Meanwhile, pirated CDs have made it nearly impossible for bands to make money through records.
China only boasts one rock and roll superstar, Cui Jian, who in the early 1980s is credited with launching the genre here when he sang on national TV what would become an anti-establishment anthem: "Nothing to my Name".
He is known as the first in China to have linked social and political commentary with electric, guitar-backed music.
Now in his mid-40s, Cui has stuck to his sharp social criticisms while making a career out of dodging censors and staging impromptu and unapproved concerts.
Cui won international recognition last month after singing "Wild Horses" with Mick Jagger when the Rolling Stones played their first-ever China concert in Shanghai.
Lucifer Jones, also known as Dr. 666, a Los Angeles guitarist who fronts a Sino-American band called the Supernaturals, agreed with Zhang that China's rock and roll industry was poised to finally do something big.
"Beijing is a place bigger than New York, but there are only about five live music clubs here. But still the potential is great, kids all over the country are flocking to rock and roll despite all the difficulties," he said.
"I think rock and roll is ready to explode here."
Jones has been performing in Beijing and the northern Chinese city of Harbin for about half a year and says he is surprised at the number of bands and the enthusiasm for rock, especially in the universities where he has taught.
"He is teaching us to put English words in the songs we sing," Wu Kejia, frontman of the Beijing band Easygoing, said of Jones' influence.
"Other than Cui Jian we really don't have any musical influences in China. I think it is important to listen to Western bands first, only after we study Western rock can China develop its own brand of rock and roll."
Meanwhile more sponsors are being attracted to events such as the Midi Festival, ensuring that major costs are paid and providing a blueprint for other festivals.
This year's Midi Festival attracted the backing of the likes of US clothing firm Lee, local beer maker Yanjing and guitar maker Gibson.
"I'm hoping the Midi Festival will become a model for other cities in China to study, so that in the future they can put on music festivals," Zhang said.
"It may have taken 20 years to get this far, but in a place like China, which has never had anything like rock and roll, this is to be expected."