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>> Welcome and thank you for standing by.
At this time all participants are in a listen-only mode.
During the question and answer session, please press star one
on your touch tone phone.
Today's conference is being recorded.
If you have any objections you may disconnect at this time.
And now, I would like to turn the meeting
over to Ms. Andrea DaSilva.
Thank you.
>> Thank you Mary.
Good evening everyone and good morning to those
of you joining us early on in China.
Welcome to our webinar titled "The Music Industry:
Selecting Partners
and Protecting Your Intellectual Property Rights in China."
My name is Andrea DaSilva I'm the Policy Analyst for the Media
and Entertainment industry here in Washington DC
at the International Trade Administration which is part
of the US Department of Commerce.
Before introducing our panelists, these are experts,
I need to cover just a few housekeeping items.
At the end of the webinar, we will offer the Q
and A session Mary just mentioned
and the phone lines will be open.
The operators will come on to instruct you how to proceed.
You'll be on mute until then as you know.
So you won't be able to ask questions until the very end.
But we do welcome your input so please stay on.
We'll also e-mail all the presentations
to the registered participants after the webinar
and we will post the webinar on mine
at STOPfakes.gov and export.gov.
If you were to experience any difficulties logging on,
you can call the conference registration.
That number is 1-800-475-5000 and ask
for technical assistance.
If you're not able to log on, you can e-mail Dawn Bruno
at dawn.bruno@trade.gov and she can send you the PowerPoint
presentations if necessary.
So onto the program.
Last year, after I participated at the American Association
for Independent Music's Indie Week in New York City,
I started to work pretty closely with Rich and his team
and we've been looking for ways to provide support
to your industry that would be practical and meaningful.
And it really is a pleasure to work
with the independent sector.
You're creative, you're dynamic,
and you represent a fantastic industry that converges support,
technology, intellectual property challenges.
Your industry is comprised mostly of small businesses
which is the landscape of our economy.
And you truly represent what is uniquely American abroad
in a lasting manner and you also collaborate
with foreign counterparts in so many different ways
to support the overall global music business.
So we're started to talk with you about China
in the music industry in the hopes
that you'll increase your toolset
so you're better equipped to export.
In addition, if you're registering other topics
in the future please send your ideas there over to us
and we'll post our e-mail addresses
at the end of the webinar.
The Chinese market holds robust potential
and our speakers Tim Smith,
Deputy head of the Dispute Resolution Team
at Rouse' law firm also based in Beijing will talk
about the current environment for your industry
with an in-depth discussion of the intellectual property regime
and a wide background, he was previously an executive
of the IFPI and then an expert on the recording industry,
equally qualified Mr. John Grobowski partner
at the law offices of Faegre Baker Daniel's in Shanghai,
is a China expert and a leading merger in acquisition attorney
and he will discuss among other things the fine points
of partnering and cooperative joint ventures.
He lofted here from our Export Assistance Center
in New York City, Dawn Bruno.
And she has been my partner in setting
up this webinar, thanks Dawn.
Here in DC, Raquel Cohen will talk
about what the US Government is doing to support your efforts
to protect creative content and force IP rules around the world.
Unfortunately Janice Wingo will not be joining us during the
question and answer session, but we hope to hear
from her on future webinars.
I now turn the microphone
over to Rich Bengloff our fearless leader and President
of the American Association of Independent Music
who has just got from MIDEM [inaudible].
Rich?
>> All right, thank you very much Andrea.
I'm going to be brief.
This journey for A2IM started two years ago at MIDEM.
When we were walking around, we just completed our 7th MIDEM.
But we just started talking to people at all other the stands
from around the world and we noted
that they were all getting government assistance,
actually not all, 30 out of 32 we're getting
government assistance.
The US press one otherwise and then I said, "Gee,
this doesn't seem fair in your board, the A2IM board due
to the initiative we should follow.
This is compounded by the IFTI,
the International Trade Organization Statistics
which have zones since 2005 to 2010.
The US market share of the music industry at wholesale has fallen
from 34 percent of the world market
to 26 percent of the market.
That's an awful statistic which we need assistance to reverse
and the way we reverse it and make a living
which is the most important thing to small businesses
as Andrea said is by increasing our share of exports.
We've gotten very lucky as a result,
we started a year and half ago.
You had a contention of about 10 of combination of the members
of A2IM from around the country.
We converged on Washington and started making contacts.
Fortunately one of the contacts we made was at commerce.
We recently won for New York State Members a STEP grant.
The trip's been postponed but we plan to go there later this year
and visit the Asian market to make end roads there.
And in two weeks we'll be filing what's called an MBCP grant
for all our members from all around the country to be able
to participate in overseas trade missions.
That's our goal.
That in a nutshell is what we're up to
as an organization in A2IM.
But I really want to give a big thank you to Andrea DaSilva
down in DC and Dawn Bruno up here in New York who worked
for the US Commerce ITA.
They've been fabulous partners for the last year and a half,
really guiding us, being our advocates, watching out for us.
We couldn't be where we are without them.
So I'm going to-- as I turn it over to Dawn,
with a big thank you to Dawn and Andrea who spoke before,
we thank you all-- all of us thank you two, very, very much.
Dawn.
>> Thank you Rich and thank you Andrea.
I'm really happy to be working with this industry.
I'm a Senior International Trade Specialist who is
in the US Department of Commerce and I'm located
in our office in New York City.
We do have offices in almost every major US City
and many smaller cities as well.
And our counterparts are in the US embassies
and consulates overseas.
And the way that we work is by industry sector.
So we have specialists in the embassies who worked
with our colleagues here in United States to help small,
medium-sized businesses sell their products overseas,
find new markets, find buyers,
find partners, overcome challenges.
And it's a great service to companies
that don't necessarily know that we're out there to help them
and be their advocate.
So we really-- I really enjoyed starting to work
with the music industries,
starting to work more with A2IM members.
I will be sending follow up information after the webinar
and I will connect all of you to your local US Department
of Commerce office and your local specialist.
And I encourage you to start-- start working closely with them
to figure out how we can best help you and support you
as you're doing international business.
And with that, I am going to turn it over to Raquel Cohen.
>> Hello everybody.
My name is Raquel Cohen and I am part
of the Department of Commerce.
I work in the office of intellectual property rights.
And I'm going to go over a couple
of basic resources the US government provides to protect
and enforce your intellectual property in China.
So let's get right into it and you're going to notice I'm going
to go through it pretty quickly
but you can always access the links and information
with the webinar that's been deployed to you later.
Okay, so the attorneys later on will go into these three details
but basically, the importance
of protecting your intellectual property in China is remember,
IP rights differ in the US and China.
So remember the three Rs which is registration, recordation
and remedies and I'll explain this a little bit more.
You want to protect your intellectual property in China
because it affords you different protections
for enforcement of your IP.
For example, one amazing program is provided by the customs
and border patrol in the United States is once you receive a US
trademark registration, you can record
that with Customs and Border.
And if you notice you have counterfeit goods
in China coming into United States Customs
and Border patrol will enforce your rights
and stop goods at the ports.
So that's a great program and I'll provide you the link later.
A couple of other remedies available to you here
in the United States, always know that you have
to enforce your intellectual property
because it's a private right.
So the US Government can only help you once you have exhausted
all your legal remedies.
The attorneys later on will explain your legal remedies
in China.
You can also always file a section 337 claim
through the International Trade Commission.
And if you Google that you could find out, you can protect
against patent infringement or trade secret infringement.
And then again, if there's any copyright infringement
which is probably more relevant to your business you should log
on to iprcenter.gov which is the National IPR Coordinating Center
located here in Washington DC.
.
And they'll start an immediate investigation
on any infringement and coordinate
with all the US government agencies.
So these are all great lengths to be aware of.
Another great resource which is put up on my office here
at the International Trade Administration is the website,
STOPfakes.gov, it offers a lot
of the US government intellectual property resources
about country specific.
We have a link to some China webinars which is put
on by my colleague Janice Wingo and you can actually go back
and listen to old webinars and it goes
over a copyright enforcement, how to do things in China.
So before you hire legal attorneys,
you can do some research and learn
about your protections in China.
In this website also, it offers also an online IPR training
module, to teach you the basics of intellectual property.
It also offers one hour of free consultation with an attorney
where there is the phone number you can call.
And if a program put on between the Department of Commerce
and the ABA, which is the American Bar Association,
and so that is a great resource.
I recommend that.
And it also provides information on IPR attaches.
So when you are on the ground in China,
we highly recommend you contact the embassy in Beijing.
We have special IPR experts
and they are well connected in the community.
So they are great resources if you're having any troubles
from the beginning of getting your intellectual property
protection to enforcing it as well.
We also have another feature which is more sophisticated
that if you have an ongoing issue with enforcement in China,
it's been there to say copyright and punishment.
You can forward that issue to my office here in ITA and we set
up a team and if we think it's a systemic issue
or a policy issue, we can raise it through different channels
within the government 'cause we have dialogues
with the Chinese government.
So if this is a systemic issue,
and you feel you have exhausted all of your legal remedies,
this is another great resource
of the US government can provide US companies.
Another great website is the embassy's website
which is featured here on this link.
We have recommendations-- a second the slides are moving.
The website offers information on local attorneys in Beijing
and resources, so it's a great resource as well.
And then lastly, I wanted to point out a couple
of intellectual property, first line of defense or common sense.
You also want to make sure you've got your partners as well
in China, and a great resource is expert.gov.
The US Foreign Commercial Service offers a great resource.
So they'll provide you information
on your business partners.
You also want to make sure
that you are actively protecting your intellectual property,
so the attorneys will go into more detail, but you want
to think ahead and project a budget.
So it's not just for protecting, but for enforcing your rights.
So that's very good to know.
And then you also want to think strategically.
So before you put your products out there, you put your music
out there, you put any brochures out there,
you want to make sure you have copyright protections
on everything.
You also want to make sure you have the dot CN
or any websites you have.
We've seen a lot of cybersquatting and said
to being a new trend in China
where companies see a future product coming into China
and may go ahead and reserve the website, the domain name
and they try to sell it back to you.
So, if you want to think five years ahead
in your business plans and projects where you're going
to be and make sure you get all those protections
in line before you start doing business in China.
And lastly, I would recommend
to make sure you have your copyrights or catalogues
for packaging and for business promotional material
and you want think strategically and you want to think
if you are going be in this for the long haul
and it's worth the investment.
And I want to thank you very much
and that was my presentation
and if you have any further questions,
please go ahead and contact me.
My e-mail address is right there Racquel.Cohen@trade.gov
and I specifically worked
with US companies doing business in China.
So I'd like to hear you know, what's going on
and if you have any questions early on to later
on in your business I'm always here for you.
So, thank you very much.
>>Hi. I'd like to now turn the mic over to Jim Smith.
All right Jim.
>> Well thank you very much and good afternoon,
good evening to all of you.
It's early morning here in China.
First of all, let me introduce myself
in Rouse very briefly just to give you some context.
And thank you, too, Andrea and Dawn
for the introductions as well.
Rouse is an intellectual property firm specializing
really in emerging markets where UK had courted from.
But we only do intellectual property and we've been in China
for nearly 19 years now starting in 1993.
I'm a partner here in Rouse and head the Beijing office here.
And my focus is on helping international businesses
operating in China and I specialize in,
is really in IP rights enforcement acting for a variety
of copyright owners in China and also some major trademark
and patent [inaudible].
My emphasis on background before joining Rouse in 2008,
I was with the recording industry with IFPI for five--
for nearly five years.
My focus there was on enforcing the industries' rights
around the world.
When I started, I was looking at some physical piracy issues
and optical disc piracy.
And then quickly that turned into a complete focus
on digital piracy issues.
And it was with IFPI being based in London that I got involved
in China in about 2005, 6.
And then we let the proceedings run by the industry
against both Yahoo and Baidu in China.
But the long story behind those are those
and I'll mention them a little bit later
as we get into the Webinar.
But let me get into the meat of it itself.
So what I'm-- so you can see the overview slide just to run
through what I'm intending to cover today.
And start with an introduction on the big picture,
have a quick look at China, and just look at some
of the statistics to see what it represents on the market,
or at least the potential market.
We'll then look at an overview of how you access
that market is really the regulatory picture.
Some of those points in the regulatory picture,
I know John Grobowski is going to go
into in further details following me, but I'll try
and give an overview of the issues there.
I'll put up some statistics
about the legitimate music market.
So given that regulatory picture of accessing the market,
we can see what the legitimate market looks like.
We can also-- I'll then have a look at how piracy plays
into here and what threats piracy offers
to the legitimate market.
I'm then going to touch on music and copyright the rights
that labels enjoy in China, those rights
and how those rights can be used to take actions against piracy
and also what they represent in terms
of opportunities to derive revenue.
We'll take a quick look at enforcement just
to give you an overview of the kind of actions
that are available in China.
And I'll also look at some of the--
or just give you an overview of some of the actions
that have been taken to some on an individual label basis,
others on an industry basis
to demonstrate those rights that are [inaudible].
And finally, I'll look at some of the events from 2011 and some
of the things going on in 2012 and maybe take a view
as to how the market might look going forward.
So the big picture, always start with the big numbers
because it's always significant when talking about China.
Over the enormous population 1.37 billion
at last count very recently the Chinese population turned
from being predominantly rurals
to predominantly urban population.
And that demonstrates that there is a growing middle class here
with the growing amounts of disposable income.
Median age of 35 is higher
than in other developing jurisdictions
and really that's an indication
of how the one child policy has being operating.
But in principle language is Mandarin but there's many
of the dialects spoken all over the country.
And the GDP per capita I think this is last year's figure.
The growth of this figure
in the last 30 years has been absolutely staggering
from the baseline of only a few hundred dollars
and the early age is that growth has been
absolutely extraordinary.
And if you'd ever spent time in any of the major cities
in China whether that the Beijing, Shanghai, Hangzhou,
Shenzhen, you'll see, you know, extraordinary amounts
of wealth focused at sometimes in just a few people
but also see disposable income.
So, let's look a little more of what this market could be.
It's a matter of potential market and ends at population
of 513 million at last count of a half of billion have access
to the internet, that's twice the size of the US.
It's gone to grow 12 percent last year.
That's over 120 million more than it were at the end of 2009.
But the rate of growth has actually slowed down
and I recall looking at this in 2007, 8,
when there were a quarter
of a million people joining the internet each day in China.
That slowed down a little bit.
We now just have 150,000 joining each day,
more than a million each week.
We can see this is still growing.
And that both a majority
of those do have acces to broadband at home.
Many of those are accessing broadband through internet cafes
or through their workplace.
An internet penetration in China, you can see is 38 percent
but that growth through the global average
in 2008 demonstrated China's emergence towards a developed
country at least in internet terms,
by the looks is still a long way to go in terms
of internet penetration, and a lot more users to come online.
So, with all of that internet users, let's have,
let's take quick look at the use of music online.
These figures come from one of the national providers
of statistic CNNIC which is used in annual report
on use on the internet.
So these are quite robust figures
and I've been tracing them over the past few years.
Music is extremely popular online in China,
75 percent of all users accessing this online,
so that's 380 are the million online music users.
As we'll see, that doesn't represent a significant
legitimate market yet but that clearly is the interest
and that clearly is the use.
I've got a few other figures down there just
to show the other popular activities.
IM, search engines perhaps not surprisingly more popular
but it's-- the music is even more popular,
we can see in the music video.
In terms of what people are listening to,
there is some Chinese, mainland Chinese repertoire that a lot
of the music listened to is what you might call Cantopop,
so that a lot of music coming out of Hong Kong and Taiwan,
also from Korea and Japan, coming from around the region.
Some of that music is recorded in the local language
and then we recorded in Mandarin, specifically
for the Chinese market.
Some of it, but it still remains,
it still remains popular in the market here.
That's a brief look at the online picture.
And now let's have a quick look at the mobile picture which is,
where these figures are, you know, even more staggering.
We have just shown a billion mobile phone subscribers
in China.
Again, these figures blow anything else
out the water around the world.
And nearly 400 million of those can access the internet
by mobile.
That's mobile smartphones.
Smartphone market is really just exploding now
because China has just become the largest smartphone market
in the world, overtaking the US
for their 24 million smartphone handsets shipped
in the last quarter of 2011 and keep going
to three of 2011 alone.
So that the growing access to the internet through mobiles
and as we'll see that represents an important piece
in the legitimate market, the potential market gone forward.
It's given us a brief overview of the market.
Let's then look at some of these regulatory issues
that are threatened in accessing the market.
Clearly it's a, as we'll see at a highly-regulated market.
The key concerns of the Chinese government are one straight
censorship but also more just a general control of the media
and of the messaging that reaches the public here.
What will-- what I'll run through, just give you an idea
of how the registry environment works for signing and recording
for imports or manufacture, publication and distribution.
They're all separate activities in the registry point of view
and there are different requirements for each piece
and then there is also censorship.
And as I mentioned, John Grobowski will be going
through some other [inaudible] after me.
The market itself is regulated basically by 2 ministries
at MIIT, the Ministry of Industry
and Information Technology and GAPP, the General Administration
of Press and Publications.
On the censorship side, I haven't put it down there
but the ministry of culture also plays a significant role.
I'll also make a comment here that the--
how the different ministries interrelate,
is it in itself a pretty complex picture.
There are-- currently, and have been to some dark time,
and effectively, therefore is going
on between the ministries here,
which means we see an overlapping regulation in places
or a lack of clarity in certain areas.
And we do see that as a good example
of the censorship picture at the moment, where both GAPP
and the Ministry of Culture involved,
[inaudible] environment.
So moving first to the first of the assigning and recording,
in short only wholly owned--
wholly-Chinese owned companies can sign
and record artists in China.
The position for Hong Kong companies is a little bit more
relaxed because of the bilateral arrangements
between the mainland and Hong Kong.
Hong Kong companies can record
but it's not actually clear whether they can sign
them exclusively.
Signing Chinese artists may not yet be an interest or concern
for A2IM members, but because of the favorable arrangements
with Hong Kong, we do see that many labels choose
to access the Chinese market from Hong Kong
and that's certainly how many of the majors
of them have approached the market.
So assuming we're not-- we're not recording in China,
and actually there's a need to bring the music to China.
And the first of this, the first of the regulatory issue we need
to look at is, is importation.
Import applies to those finished physical product
or masters brought in for manufacture
and distribution here.
There have been some changes rationally
and we'll see there's been from changes recently not only
in importation but also in distribution.
These changes have all come about as the result of the--
what was a long running WTO complaint by the U.S,
led by the U.S supported by others, which succeeded
in opening the market to some extent in various areas.
And the deadline for implementation
by the Chinese government to some of those changes was 2011
which is why we've seen some changes there.
So until 2011, importation could only be done by the states owned
and it's the SOE, that will give them the monopoly
on music import.
There was a need to engage with that importer
and that importer only.
Now, in theory, foreign-invested companies can apply
for an import license, but these are new regulations
and it's not a well coordinated area and it's largely unknown.
If it's going to be a question of recording, bringing masters
in for a manufacturer and distribution and turn it
on the manufacturer must also take place
by a wholly-owned Chinese company.
That is a brief with importation.
We'll then have the separate issue of publication.
This is one of the key ways in which GAPP,
the General Administration of Press and Publications exercise
with this regulatory control over the market.
Publication is different from distribution.
And I'll come on to look
at distribution briefly both the physical and digital.
But we can see that publication is a necessary step,
and there are a few publication houses which need to be used.
But they are all state-owned enterprises.
All of those publication houses are regulated by GAPP.
And essentially, a submission needs to be made
to the publication house along
with various supporting documentation,
and to perhaps the two key things there are certificate
of authentication.
This is a document which essentially demonstrates
that you do own the rights in the sound recording
that you are seeking to publish in China.
That can be issued by the IFPI for IFPI members.
And if you're not an IFPI member,
then the copyright protections interrupt the National Copyright
Administration for China,
the NCAC can issue those certificates of authentication.
Also there's a need for an ISRC code.
There's been a little relaxation there,
previously the only ISRC code issued
by the Copyright Protection Center,
at the NCAC will recognize now ISRC codes issued overseas are
being recognized so that's a-- just lot relaxation.
That's publication.
Then we come to the distribution.
At first I'm going to have a look at physical distribution.
The physical distribution position has been--
we'd opened up a little while ago in 2007.
Between 2007 and 2011, there was a requirement
that the Chinese entity involved in the distribution at--
I'm sorry, that the Chinese entity should hold the majority
of shares in the company during the distribution.
Now, following the changes in 2011, there still is a need
for it to be done in collaboration
with the Chines partner, but the foreign company can now be a
majority shareholder of the distributor.
And again, indicating the more relaxed approach
to all the better access to Hong Kong companies have,
Hong Kong companies can now be a hundred percent owners
of Chinese distributors.
I'll come on to the censorship picture later but in practice
of physical distribution, it's typically the label itself
that applies for the censorship, censorship clearance.
That's a snapshot of physical distribution.
Online is a different picture
and in some ways, more regulated.
If you want to sell or distribute music online,
then you need to have a permit from the Ministry of Culture
and to be licensed to be a cultural products network
service provider.
Before the changes, that had to be any cultures,
products networks service provider have
to be a wholly-Chinese owned identity,
there has been a relaxation in that in general,
I'd give us some of the details later.
And to be a-- there's an interesting issue here.
To be a seller online, strictly,
you need to be an exclusive licensee.
Now, that would suggest that if
that exclusive licensee has been granted to online distributor,
then there should only be one.
And strictly as the case, but what we find in practice is
that the requirement that the seller be an exclusive licensee
is not strictly enforced.
So, this is a classic situation when a law says one thing.
Practice is different from that and when there's no sign
of no active agreement from the state,
but there's no active enforcement of issues,
meaning that in practice, labels do have more than one licensee,
and that's either granting most the licenses
but only understanding that they're not actually exclusive,
but they are on the phase of them exclusive,
it should be authorities be not wanting to look at those.
Or sometimes an exclusive license is granted
and then sublicenses are granted as directed by the label.
So there are ways around the exclusive license requirement.
And in practice, in the online distributions space,
it is the exclusive licensee that normally applies
for censorship clearance.
[ Pause ]
So let's look at what censorship clearance looks like.
In China, sometimes in this content review
which sounds a little more benign in its title.
And this is a scenario where--
are dimension that have been therefore is ongoing
between the GAPP and the Ministry of Culture.
In simple terms, the GAPP is responsible
for clearing physical products and the Ministry
of Culture is responsible for clearing digital product.
But things aren't-- don't work out quite so cleanly or--
and we'll see there's actually challenges
because that presents the double clearance in some situations.
For physical products, so then it's been usually the label
applies, and that application must be to GAPP.
And the things that must be provided amongst others
as with the application form of a sample of a product.
The lyrics in Chinese and of the other textual materials
that come with the finished product and the import agreement
that was in place to allow the product
to be imported in the first place.
And the-- having cleared music for censorship of--
and clearing it for the physical product.
In practice, the administrative culture should recognize the
clearances issued by the GAPP when considering online content.
But in practice they don't.
It's not automatic and that can lead to a delay which means
that there are web products, that's going
to be really strategically ended,
just laid off from the case.
Then there was a need to go
through to censorship clearance procedures
which just slows down, slows down access to the market.
Confusingly as well, there have been released provisions
for GAPP to clear online content.
But there's no specific regulations there yet.
So it's not accessible yet and it's not clear how
that would work and how that would relate to the Ministry
of Culture provisions on online content.
So, moving then to the online content picture,
as I said the Ministry of Content--
Ministry of Culture is responsible.
And in this situation it's usually the online distributor,
the exclusive licensee that is applying for this.
There are similar requirements that need to go
through the application that's the original text lyrics
and the translation of them,
evidence of the copyright ownership
and then this permission for the operation
as a culture products network service provider
for the party that's actually going
to be distributing these products within China.
That application process with the Ministry
of Culture can be done online and can take up to 15 days.
There is, they say a green channel
for very urgent applications--
if you got a worldwide simultaneous release
and you wanted to be hitting the ground and China just
when it is in other countries.
That is available, how widely available, is not clear
but they claim that it can be done
in as little as two or three days.
These challenges, the lack of clarity between the GAPP
and the Ministry of Culture, all the subject of law being
by the industry, I was present recently
at the European-China IP dialogue
where these issues were raised.
And now the challenge is not to censorship per se,
that's a much more difficult
and a much greater hot potato, politically.
The challenges are to the lack of--
come from the lack of clarity, this double clearance
that you need for physical and digital product,
the lack of recognition or lack of automatic recognition
by one ministry from clearance by the other.
And the speed and all of that,
all of those things represent barriers to entry
and they provide if there's going
to be a delay of two weeks or more.
They provide the opportunity for the [inaudible] market
to take all and what maybe in our key time for the sale
or distribution of legitimate product.
So that's a quick overview of the regulatory hurdles.
Let's look at then on what the legitimate market looks
like given those regulatory hurdles in place.
As I mentioned, China has for twice
as many internet users as the US.
But digital revenues here are
about one percent of that in the US.
We can see just by looking
at those figures there there's a not a terribly rosy picture.
The total market in 2010 was just 64 million dollars
which makes it a smaller market than Ireland for example.
And we can see that there's actually been a decline
from 2009 to 2010.
And also a decline from 2008 to 2009.
So that has been the trend currently.
That's not surprising, we are seeing a decline in the sale
of physical units and also a little more worryingly,
we're seeing a decline in the digital revenues as well.
Digital represents as you can see the--
the majority of the sales these days, that is, on the one hand,
it's positive because there are-- that looks set to grow.
On the other hand, because of the declining physical market
those figures are somewhat plotted.
We can see in terms of the physical units sold,
we just had 4.1 million units sold in the whole of China
in 2010, which is absolutely tiny.
And just speaking from my own personal experiences
as a resident of Beijing, and I'm so--
John would say the same in relation to Shanghai.
Finding legitimate physical product is actually
very difficult.
Finding illegitimate physical product is very easy.
And you offered it on the street quite regularly.
Well there are CD and DVD stalls which happily--
quite happily offer illegitimate content on the shelf.
So as I mentioned, digital represents the rosy pictures
so let's have a look at how that--
the digital market breaks down.
We can see and we can see quite quickly by looking at those--
those formats that are-- that the ringback tones is the--
presents the largest proportion of the digital income,
that the mobile market here is clearly important.
And for issues such as mobile single track downloads
and ringback tones, those are areas where piracy is much less
of an issue because you've got the content being provided
by the telecom.
Just to give you and idea of what these-- what these--
how much music-- the legitimate music does cost in China,
a ringback tone typically is about 2 or 3 yuan which about 30
or 40 cents, to purchase a ringback tone
or you can subscribe for about 75 cents a month to have--
to be able to change your ringback tone
from your provider.
And--
>> Excuse me Tim, you have about three minutes left
for your presentation, thank you.
>> Okay. And for mobile-- for mobile tracks,
that's about-- or 30 cents.
So there is some revenue there
but you'll also see there's a lot of advertising supported
which is free to the end user, users as well.
And those legitimate services just running through the break,
which you can see and the major telecoms are there,
Baidu and Google, now offering ad-supported free
to end user music.
We've also have got some of the UGC sites
and the social networking sites.
That's the legitimate market,
the pirate market however is massive.
Estimated that 99 percent of the content
in China is pirate coming from a wide variety of services.
Not typical of other market, it's not dominated by P2P,
traditionally it's been dominate by linking services but also
that is declining to some extent and we're seeing cyberlockers
and straight download sites.
The industry has taken action but the problem is the--
so that's unfortunately fairly bleak picture.
Let's take a quick look then at the right that labels enjoy.
China basically has an essentially modern
copyright law.
It's a signatory to all of the major international agreements.
And it has, includes rights of reproduction, distribution,
rental and a network dissemination right
like an online right for sound recordings.
The key-- the key issue in terms of revenue however is
if there's no public performance right or broker's right
for sound recordings in China and so there's no revenue there.
There are internet regulations which provide,
safe harbours similar to the DMCA, this really China DMCA,
and it also provides for a-- a take down regime.
The notice requirement of a take down are a little
in interest brought in practice many providers don't require a
reasonably flexible and take down is a valuable option here
when content is found.
It's just that the challenge really comes
from the volume of music available.
I'm just running through this quite quickly 'cause I'm
conscious of the time.
So the enforcement options in China as I've mentioned notice
and take down is available there, there are also civil,
criminal and administrative options.
Civil, I'm talking about obviously civil proceedings
through the court claiming copyright infringement.
Criminal and administrative are both
over the state provided enforcement.
But they're not available for complex issues
such as indirect liability.
A criminal is available and is used in some certain situations
but it is subject to threshold so it has
to be a major issue before the police will get interested
and you may need to have a political hook
to make them more interested.
Administrative enforcement is possible
but it's not particular well-resourced.
Running from 2010 and to 2011, there was a special campaign
in which did bring down quite a lot of illegitimate music
but we've seen that drop off a little since the end
of that special campaign.
The industry, most of this action coming
from IFPI although some from private labels, has taken action
and has had some success both in finding
that linking services are infringing that Yahoo China--
it's the case I was involved with.
Also demonstrating that P2P services are liable
and absolutely the straight downloads services,
not that they're liable.
The major point there is
that there have been successful criminal actions
against straight download services
where the police have been able
to find the service offering the music.
So there are remedies available.
Looking forward, so two of the major development that occurred
in 2011 were the deadlines for these changes required
as a result of the WTO decision, coming into force which have led
to the opening up to some extent
of the importation and distribution.
And the other major piece is the Baidu settlement
with three majors.
The Baidu now has license agreements with all four majors.
And the significance of that is the Baidu closing its
linking service.
When taking proceedings against Baidu, we did some analysis of--
into market survey as to how much Baidu was used
as the major source of music in China.
Baidu is the Google of China.
And there were literally billions
of downloads going to Baidu each year.
For that linking service being closed,
here's a major step forward.
They are now setting up a service called Ting!
which is free to the end user but advertising supported.
So revenues may not be great but at least we have one
of the major services offering illegitimate content,
now moving into a revenue-generating space.
And in 2012 itself, we have the copyright law has come--
is now on the process of review and amendment.
It's the first full review of the copyright law
in more than a decade.
Everything is on the table
and key issues form the recording industries point
of view on the table include a continuing push
for the inclusion of public performance
and broadcasting rights.
And a clarification of these intermediary liabilities,
so these websites that are offering access to music even
if no access-- offering the content themselves.
That processes is running through this year
and we may expect to see a final growth by the end of the year.
So that's a pretty quick run-through.
Just to try and summarize some of those points.
There are major challenges,
the regulatory environment is challenging.
It is opening up little, but it still remains difficult.
Piracy is obviously a significant problem.
But again, we have seen the green shoots
of that moving towards a more revenue-generating picture.
Obviously, the potential of the market remains massive.
The interest in music is here.
The acces to it is here.
It's just not revenue-generating currently.
And if we look at other markets around the region,
we see that there are--
if the status becomes more greatly involved,
there is a potential for much, much stronger,
more valuable revenue and take the market like career
for instance which is a very strong picture particularly
digitally for the industry.
So there are some green shoots there.
That's a very quick run-through,
there's quite a lot of detail there.
I believe John is going to run us through some more
of the detail but happy to take questions afterwards.
>> Thank you Tim for a very comprehensive presentation.
In bet there's going to be a lot questions
and hopefully once A2IM reschedules their trade mission
to your part of the world we'll be able to set
up the meetings one on one.
So thank you very much.
And now I'm going to open the mic to John Grobowski.
>> Thank you very much.
A pleasure to be with you this morning
or this evening in US time.
I am a partner with the law firm Faegre Baker Daniels,
Faegre Baker Daniels a recent combination of two firms Faegre
and Benson, headquarters' Minneapolis, and Baker
and Daniels headquarters' in Indianapolis.
I have been working in China as a lawyer since 1991,
not quite continuously I was in the Hong Kong for three
to about seven years in the middle of the step.
But today, I'm a corporate and commercial lawyer
and as authenticated at the top of this presentation,
I advice a lot of clients on things like mergers
and acquisition in China, and setting up the businesses
in China that kind of thing.
And so today I'm going to be talking about foreign investment
in the music industry in China.
And Tim already gave a very good introduction to some
of the aspects of this.
I'll be going into a few more details with respect
to a number of things.
This is the case with many, many things in China.
The music industry in China is subject to a lot
of regulatory controls.
And this is specially the case when we talk
about foreign participation through investment
in the music industry here.
So here I'm going to be talking mostly about the possibility
of foreign firms establishing amenity in China
to import foreign music into China
and then distribute it within China.
And I'm going to be focusing mostly on physical products
if we do have time then I'll get into some of the issues
with online and digital.
[Inaudible] indicated, there have some recent changes
that have come into play because of WTL.
Basically, what we have seen is at the end of 2011,
China came up with a new version
of the Foreign Investment Catalogue.
This is a publication that is somewhat unique to China.
What China basically does is it tries to list the industries
with certain kinds of investments into China,
are either encouraged, restricted, or prohibited.
And then basically, everything else is permitted,
but in HK's subject to approvals.
And in the case of the Foreign Investment Catalogue,
before these changes that came in at the end of 2011,
foreign firms were periodically prohibited from investing
in any businesses in China for the import
of foreign music into China.
So this meant that, effectively this can only be done
by Chinese-owned companies.
Similarly, before these changes came into play, foreign firms--
if they wanted to engage in distribution of foreign music
that was already imported into China, they could only do
so by entering into a Cooperative Joint Venture
with more and more Chinese parties
which would hold the majority interest in the joint venture.
So in other words, they'd only be a minority party
in the joint venture.
This is the case with many things in China,
this role was subject to a number of exceptions.
For example in the case of firm space in Hong Kong and Macau,
they were largely accepted from this requirement
if they met certain condition and allowed to enter
into equity joint ventures where they have majority control
or even wholly foreign-owned enterprises
or to effectively consider it's of foreign companies.
The-- in terms of what sort
of animal the cooperative joint ventures were,
these days in China, typically Cooperative Joint Ventures are
corporate in nature so that means that the they basically--
our companies, they have registered capital
which is an amount of capital which is contributed
to the company, one of those first set up and basically,
that capital cannot be clearly withdrawn from the company.
And so in this case, you'd have a partnership really
between a foreign company, Chinese company
and that's indicated before one of the previous requirements
for distribution, the Chinese company
with majority of control.
Now with these changes in the catalogue,
it should be possible now for foreign firms
to form Cooperative Joint Ventures with Chinese parties
and even have the-- and the foreign firms even having the
majority interest in the joint ventures, for both the import
and the distribution of foreign music.
So in other words, both import
and distribution have been opened up a fair amount at least
in terms of what we see in the catalogue
from the previous version of a catalogue.
However, one thing to note here is
that the catalogue itself is not a regulation.
It doesn't have the force of law,
it's really more keen to a policy document.
And so what that means is
that until the existing the regulations are in fact amended,
then the rules have really not changed
yet despite the changes done in the catalogue.
So we are expecting that the regulations will be changed soon
but that still hasn't happened yet.
But when the regulations are changed,
then it should be possible to have joint ventures
where foreign parties do have majority interest and engage
in both the importation and distribution of music.
The-- there are a number of requirements which apply
to the establishment of--
[ Pause ]
Of a foreign music distribution joint ventures in China.
Again, I'm talking about the current regulations
which have not been amended yet.
And there are of course some differences depending
on what part of China CJV is established.
And as is the case with the establishment of all companies
in China, there are a number of procedural requirements,
for example you got to come
up with a feasibility study synthesis, a joint venture,
you need a joint venture contract,
you need articles association for the company,
probably you're going to have license agreements
and other kinds of agreements
between the parties to the joint venture.
So there really will be a kind of a package of documents
which need to be negotiated and concluded
between a foreign party and the Chinese party.
As is the case with all foreign investment in China,
the establishment of such a joint venture is subject
to approvals in China, to governmental approvals
and in the case of this particular kind
of joint venture, one that engages in music distribution,
and hopefully in the future music importation.
The approval requirements are more complicated
than it would be the case typically
with many kinds of joint ventures.
There are a couple of extra layers
of approval which are required.
For example, at the very beginning of the process,
normally, one would need to get an initial approval
from the provincial level Press and Publication Bureau which is
under the General Administration of Press and Publications
to establish the joint ventures.
So you need an initial green light just to be able
to go forward and receive
with the establishment of a joint venture.
And then once you get that green light then you've got
to negotiate the various joint venture documents,
which we talked about before and typically,
those might be submitted to a provincial level,
commercial, of commerce.
If it is a larger joint venture with total investment
over 50 million dollars US, then in fact, that would need
to be submitted for approval to the Ministry
of Commerce in Beijing.
After that approval is required, then again one needs to go back
to the-- in most cases the provincial level,
Press and Publication Bureau,
foreign audio-visual product operation permit.
This permit would be an addition to the normal business license
that all the companies in China have.
And it would be necessary to engage and it would be necessary
to have this to engage in distribution of music in China.
And then, finally, there needs to be registration
with the local Administrative Bureau
for industry and commerce.
It probably should be noted that, again, if we're talking
about physical products, if you are setting
up retail operations,
then additional requirements will come into play.
For example, if you're setting up a chain store operation,
a franchise type operation.
We've got stores using a common name, then if they're going
to be established in a single province,
then there would be a minimum registered capital requirement
of 1 million RMB for such a joint venture and if
in fact you're going to be establishing such stores in more
than one province in China,
then the minimum requirement would be 5 million RMB instead
of 1 million RMB.
Otherwise, there is no particular requirement at least
in the regulations
for registered capital of the joint venture.
However, it should be noted
that approved authorities have pretty wide discretion
to decide what they consider to be acceptable or not acceptable
in terms of levels of registered capital.
Typically, what they do at some point is they take a look
at the feasibility study for the establishment of the company
and they get a sense as to how the company is going
to be capitalized, what level of businesses can engage in
and it will basically have,
make it's own seat-of-the-pants determination about whether
or not it considers the capitalization
to be adequate or not.
And if the capitalization is going to be too low,
then typically, the approval would not be worth coming.
The-- I think it's just important to know once again
that although the point of estimate catalogue has changed,
the existing regulations have not yet changed
and so we still have the old rules in effect, as of today.
But hopefully those regulations will finished quite soon.
Tim already mentioned the, I thought it's--
he did an excellent job of talking
about the specific approvals that are required
for individual items of music from the general administration
of Press and Publications and also
from the administrative culture.
And I think that really those requirements are likely
to remain in effect
for a considerable period of time to come.
China is still quite cautious about the kinds of music
and films and other things of this sort that it allows to come
into China and be sold to mass finances here.
And I think that primary maybe one other thing to note is
that there are some regulations on the books
which basically require that--
or items of foreign music have been legally-imported into China
and again this would be by Chinese companies previously.
And then published in China by one or more Chinese publishers
for pursuant to agreement.
There is actually at least one regulation that requires that--
or this is done then you cannot have a separate channel
or the same foreign music is imported and then sold
for some period of at least 3 years.
So, I shall stop there and I think that Tim
and I would be happy to hear questions.
>> Thank you very much John.
This is very interesting and the approval chain seems quite
complex and almost a little bit like a moving target.
So, I'm going to open the floor for question and answer.
And if the audience can tell us who their questions are for,
whether it's targeted to Raquel, Tim, John or maybe Rich,
that would be helpful.
We were scheduled to close our session in about 7 minutes,
however, I've been informed that we can stay open as long
as we have questions and time permitting for our speakers
who have to get back to the office.
So with that, I'll open the floor.
>> Just one comment before we do it Andrea.
Just want to remind everyone, you will get copies
of the slides, and Sheryl Cone here at the A2IM office
as a result of what [inaudible] slides so you think
about things overnight.
We'll gather questions from our members which we'll send along
to Andrea and Dawn and so this won't be your only chance
to ask questions.
>> Thank you.
We will now begin the question and answer session.
If you would like to ask a question, please press Star 1.
Please unmute your phone
and record your names clearly when prompted.
Your name is required to introduce your question.
To retry your request, you may press star two.
It will be one moment, for our first question please?
We do have a question from Patrick Rains,
sir your line is open.
>> Hi, my name is Patrick Rains, my question is probably for Tim
and John or either individually or together.
I'm a small independent label, I'm not in a position
to be thinking about doing a joint venture investment
in China, but I would be very interested
in finding distribution to get my products in the marketplace.
You spend a lot of time talking about the joint venture process
and what's under like a much bigger venture deal
which is great but for those of us who are simply looking
at trying to find a licensing partner distribution partner,
can you tell us a little bit about that?
[ Pause ]
>> Patrick this is Tim Smith, are you interested
in physical or digital or both?
>> Well both, of course.
>> In terms of physical, I'm not very familiar, I'm not an expert
of the claim I am now.
I'm not an expert on the commercial scene.
And so I'm not familiar with how many
of the labels set them up-- set themselves up.
But I would-- as I did the way that many labels have come
to access China is through Hong Kong
because of the favorable arrangements that exist
in relation to Hong Kong.
For physical products, I would certainly have thought
that trying to understand how Hong Kong labels access the
Chinese market for physical products
and what distribution arrangements they have would be
a very good starting point in trying
to find a partner 'cause they will have experience
in how it's done.
And because it's a fairly-established channel,
there could be some good experience there.
On the digital side, I don't know whether there are
aggregators that are available to contact who then on sell
to the likes of Baidu.
Obviously their regulatory, I know that that exists,
so in other more developed jurisdictions,
where you have somebody who will aggregate content as it were
to sell at all license to online providers.
Because of the more stringent regulatory environment, he--
I'm afraid I simply don't know whether those kind
of aggregators exist.
Although a purchase could be made directly
to somebody's major players to just to ask how they would go
about taking a license of your content, and obviously because,
particularly in the online space where it's more typical
for the online provider to be really quite engaged
because they need to have this permit to upgrade
in the first place and because it's typically then
that applies the censorship, they will have quite a lot
of experience of the market
in navigating the market themselves.
On the digital side, it may well be possible to approach some
of the major providers directly.
>> Yeah we've had [inaudible]-- we've gathered big anticipation
of the trip that you will be on over a dozen licensee
and licensure excuse me, licensee candidates
from your fellow A2IM members, some of the ones that are larger
that are doing business there.
Some of the ones actually they're smaller
than doing business there as well.
So we have a list of those as well as people
in the touring area, sync licensing in a variety
of other areas which we'll share--
probably we're going to share with Tim and John as well.
We're going to-- we're putting lists together in anticipation
of our trade mission later this year and we'll share
that with everyone on this call.
Thank you.
>> I'm this kind of, just going to add to that, you know,
think that one of the things you probably need to think
about at some point is spend some time in China.
It sounds like you're about to do that in the coming months.
And I think there are a lot of resources that can be used here,
for example, it was mentioned earlier
on the US foreign commercial service, does have people
in China has got boots on the ground that the industry
in Beijing and the consulates in China
and those commercial officers are actually quite helpful
in helping to find business partners in China,
not necessarily for setting up a company in China
but distributors if you simply want
to have your product distributed within China
and have somebody else import it.
So that's one possibility.
There are also quite a few companies in China.
In some cases, foreign-owned companies
which do consulting type of work.
And some of them specialize very much, you know, just exactly
in trying to find good business partners
for various opportunities that people are looking for.
So, you know, I would suggest
that you consider those resources.
>> Okay, thank you.
>> And the next question comes from Deborah Newman.
Your line is open.
>> Okay, great, thank you very much.
This is Deborah Newman, I'm in New York.
I'm a consultant in the digital music space
and I have some experience from now,
what is almost five years ago dealing with--
helping a San Francisco-based company
that was building a music service in China.
They had acquired, I guess, called an SP in Beijing
and I was working with them and with also their law firm
and partly in that agreement
and also they have done a partnership agreement
with Top 100.
And I think quite a bit of time trying
to understand the rights issues involved in digital distribution
and discussions with all the major label people and also
with some of the music publishers, for example,
EMI Music Publishing has an aggressive office in Beijing.
I'm trying to understand the copyright implications
on the publishing side not just on the sound recording side.
And a varied conflicting answers from people as to whether
or not we needed to worry or about depending
on who we were talking to that right or not and then trying
to understand the MCSC and what it actually does and who,
if anybody collects for the underlying composition the
rights in the song as opposed to the recording.
Can you explain that, I guess, Tim because you went
through these explanations of the reproduction distribution
of rental rights, you know, no public performance rights,
for broadcast or sound recordings but you never--
there really was no discussion of whether
or not there is a right in the music publishing side for,
let's say, digital performance or distribution.
>> Thank you Deborah, thank you for the question.
There is right for the authorial work for the music
and the lyrics, et cetera for the publisher's right.
And it is the MCSC, the Music Copyright Society of China
that collects in behalf of those rights.
It's a monopoly organization set up by the state and it collects,
in particular like karaoke as well as other sources.
On the sound recording side, there has been,
there is set the CAVCA which is the China Audial Visual
Collections Association, I think, which is placed
to collect on behalf of sound recording owners.
The lack of rights for sound recording owners means
that there's very little time to collect.
In principle, I understand that it is possible to collect
from karaoke use but obviously that's only going to be
when original sound recording are used in karaoke rather
than kind of re-record.
And my-- I have a little bit of background knowledge that I know
that the majors don't like and have trouble getting
on with CAVCA, and if I had not had a great experience in this
that actually no revenues that I understand the revenues
that have been collected from any possible karaoke collection
on the sound recording side.
So that's the broad picture.
As to the practicalities of dealing with the MCSC
on the publishing side,
I'm afraid I don't have any personal experience.
I'm afraid I can't offer anything there.
>> So the MCSC collect from digital services as well
as from karaoke and I thought they also collected
from broadcast services, radio and television which I sort
of thought was a sort of a contradiction
since they're a government body and most
of the broadcast media is government-owned.
It seems like they were collecting from themselves
to pay themselves and it wasn't clear whether
or not they were collecting from, let's say, Top 100
or from, you know, Baidu's, from Ting,
for example for ad-supported streaming services
or for downloading for that matter.
>> I believe they are but I don't have--
I can't say for certain, I believe they are.
>> Okay. Thank you, maybe I could-- at some point e-mail you
and get some clarification on that film.
>> And our next question comes from Robert Singerman.
Sir, your line is open.
>> Thanks, I was going to ask a question on publishing
as well but, Tim, in the publishing side I've heard also
that publishers generally the percentage is six
to eight percent and I've also heard
that MCSC really isn't paying international publishers
that they're saying they don't have a mandate
to actually pay the international publishers.
So, and I know that they're not collecting now
from China Mobile for example.
But it's a six to eight percent consistent
with what you're seeing there?
>> I'm afraid I have to say I don't have personal experience
with dealing with MCSC.
I'm not advising companies on issues
around publishing currently.
So, we can certainly look into it
but I'm afraid I don't have an answer for you today.
>> I have another question, this--
the 67 or 64 million dollars, is that non-Asian music,
is that non-Cantopop, non-Chinese music,
or is that total music sales in China?
>> That is, with figures--
completely accurate figure that's quite difficult
to come by in China.
Those are figures pooled together by IFPI.
And, as I understand, the methodology
that IFI uses is it takes its own member's repertoire
which includes a lot of that Korean, Taiwanese,
Hong Kong repertoire, it oversee--
to get data from it's own members as to the income
that they are receiving from China.
It then makes an assessment of the proportion
of the whole market that those IFPI members enjoy.
And then it works backwards as it were to under--
to estimate what the total market is.
So, yes, my understanding is that,
that is a total market figure but based
on limited data that's available and then extrapolated.
>> That's little market.
One last question, the app market, China is said
to be the second biggest app market
to the U.S, now, mobile apps.
In your opinion, would all the music that might be found
on mobile apps need to be cleared through the MOC
or the GAPP probably the MOC process, from my understanding
that that's probably yes but I just wanted
to get your opinion on that.
>> Yeah, my assumption would be the same.
My assumption would be the same.
>> Okay, thanks very much.
>> Yeah.
>> And our next question comes from Charles Book.
Sir, your line is open.
>> Hi guys, I was actually going to ask pretty some
of the questions with regard to publishing.
I guess it's already answered but--
one thing that I've heard rumors
of the MIDEM was potentially a new collections organization
being formed, you know, in regards to mechanicals.
And that's kind of a big question when it comes
down to finding digital partners and especially
because without something being in place, I mean,
I know that some folks put, you know, [inaudible] thinking
that this is going to happen down the line.
So I just want to get your thought on that and if you heard
about any new right to organizations coming
to the forth this year?
>> Personally I'm not aware of any coming to the forth.
Obviously again I'm happy to look into that
but I don't have an answer for you right now.
>> Okay, thank you.
>> And I'm not join-- excuse me I just had another question too
up, Robert Singerman your line is open.
>> Thanks, I just wanted to mention
to Charles this question.
What I've heard as well from my colleagues in China is
that the MOC is actually going to give a second number.
Currently they gave a number which is really reflecting
of the master, the approval
in the master once they approved the track, you know,
for the censorship area of it and it's also an anti-piracy.
But they're supposed to be going to give a second number
which is actually the approval for the song itself
on the publishing side, is that something
that you've heard Tim maybe that's what Charles is referring
to, I'm not sure.
>> That could be what Charles just said,
referring to sounds consistent but if they,
I'm afraid I don't have some answer on that.
>> All right, thank you.
>> Yeah, I've heard Robert 'cause I talked to the people
from Cava this is which again, we have a relationship
with the people from Cava and some related companies
up in Shanghai when were meeting them, and they seemed
to indicate that's one
of the barriers that's why people keep bringing this is
up Tim.
They get rights to bring it into the marketplace,
the people at the publishing side.
I want to make sure at some point that they get paid and--
and this is something that's been going on for a while
within the conference in Shanghai I guess it was
about was 2 years ago where we met
with the government officials and they seem receptive to that,
but we'll see how it plays after in a year.
[ Pause ]
>> I'm showing any further questions at this time.
>> Well if that's the case, in behalf of everyone from A2IM.
I would like to thank everyone who is on this call.
I really appreciate, especially Andrea and Dawn
who did all the late work and we sort
of just drafted behind them.
We heard some wonderful presentation from Raquel,
Tim and John tonight we thank all three of you so much,
especially with John and Tim as this was early in the morning
for you and you did this is
on a pro bono basis although we appreciate everything
that everyone from commerce ITA has been for us as well.
So we just couldn't thank you enough 'cause this is the first
one as I said exports is becoming a big priority
as we were-- our own marketplace has shrunk over the last 5 years
and we're really going to be attacking the market
and hopefully both John and Tim both
of your cities will be visiting [inaudible] this year
and we will be able to invite you to a reception and get
to meet you face to face.
>> Sure.
>> And you know that will be great.
>> Thank you very much.
>> This was just terrific
and I'll throw it back to Andrea to close.
>> All right, I think you said it well Rich,
I really appreciate especially with this tough time differences
between the East Coast and--
>> Hold on, hold on we have Leah in Mt. Maple in Hawaii.
So for her it's just a little bit after lunch time,
you're making a presumption about the size of our country.
But, you know we're spread out across the country as well.
I'm just teasing, but we do have someone on the call from Hawaii,
one of our members in Mt. Maple.
>> That's great welcome.
Well what we'll try to do is get more clarity and answers to some
of the questions that we weren't the right people
to respond to essentially.
And I'm actually thinking out loud here.
This could be some good topics for future webinars.