New China

New China

Thomas Wilburn | 13 Jun 2006 08:00
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Yet, consider it from the perspective of a Chinese entrepreneur. Developing something like WoW at market rates in Irvine, CA, where Blizzard is based, can't be cheap. And then, there's the maintenance for those servers, patches and customer support. But the market rates for all of those services are much less expensive in China, where the average per capita income is only $6,800 a year. Low wages and government control ensure China's dominance of low-cost manufacturing industries. Why couldn't they do the same thing for more high-level media design, like gaming?

In fact, that's exactly what is happening. Much the same way that India took technical outsourcing and turned it into a growing software design and consulting industry, Chinese businesses are starting to consider the possibility of moving into IT and other innovative industries. Ironically, China's high piracy rates make this much, much easier. While American companies might pay thousands of dollars for tools like compilers, source control and art design programs, the cost is virtually zero in China's little-enforced software environment. And Chinese companies may soon be able to pirate legitimately, noted Fishman, thanks to the so called "triangle-trade," where other countries help China work on open-source alternatives to popular computer programs in order to undermine American software engineering dominance.

Outside companies, aware of outsourcing shifts in manufacturing fields, have not missed the importance of this trend. EA, Take-Two and Ubisoft have all opened studios in Shanghai. Currently, they act as localization hubs, adapting current products to fit the language and government requirements for the country. But there's no reason the process can't work the other way - games designed, developed and programmed in China, then shipped to a smaller U.S. or European studio to be adapted for other markets. The process would need to be refined, but the problems aren't insurmountable, as Ubisoft (originally a French company) has proven.

Oddly, these two trends (the rise of local companies, as well as outsourced studios) may be one of the best hopes in the fight against piracy. As companies in China begin to move from simple production houses to IP-generating firms, the country will want to protect that domestic work from theft. The possibility is that standards will be tightened as China reaches a level of development comparable to the U.S. and Japan. A wild card in that scenario is the unpredictable communist leadership. They're certainly capable of controlling market infringement - the Jet Li action/propaganda film Hero, with substantial government money behind it, was pirated only in miniscule numbers - but they're also capable of changing the rules to fit their needs at any given moment.

The color of the cat
When I left China, the impression I had formed was of a country still in conflict between its past and its future. What else can be expected from a country that began modernizing less than 40 years ago? Ever since Deng Xiaoping announced that "it doesn't matter if the cat is black or white, as long as it catches mice," the People's Republic of China has rushed forward, stumbling to catch up with the United States. Go to Shanghai, and if you look up at the shining buildings and bright neon signs, you'd almost believe the country has made it. Just don't look down at the streets filled with litter or the beggars in dark doorways; refugees from the poorer rural areas. China may have imported the technological advancements it was previously denied, but implementing the changes that go along with this industrialization is more complicated than the country is willing to admit.

Thomas Wilburn went to China, and all I got was this lousy T-shirt.

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