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Nation Moves from DVD to EVD

China, the world's biggest maker of DVD players, has moved to create its next-generation rival -- the EVD -- the first step toward creating a possible new national industry standard.

Beijing E-world Technology Co. Ltd., the corporate entity of a government-backed consortium of businessmen and academics, and two DVD manufacturers unveiled the indigenous, higher-definition Enhanced Versatile Disc on Tuesday.

"It's not a question of whether we walk the EVD path. It's a question of how fast or slow we go," Hao Chieh, president of E-world Technology which designed the new standard, told Reuters.

But analysts doubt that EVDs would be widely adopted in the rest of the world even if China were to adopt it.

The move aims to reduce the drain of what domestic DVD makers consider exorbitant patent royalties they must pay to a group of mostly Japanese electronics conglomerates.

It also aims to avoid over-reliance on foreign technology and could transform China from a mere copier and global factory to an innovator in audio visual technology.

Hao is convinced domestic DVD makers will switch to EVD because royalty payments totaling 2.7 billion yuan, or $325.3 million, have eaten into their profits.

Talks also are under way between domestic DVD makers and the foreign conglomerates to pay royalty for DVDs sold in China.

But EVD may not knock DVD from its leading position just yet.

The Ministry of Information Industry will set up a task force this month to deliberate whether to adopt EVD as the new national industry standard, a ministry spokesman said. There was no timetable for a decision.

DVD is the current unofficial national standard. More than 100 domestic DVD makers produced about 30 million players last year, almost double the 2001 figure, state media said.

China exported 20 million players in 2002, accounting for up to 70 percent of the global DVD market.

Reigning TV maker Sichuan Changhong is in the process of developing its own format and still considering whether to shift production to EVDs, company spokesman Liu Haizhong said.

Only five of China's more than 100 DVD makers have signed up to make EVDs. SVA Electronics, one of China's biggest DVD makers with annual output of about five million, has started mass production, a company spokesman said.

Up to 1.8 million EVD players will be manufactured in 2004, Hao said. Production will be boosted to three million in 2005 and nine million in 2006.

An EVD player costs up to 1,900 yuan, or $230, compared with an average of 800 yuan for a DVD player.

The government contributed 10 million yuan (US$1.2 million), or one quarter of R&D costs, in 1999 after nine big electronics makers, including Sony Corp and Toshiba Corp., pressured Chinese DVD makers to pay $9 in retroactive royalties for each player exported.

"The DVD dispute makes our enterprises truly understand the implications of possessing our own intellectual property rights," Vice Minister of Information Industry Lou Qinjian said at the unveiling ceremony.

The consortium charges 500,000 yuan (US$60,411) in licensing fees and $2 in royalties for each player manufactured.

"Even if China were to adopt EVD, it seems unlikely that it would be widely adopted in the rest of the world," said Helen Davis Jayalath, a senior analyst with the London-based Screen Digest, a market research journal on audio visual media.

"For this to happen the Hollywood studios, which drive the world video software business, would have to release their titles on EVD," she said.

(Xinhua News Agency November 19, 2003)

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