industries has been more than double that of the economy as a whole: between 1977 and 1999, the core copyright industries witnessed an estimated compound annual growth rate of 7.2% while the rest of the US economy at 3.1%. The copyright industries’ foreign sales and exports are also larger than almost all other leading industry sectors, including the combined automobile and automobile parts industries and the agricultural sector.
8 Although the “legitimate” transnational corporations (TNCs) do rely on, and indeed celebrate, deregulation to move smoothly in the world market, they require national regulations to ensure proper local protection, which includes laws and regulation (e.g. ban on parallel imports; copyright protections; labor relations), taxes and tariffs, legal entry, among others.
9 See Nordstrom, 2000
10 See Liu (1999:217). Other cultural markets include Cultural Entertainment, Audio-Visual, Performance, Print, Film, Artifacts, Cultural Tourism, Artworks, Stamps, and New Culture.
11 Ibid. and my translation (from Chinese).
12 Personal interview, Zhang Lihui, General Manager, Warner Home Video, China, June 9, 2000, and Wang Yung, MPA Legal Counsel, June 5, 2000. Zhang was in charge of WB-China’s theatrical distribution from 1995 to 97.
13 Personal interview, Wang Yung, Legal Counsel, Motion Picture Association – China, June 5, 2000. See also Parkes (2000).
14 According to Wang Yung, MPA legal counsel in China (see note 8), under revenue-sharing agreements Hollywood majors receive roughly 15% of box office revenue. Zhao Jun, vice head of Guangdong film company, provided me with a much more detailed breakdown: for each sold ticket 46% will go to China Film, the monopolistic Chinese import/export distribution office. From the 46%, 13-17% goes to the Hollywood majors depending on the performance of each film. The remaining 54% would go to local film companies that handle distribution in their localities.
15 See both Schwarzacher 2001, and Groves 2001. The end of China Film Corp. distribution monopoly was announced during the Shanghai International Film Festival held in Shanghai, China, from June 9 to 17, 2001.
16 See Liu (1999) and the PRC Radio and Television Association (1996) for detailed discussions of regulations and policies.
17 Personal interview, Wang Yung. See note 8.
18 Ibid.
19 I interviewed a white-collar engineer in Shanghai who indicated that he and his family would much prefer buying pirated VCDs than renting from Maya, a well established chain video rental outlet in Shanghai, primarily because of speed. One can easily finds pirated VCDs of newly released films while the legitimate VCDs are usually months behind. Personal interview conducted on June 18, 2000, in Shanghai.
20 See Neigel (2000) for a brief history of Copyright Law developments in China.
21 See “Copyright and Trade Issues,” IIPA website (www.iipa.com/copyrighttrade_issues.html).
22 See both IIPA Special 301 1999 Report: PRC, and Neigel (2000).
23 Ibid.
24 306 monitoring refers to Section 306 of the Trade Act, under which those countries that have had a Priority Foreign Country designation previous year and have already been subject to a Section 301 trade investigation are monitored. See USTR Special 301 Decisions (IIPA website).
25 The committee consists of The General Office of the State Council, the Publicity Department of the Central Committee of the Communist Party, the Political and Law Committee of the Central Committee of the Communist Party, the Ministry of Public Security, the Ministry of Railways, the Ministry of Communications, the Ministry of Information Industry, the Ministry of Culture, the general Office of Customs, the Civil Aviation Administration of China, the Administration of Broadcasting, Film and Television, the State Administration for Industry and Commerce, the Press and Publication Administration, the Publicity Department of the General Political Department of the People’s Liberation Army, the People’s Government of Beijing Municipality. See the Working Committee’s 2000 Report.
26 According to IIPA 1996  Special 301 Report, PRC, the source identification (SID) code (a title verification code) allows reliable tracing of CD products to the factories that they were produced in.
27 Personal interview with Zhong XiongBing, Director, Guangdong Freeland Audio & Video, Paramount and Universal licensee in China. June 21, 2000, Guangzhou.
28 Personal interview with Pioneer Chan, Director, Golden Image Video & Audio International Limited, on June 23, 2000, Guangzhou.
29 Paramount is the only major US studio to still hold out against distributing legitimate VCDs. See Screen Digest (2000).
30 See reports from The Economist (1999) and Television Digest (1994 & 1993) for a brief history of early development of the VCD technology.
31 Interestingly, equipped with indigenous decoding schemes, VCD players made in China have a higher degree of tolerance for technical glitches and thus can show pirated VCDs in a better quality than the more expensive imported players do.
32 I had interviewed VCD lines owners and distributors and they seemed to believe this is the case. Due to the sensitivity of the subject matter, they have requested to remain anonymous.
33 Personal interview, He Ping, Consultant, Columbia Pictures Film Production Asia, July 6, 2000, Beijing. Ho is a Chinese director.
34 Personal interview conducted on June 6, 2000, Beijing
35 Personal interview conducted on June 8, 2000, Beijing
36 Personal interview conducted on June 6, 2000, Beijing
37 Personal interview with a production line distributor, who requested to remain anonymous, conducted on May 26, 2000, Hong Kong.
38 Personal interview with Zhang Hui Guang, June 6, 2000, Beijing.
39 Personal interview with Zhong XiongGing, Director of Guangdong Freeland, licensee for Paramount and Universal, June 21, 2000, Guangzhou, China. Mike Ellis, director of MPA’s Asia-Pacific Anti-Piracy Operations also confirms this usual route for pirate networks.
40 Between 1999 and 2000 fiscal years, for example, there was a nearly 3300% increase of counterfeit products from Malaysia seized by U.S. Customs.
41 Through the production of DVD players that overwrite the zoning restriction (which most Asian players are), hardware manufacturers indeed work with pirates in increasing the consumers’ selections.
42 See Giddens’ extensive discussion of Talcott Parsons’ writings on power (Cassell, 1993:212).

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