[NSP Research Report] Information and Cultural Industries and the US-China Hegemonic Competition: Hollywood's Transformation and the Challenge of Chinese Cinema

AbstractThis paper presents an analytical framework for understanding the US-China hegemonic competition in the information and cultural industries, particularly the film industry, as leading sectors of the 21st century. Firstly, in terms of technological competition, Hollywood is still leading the global film industry's trends while seeking transformation strategies for new markets, and China is challenging this by leveraging steady growth in its domestic market and technological advancements. Secondly, from the perspective of standards competition, while Hollywood dominates industry standards, China's challenge to propose new models by leveraging its vast domestic market and capital is also significant. Lastly, in terms of attractiveness competition, the efforts of the film industry to emanate content appeal and the competition in policies and systems between the two governments supporting these efforts cannot be overlooked. In summary, the US-China competition in this field should be understood not merely as a traditional competition for market share or technological innovation, but as an emerging power competition involving the control of standards, the projection of appeal, the variable of scale, and the nature of the system. Therefore, the outcome of this competition is less likely to be a simple power transition scenario of a single nation's decisive victory, as posited by existing theories of power transition, but rather a scenario of symbiotic competition between the two network states, the United States and China. Diagnosing the current state of US-China hegemonic competition unfolding in these complex dimensions and projecting its future is crucial for South Korea, which is establishing its position in the information and cultural industries through the recent success of the Korean Wave, to formulate future strategies.

I. Introduction

In recent years, research on the competition between the United States and China has been actively conducted in international political science circles, both domestically and internationally. US-China competition transcends the simple dimension of competition between two great powers and carries complex implications for 21st-century global hegemonic competition and the resulting transformation of power structures. Academic interest in US-China competition has primarily focused on competition in established arenas such as military and economic power. Regardless of how the world changes, victory in the game of rich and strong nations will remain a crucial variable in determining the trajectory of global hegemony. However, in today's world, undergoing complex transformations such as globalization, informatization, and democratization, attempting to gauge the overall landscape of the global stage solely by competition in established arenas is overly simplistic. This is because not only are the established arenas themselves becoming more complex in 21st-century world politics, but new arenas of power are emerging beyond the boundaries of traditional international politics. Understanding the trends of competition in these so-called emerging arenas is important not only for its own sake but also for understanding its impact on established arenas. Based on this perspective, this paper aims to analyze the current state of US-China competition in emerging arenas and project its future.

The term 'emerging arena' here refers to areas such as technology, information, knowledge, culture, and communication, where new patterns of competition in world politics are emerging, beyond the existing military and economic domains. The emerging arena that this paper primarily focuses on is the 'information and cultural industries' as a leading sector of the 21st century (Rennstich 2008; Akaev and Pantin 2014). The information and cultural industries, primarily composed of broadcasting, music, film, and games utilizing digital technology, are also referred to as digital cultural industries, information content industries, creative industries, infotainment industries, and entertainment and media (E&M) industries. These information and cultural industries are representative leading sectors in that their market size has been continuously increasing over the past several years and is expected to continue to grow. As of 2013, the global market size of the information and cultural industries was approximately $1.8 trillion, and they are leading the global economy with an average annual growth rate of 5.0% from 2014-18 (KAIST Institute for Information Media Policy 2015). This paper seeks to initiate its discussion from the film industry, which is undergoing transformation in the digital environment, within the information and cultural industries.

The competition among great powers in leading sectors has long been a subject of interest in international relations theory, as it vividly illustrates shifts in the international political structure. For example, historically, the trajectory of competitiveness in leading sectors of the global economy has been closely linked to the rise and fall of global hegemony (Gilpin 1987; Thompson 1990; Modelski and Thompson 1996). The most recent example is the hegemonic competition between Britain and the United States in the first half of the 20th century, centered around sectors like electrical engineering, consumer durables, or the automotive industry. More recently, the hegemonic competition between the United States and Japan in the latter half of the 20th century, in consumer electronics, computer hardware, and software industries, can be cited. Within this continuum, the hegemonic competition between the United States and China in the information and cultural industries, a leading sector of the 21st century, can also be understood (Dynkin and Pantin 2012; Kim Sang-bae 2012). In particular, the hegemonic competition in the information and cultural industries, which will serve as a yardstick for discerning the future of US-China competition, is drawing more attention as it portends the emergence of a new type of power game, different from those seen in previous leading sectors. Based on this perspective, this paper examines the three dimensions of competition between the United States and China in the film industry within the information and cultural industries. Firstly, in terms of technological competition, Hollywood is still leading the global film industry's trends while seeking transformation strategies for new markets, and China is challenging this by leveraging steady growth in its domestic market and technological advancements. Secondly, from the perspective of standards competition, while Hollywood dominates industry standards, China's challenge to propose new models by leveraging its vast domestic market and capital is also significant. In addition, in terms of attractiveness competition, the efforts of the film industry to emanate content appeal and the competition in policies and systems between the two governments supporting these efforts cannot be overlooked. Diagnosing the current state of US-China hegemonic competition unfolding in these complex dimensions and projecting its future is crucial for South Korea, which is establishing its position in the information and cultural industries through the recent success of the Korean Wave, to formulate future strategies.

Existing research on the film industries (or cultural industries in a broader sense) of the United States and China can be broadly divided into three groups, with significant gaps among them. Firstly, research from American academia largely stops around the early to mid-2000s Hollywood studies, with virtually no academic research covering the competition between Hollywood and the Chinese film industry in the 2010s. Secondly, research from Chinese academia has mostly been at the level of introducing the status of China's cultural industries undergoing changes in the environment of globalization and market liberalization, with most of these studies lacking academic rigor. Lastly, research from Korean academia has predominantly focused on analyzing China's film industry and popular culture from the perspective of Chinese regional studies and state theory, or analyzing the cultural codes of Chinese cinema from the viewpoint of film criticism. Although there have been occasional academic studies abroad dealing with similar topics to this paper, they have not been sufficient to fill the research gaps found in these three groups. This paper aims to present three new arguments regarding the future of hegemonic competition in the film industry. First, competition in this field is not merely a resource-power game over market share or technological innovation, but an emerging power game involving the control of standards, the projection of appeal, the variable of scale, and the nature of the system. Second, competition in this field is not solely between state actors but is a competition among state-non-state complex actors, involving not only private enterprises but also non-state actors represented by consumers of information and cultural content. Finally, the outcome of this competition is not a simple power transition structure as posited by existing theories of power transition, but a reorganization of a complex 'network of powers' emerging from the complex power games played by various actors. In summary, US-China competition in this field should be understood not as a form of 'symmetric international politics' discussing a single nation's decisive victory, but as 'asymmetric inter-network politics' where two networks, with the US and China as hubs, engage in symbiotic competition (Kim Sang-bae 2014).

This paper is broadly divided into four parts. Chapter II presents the analytical framework for US-China hegemonic competition in the information and cultural industries across three dimensions: technological competition, standards competition, and attractiveness competition, and examines the variables of scale and system operating behind them. Chapter III examines the secrets of Hollywood's technological and standards hegemony in the era of media convergence from the perspective of technological competition, and the quantitative growth and technological advancement of the Chinese film market challenging this. Chapter IV examines Hollywood's transformation strategies, currently employed to overcome its stagnation, focusing on its strategy to penetrate the Chinese market, from the perspective of standards competition, and explores the potential of Chinese film and internet companies that are rapidly advancing amidst this. Chapter V compares and explains the appeal embedded in US-China film content from the perspective of attractiveness competition, and points out the nature and limitations of the government policies of both countries supporting the competitiveness of the film industry. The conclusion summarizes the paper's arguments and briefly touches upon the implications of US-China hegemonic competition in the information and cultural industries for South Korea.

II. Analytical Framework for Leading Sectors and Hegemonic Competition

1. The Three Thresholds: Technology-Standards-Attractiveness

The recent competition in the information and cultural industries presents a different aspect compared to past competitions aimed at producing affordable and high-quality semiconductors, high-performance software or computers, or fast internet access. In other words, it goes beyond competition at the level of securing resources or building capabilities by a company or country, such as product competition or technological competition. Of course, in the competition within the information and cultural industries, creating engaging dramas or realistic film content is a crucial aspect. It is undeniable that securing sufficient capital and cutting-edge technological capabilities is important to win in such competitions. However, competition in the information and cultural industries within the media convergence environment makes it crucial not only to dominate the standards for the production, distribution, and marketing of information and content but also to possess the ability to project appeal to satisfy audience tastes. In summary, competition in the information and cultural industries is a three-dimensional competition to dominate industry standards and appeal, going beyond a flat competition of capital and technology... (Continued)

Author

Professor of Diplomacy, Department of Political Science and International Relations, Seoul National University. He graduated from the Department of Political Science at Seoul National University and received a Master's degree in Political Science from the same university, followed by a Ph.D. in Political Science from Indiana University, USA. His main research areas include information, communication, and networks in international relations. His books include <Arachne's International Politics: Challenges of Networked World Politics Theory> (2014), <Information Revolution and Power Transformation: A Networked Political Science Perspective> (2010), <National Security Strategy for Cyber Security: A Perspective from International Politics> (forthcoming), <Future Strategies for Emerging Security: Beyond Non-Traditional Security Theory> (2016, co-edited), <Middle Power Diplomacy of Korea: History, Theory, and Practice> (2016, co-edited), and <Emerging Powers and Emerging Security: Competition and Cooperation in Future World Politics> (2016, co-edited). He is currently the Director of the Institute for Global Social Affairs at Seoul National University and the Director of the Center for Future World Politics at the Institute for Global Social Affairs, Seoul National University.