Companies thinking about hosting event in Beijing next summer…think again.

Recent reports in the Chinese press indicate that from April 30, 2008 - July 31, the Chinese government will “severely restrict” major promotional gatherings, and will ban the events outright from August 1 - September 23 . Though it remains to be seen how the policy will play out, the ramifications on the communications industry could be massive.

Many companies have been counting on hosting events during the Olympic season in order to capitalize on the unprecedented enthusiasm that the government has been drumming up for more than six years; event planning and public relations firms, which are primarily focused on event planning and management are now bracing for what could be a severe blow to their marketing business.

Though the Olympic committee has a legitimate right to protect against ambush marketing, and while it is recognized that the local government is preoccupied with keeping a handle on things during this sensitive time, this new policy unreasonably punishes many company’s who have unwittingly built their operations around the Olympic economy. One can only hope that, like many Chinese regulations, it goes unenforced.

For a full translation of the original article and the policy itself, see below:

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The last six months have been less than friendly to Chinese exporters and increasingly, it appears that US consumers are forming blanket opinions about the safety and quality of Chinese made products. As the complaints from the US side and the rhetoric between China and the US continue to build, one must question if this is simply a bump in the road or the beginning of a major trend where Americans become increasingly resistant to all goods stamped with the “made in China” label.

There are a few factors that must be considered that seem to have been overlooked by much of the media coverage. One big issue that has not received its fair share of coverage is the fact that American politicians are looking for reasons to make the “China issue” a campaign issue and these consumer scares not only give them an opportunity to further push trade protectionism, but also play to the voters that feel that their safety (and the safety of their defenseless pets) is at risk. China Law Blog captured this point by highlighting how Alabama senate hopeful Ron Sparks has used scares over the safety of Chinese seafood to further his attempts to protect Alabama’s fish farming industry.

Another factor is that in reality, the typical American consumer has only a partial understanding of how critical China is to the global supply chain. It’s one thing to avoid buying cheap toys with “made in China” written all over them, but it’s another thing to take the necessary time to sift through the opaque supply chains of every piece of merchandise that one buys to determine if products were partially sourced or assembled in China. This The World is Flat type complexity would be a major obstacle if a consumer were to try and boycott Chinese goods until they felt that the Chinese government was sufficiently ensuring safety and quality.

A huge driver behind the rhetoric that is building between the United States and China is that the Chinese government is completely unfamiliar with how protected consumers in the United States are made to think that they (we) are. Chinese consumers are increasingly vocal about food safety issues but because of the nature of the Chinese political system, their complaints have traditionally not made much of a difference (this definitely seems to be changing though). In the United States on the other hand, when we feel that this trust between supplier and consumer has been violated (and government agencies fail to catch it) it sparks a public and media outcry that usually then gets picked up by the political sphere.

The only way to reverse the current trend is for China to take concrete action in better ensuring that their exports are safe, and they seem to be doing this. The fact that they did it in a manner that according to this New York Times article was rushed and haphazard suggests that they are also realizing the urgency of taking action before American politicians and the foreign media escalate it beyond their control.

I’ll admit it. I am a HUGE Harry Potter fan. I preorder books, read them within the first 48 hours, and then again two months later when the magical withdrawal becomes unbearable. I frequent the various Harry Potter blog sites, and am even guilty of watching the ‘behind the scenes’ features on the DVDs. Yes, it might be pathetic, but at least I am not alone. There were millions of us who waited with bated breath on July 21st for the official English-language release of the seventh and final book in the series, “Harry Potter and the Deathly Hallows”. Within the first 24 hours, the book sold 8.3 million copies in the U.S. alone.

Having resurfaced from my 48 hours of Harry Potter isolation, I, like many, continue to search for J.K. Rowling interviews and other related commentaries in a sorry attempt to keep the magic alive. What I found was quite astonishing. The most fruitful attempts to maintain this magical momentum were not, in fact, attributable to the 8.3 million American fans, nor to the scores of English-language readers worldwide. Instead, the Chinese, who still await the official translated version of the final book, constitute the driving force behind the unofficial Harry Potter phenomenon.

Preempting the Harry Potter craze, Chinese publishing houses have printed unauthorized translations of real Harry Potter books as well as fake copies of the most recent English-language edition. Such book piracy is not surprising, as 30 to 40 percent of all books for sale in China might be illegal. What is surprising, however, is that the Chinese have evolved past counterfeiting as a means to capitalize on the success of the Harry Potter phenomenon. Myriads of budding Chinese writers have taken it upon themselves to recreate the magical epic, publishing unauthorized Harry Potter titles that may or may not parallel the original. Such titles include “Harry Potter and the Half-Blooded Relative Prince,” “Harry Potter and the Hiking Dragon,” “Harry Potter and the Chinese Empire,” “Harry Potter and the Young Heroes,” “Harry Potter and Leopard-Walk-Up-to-Dragon,” and “Harry Potter and the Big Funnel.” Dozens of these titles are hawked on street corners and even cataloged in school libraries. Some imitate the original text, while others weave in plots from other established authors like J.R.R. Tolkien. Still others swap protagonists with those from well-known kung-fu epics and Chinese literary classics.

The most notable such invention is entitled “Harry Potter and the Showdown,” a 250,000-word novel that replaces Book Seven. The novel was written by Li Jingsheng, a manager at a Shanghai textile factory, in order to allay his son’s fierce anticipation for the release of the final book. The finished manuscript was placed online and has received rave reviews from its 150,000 readers. One such comment of praise from Gu Guaiguai, an enthusiastic fan, reads, “I wonder if Rowling would bother to continue to write if she had read [‘Showdown’].” Despite receiving no interest from publishers, “Showdown” is nevertheless being sold in a bound version on the streets of China’s major cities. The source: the People’s Literature Publishing House (the official publisher of the Harry Potter series in China), which denies any association with the fraudulent novel. Seemingly innocent, the publishing house’s director of business development, Sun Shunlin, recently reminded the public that, “You are not supposed to use the name of Harry Potter anywhere else other than J.K. Rowling’s own books.” Thank you, Sun, for clearing that up.

Other publishers are not so quiet about their attempts to piggyback on the success of Harry Potter. “We published the book out of a very common incentive. Harry Potter was so popular that we wanted to enjoy the fruits of its widely accepted publicity in China,” explained Wang Lili, the editor of the China Braille Publishing House. Wang is referring to the knockoff book “Harry Potter and the Chinese Porcelain Doll,” published in 2002.

Wang’s attitude towards piracy is shared by many in China, despite recent government attempts to reverse the rampant violation of intellectual property rights. Such efforts have been slow to take effect, as one can still purchase knockoff prescriptions, DVDs, artwork, and even automobiles. With regards to book piracy, Wei Bin, editor of the Writers’ Publishing House, concludes that, “The focus of the government is not to fight against piracy. It seems they fight harder for banned publications, like pornography, political books, such as things written about the leadership, the government, and historical matters like the Cultural Revolution, and the Anti-Rightist Campaign.”

Perhaps Mr. Wei has a point. In the struggle to uphold IPR, the Chinese government might respond more fervently to products which seemingly threaten political and social stability than to any economic retaliation or sanction from the international community. While ‘Counterrevolutionary Viagra’ is an unlikely innovation, “Harry Potter and the Deathly Coal Mines” is not, especially given the rise of citizen journalism and public opinion in China. Until the release of “Deathly Coal Mines” and the subsequent crackdown on literary fraud, however, I will be enjoying my copy of “Showdown.”

Source: Only in China: Harry Potter and the Big Funnel By Howard W. French New York Times

So how does Public opinion influence businesses in China? Well, looking at the effect of internet users insisting on Starbucks leaving the Forbidden city reported on this site and others, it seems that public opinion has quite an effect on various businesses.

Case in point: a Beijing TV posted a story 3 weeks ago detailing how 40 to 50% of all bottled water sold in Beijing was simply bottled city water that had undergone little or no filtration. My roommate and I immediately started boiling water and bought our own filtration system. A visit to my local water delivery company revealed that their business has significantly dropped since the report came out (25% by their estimates), and they had enacted measures to double check the quality of their water. They are a licensed business and according to their manager only use “qualified sources” of water. They also mentioned other water businesses were facing the same problems they were.

This case highlights the lack of trust in the quality, safety and hygiene of the distribution systems for public goods. Here in China so much goes unregulated, and even if regulated, most products or services have no guarantee on quality or safety, as we have seen in the recent Chinese FDA case. Most Chinese consumers are wary of this but have few options. You will note that most recent large scale public protests have been against foreign brands, e.g. demonstrations last year against Japanese products and the Starbucks Forbidden City case. Both of these are more along the lines of nationalism, and highlight the growing influence of Chinese Consumers, but this influence falls short when applied to consumer product safety issues. Unfortunately most Chinese consumers have only two choices, to continue to purchase the goods, or simply forgo them altogether. Some local reporting when combined with public outcry have been effective in revoking licenses or clamping down on illegal business practices, such as the recent reports on abuses by brick kiln owners in Shaanxi Province. This, when viewed with the Starbucks Forbidden City case makes a strong argument for a Chinese public that is becoming increasingly aware and outspoken on a growing range of issues.

In a former post, I questioned the effectiveness of the online uprising in protest of a Starbucks in the Forbidden City. However, Starbucks announced at the end of last week that it is closing the shop. The reason stated is that the Forbidden city has decided that it will take over management of all commercial shops in the compound.

Considering that the online attacks subsided six months ago, it is surprising that this development happened now, but it is quite likely that the delayed change in policy at the Forbidden City and the subsequent departure of Starbucks is merely a way for all parties to ’save face.’ By waiting six months, both the Forbidden City management and Starbucks can avoid looking as though they have directly bowed to online pressure. However, it would be hard to deny that the online campaign had some effect on the decision.

This result does indeed indicate that the Web is an important influencer on business decisions in China…certainly more influential than this writer previously thought.