CB(1) 298/98-99(04)

LETTERHEAD OF MOTION PICTURE ASSOCIATION

October 6, 1998

LegCo Panel on Trade and Industry
c/o Ms. Leung Siu-kum
Legislative Council Building
8 Jackson Road
Central, Hong Kong

RE:	MPA Submission on Parallel Imports to LegCo Panel on Trade and Industry for October 10 Meeting

Dear Honourable Members of LegCo Panel on Trade and Industry,

The Motion Picture Association (MPA) appreciates the invitation to provide this submission on parallel imports for your consideration. MPA is a trade association representing the major Hollywood film studios. The seven MPA member companies produce movies in the United States and some also produce movies in other countries. One member company recently announced plans to begin producing movies in Hong Kong.

The issue of parallel importation was thoroughly reviewed and hotly debated in the lead up to the Copyright Ordinance 1997. Some retailers were claiming that local film distributors would form a cartel, prices would go up by 50% and the range of sell-through titles would drop by as much as 79% if parallel import protection were retained. None of this occurred.

Now retailers are claiming that parallel import protection is responsible for the high levels of piracy in Hong Kong. The reality is piracy would be even worse if Hong Kong did not provide protection against parallel imports. It is a tragedy that some retailers are using parallel import controls to mask internal problems, thus diverting the attention of Legislative Council members from the major issue of optical disc piracy.

07-06 United Square, 101 Thomson Road, Singapore 307591

Let us first dismiss the issue of pricing. Members of the Motion Picture Association (MPA), which are the major Hollywood producers, did not raise their prices after the new copyright ordinance was adopted. In fact, most MPA member companies have dropped their wholesale prices to video outlets in recent months in response to the slowing market. Interestingly, some retailers still raised their retail prices to consumers. Who is calling the kettle black?

Turning to availability of product, MPA member companies are making every effort to make their product available to retailers. What they are finding, however, is that retailers are not placing as many orders as before. A shortage of product or lack of selection in video outlets is a reflection of decisions by retail outlets, not a result of product being withheld by distributors.

Any suggestion that parallel import controls are fueling video piracy is hollow. Within a matter of days after a Hollywood film is released for the first time in cinemas in the United States and six months before the title will be officially released on video, pirate copies of the film are widely available in Hong Kong on video compact disc (VCD). Pirates are having a field day. This is what is crippling the video business and damaging the theatrical market in Hong Kong, not protection against parallel imports.

Honourable Members, I would urge you to focus your legislative efforts on finding means to attack piracy rather than rehashing the issue of parallel imports. Piracy is the root cause of the debilitating disease plaguing the video market. If parallel import controls are lifted, piracy will only get worse by importers attempting to pass off pirate product as parallel imports.

Sincerely,

Jeffrey J. Hardee