TEXT OF INTERVIEW
KAI RYSSDAL: Over the weekend, the Chinese government promised to crack down on piracy -- again. This time it's illegal music downloads. The Culture Ministry says it's going to do its darndest to control illegal file swapping. That's going to be tricky, because there are as many Internet users there as there are here. Starting at the end of this month, Beijing's promising tough new rules for companies wanting to do business online. Call it the "Great Firewall of China," if you like. The prospect has investors a bit leery. We've got Scott Tong on the line from the Marketplace bureau in Shanghai. Hey Scott.
SCOTT TONG: Hello Kai.
RYSSDAL: Remind me what the buzz is over the Chinese Internet, and what has these investors so excited?
TONG: Well I want to tell you about our intern Edward, because he's a snapshot of what's going on here in China.
TONG: Nice guy, just graduated from college, and he doesn't watch TV. He says TV stinks here in China, so he watches online video, and guess what he watches -- he watches Jon Stewart, and that's the story of China. You have bad TV, and everybody is connected to the Internet, and so there's this great opportunity. Two-hundred-ten million eyeballs here in China, the Internet population is virtually tied with the U.S Internet population, and Chinese Internet users are way ahead of Americans as far as social networking and blogging, so the big venture capital guys, names that you and I know: Secoya Capital, Bain Capital, they're placing big bets on these websites, kind of the Chinese versions of YouTube.
RYSSDAL: What are they watching, these recent college graduates, besides, you know, Jon Stewart?
TONG: A lot of entertainment, a lot of sports, there is a famous boy band here in China called the "Backdorm Boys," so they're downloading and watching a lot of that on these websites. You're not going to be surprised to hear they watch a lot of the naughty stuff, too.
RYSSDAL: I'm shocked.
TONG: The big "it movie" in China is Ang Lee's "Lust, Caution," and the regulators in China, they kind of snipped out 10 minutes of the lust, which people want to see, and so . . .
RYSSDAL: Lots of caution though, not much lust.
TONG: Right, right, heavy on the caution, and so people are downloading some of those clips so that they can watch that, and there's also politically sensitive stuff. There are protests periodically in China, and that is what the regulators in Beijing are concerned about.
RYSSDAL: Which brings us, I suppose, to these rules that are going to come out. What do they say?
TONG: The online video websites, according to the rules, they have to be majority state-owned. The other part of it is these online video companies have to have comprehensive internal censorship going on. Now the thing is, they already do that. One analyst said he walked into one of these companies and they have people who are just sitting in front of video monitors watching stuff that's on these sites, and finding stuff to "harmonize," as they say in China. The word that the president has talked about is the "harmonious society" in China, so when things get snipped out, or changed, or deleted from websites -- they say it's been harmonized
RYSSDAL: Harmonious maybe, but you have to wonder how profitable it's going to be. Are these rules going to sort of hurt the industry before it really gets going over there?
TONG: The people who watch this industry say it may be more bark than bite, so it may be more to send a message to these websites to make sure their internal censors work a little bit harder so that these are deemed "clean enough," especially going into the Olympics this coming August. The question from the business side is, is this going to scare away some of the advertisers, which may scare away some of the venture capital investors, and I guess that's the thing about China, it's super high-reward and super high-risk, and the risk just went up a little bit.
RYSSDAL: Marketplace's Scott Tong in Shanghai. Thank you Scott.
TONG: Alright Kai, thanks.