Speech of John Skinner, Managing Director of Blockbuster Hong Kong Limited, at Meeting of Panel on Trade and Industry of the Legislative Council on June 7, 1999

Good afternoon distinguished members of the Legislative Council's Trade and Industry Board.

My name is John Skinner and I am the Managing Director for Blockbuster Hong Kong Limited. Blockbuster is the world's largest video rental chain with over 6000 stores in 27 countries. It is important for me to emphasize that even though Blockbuster is an international corporation, 99% of the employees of Blockbuster Hong Kong are from this community. At present we employ over 150 people.

We entered the Hong Kong market in February of this year after the 42 store chain known as KPS went into liquidation in November of 1998.

As Blockbuster conducted our market analysis before entering the Hong Kong market, we took into consideration the statements made by KPS that video piracy was a primary factor in the failure of their 15 year old video chain. Our market research resulted in our belief that sufficient anti-piracy laws addressing these concerns were already in existence in Hong Kong.

Speaking in blunt terms, we have been shocked and disappointed with the continuing explosive growth in the number of pirated VCD outlets throughout all areas of the Hong Kong market. We have quickly discovered that there are sectors of this market that we simply cannot open a video rental store because VCD pirate shops have already overwhelmed those retail trade zones.

Much to our dismay, we now find our existing stores under increasing pressure because illegal VCD pirate shops, blatantly violating existing laws, continue to open new locations immediately surrounding our stores.

For example, when we opened our Hopewell Centre store in February, there were no VCD pirate shops within 200 meters of our store. In the 3 months since we opened for business, 4 VCD pirate shops have opened within that same 200 meters. The resultant financial impact on our store has been shocking.

As a legitimate business following existing laws and regulations, Blockbuster Hong Kong simply cannot survive if our primary competition ignores every legitimate regulation this informed and respected body has fought so hard to pass. Our jobs, our success and the resultant continued growth of our business is dependent upon a significant increase in the enforcement of existing anti-piracy laws.

In light of the rampant piracy spreading quickly across the Hong Kong market, we would sincerely appreciate your support as we seek the empowerment of the Hong Kong police to enforce existing copyright protection and anti-piracy laws.

I sincerely appreciate the opportunity you have given me to speak with you today and thank you for your consideration.