March 24, 2006: The Chinese army has suffered substantial economic losses because of movie pirating. Illegal CD. DVD and tape copies, of movies produced at the army owned August First Film Studio, has led to the loss of 90 percent of the business the army used to do there. This is the largest film production facility in the country, and until video pirating became a factor, turned out 40-50 productions a year. Now, production is less than ten percent of that.

The studio was founded in 1952, and has long been a source of income for the army. Owning a movie studio is not unusual for the Chinese army. In East Asia, it's quote common for the armed forces to have non-military business operations. In the case of the August First Film Studio, there were military angles as well. The studio produced hundreds of propaganda and training films for the troops, and young audiences containing future soldiers. Because the communist party can censor any film shown in China, one could say that everything produced by August First Film Studios is propaganda. But that's not exactly the case. Three decades ago, when the economy began to open up to competition and entrepreneurs, the studio had to compete with foreign imports. This it did with some success. But video pirates killed the market. There aren't that many movie theaters in China, and people prefer to buy a CD or DVD and watch films at home. It was in China that film pirates developed a file format that allowed most movies to be copied to a CD, rather than more expensive DVDs. This was fine for viewing on TV, and over a hundred million CD players, that could handle this format, have been sold. You'll even find them in barracks, so soldiers can view the films. While film piracy is technically illegal, the army is believed to have been involved in that end of the business as well.

While the government has forced the army to sell off most of its business interests in the last decade, the August First Film Studios are still army owned, and trying to make a comeback. It's cheap to make movies in China, and the army facilities are among the most spacious and well equipped in the country. In addition, the army can quickly summon thousands of soldiers as extras, and has a huge stock of military props.