Chinese checkers
The Great Wall shatters H'wood's hopes for pic blitz
For U.S. distributors of this summer's biggest tentpoles, business in the Middle Kingdom is getting ever more mysterious, with many left puzzled why the government is tightening the screws on their product.
The big question: Is China limiting Hollywood pics to keep its local movie industry in the race?
While such speculation reflects tinges of paranoia on the part of frustrated executives -- and would be difficult to prove -- the situation is being taken seriously enough that the Motion Picture Assn. has commissioned an internal report to examine what has happened.
A heavy hint that the government is prepared to take action favoring Chinese film at the expense of others came during last month's Shanghai Film Festival. While opening-night addresses are usually congratulatory and banal, State Administration for Radio, Film & Television (SARFT) director general Hu Zhanfan dropped a couple of sentences into his speech describing "preferential treatment for commercial Chinese cinema" and the "opportunities ahead for domestically produced movies to increase screenings."
Studio execs do not view China's film restrictions as malicious, but they fear worse is to come, and that administrative tools are being used to make commercial reality fit a policy goal.
Specifically, they worry that:
- the 20 films imported into China each year and eligible for revenue-sharing distribution are being selected to keep B.O. on Hollywood pics down;
- there is an unofficial ceiling of RMB100 million ($12.5 million) placed on the revenues of foreign films. In other words, "Da Vinci" may not be the last Hollywood film whose run is cut short prematurely in China;
- censorship and approvals bureaucracies are being used to delay the release of Hollywood movies. This keeps marketers in the dark until the last minute and allows disc piracy to erode theatrical potential;
- the number of "blackout" periods in which foreign films are not allowed to release is on the increase from a typical two or three to perhaps five this year.
Chinese authorities deny any attempt at market manipulation.
A senior manager in the import and export division of China Film Group says there is no cap or restriction put on the amount of revenues a foreign film can earn in China, and he denied the idea that "X-Men 3" and "Shall We Dance?" were recent examples of banned films. He says rather that they had not been approved because they have not yet been submitted.
"We introduce films according to what the market wants, and our decisions are commercial decisions," he says. His division recently delivered the news of a U-turn on Pixar's "Cars": Having initially been told it would not receive approval, Pixar has learned the toon now will get a release in August.
While most individual instances of release difficulties for foreign movies can be attributed to plausible explanations, taken together the list of complaints looks to some like the manifestation of a policy to suppress Hollywood's B.O. in China.
While film biz execs are concerned, they don't feel they are being singled out. For example, news outlets with operations in China are concerned with ongoing efforts to restrict the press. A proposed law would fine news outlets for failing to get permission before reporting on emergencies. And last month, China put a jailed New York Times researcher on trial for "providing state secrets abroad."
In the past year, Yahoo!, Google and Microsoft have come under criticism for complying with Chinese censorship efforts in their operations there. And according to the Washington Post, Yahoo! provided data that was used to prosecute Shi Tao, a journalist jailed for leaking a propaganda directive.
The restrictions on Hollywood films may not be permanent. Rather, they could be an enactment of a policy (unarticulated publicly) aimed at ensuring that Chinese films enjoy a majority of the B.O. revenues.
China Film and parent ministry SARFT, have proclaimed that Chinese films in each of the last three years earned market shares greater than 50%, and that the overall market last year grew 30% to some $250 million.
Trouble is, 2006 has been a lousy year for Chinese releases. And in order to maintain the very important Asian concept of "face," which roughly translates as "respect," films of other nationalities are being held down.
The year opened brightly enough with the Ronny Yu-helmed martial arts actioner "Fearless" racing off to a smashing $12.9 million, beating "King Kong" in the process. But since then, local pics have failed to jell. The next most successful this year is low-budget comedy "Crazy Stone," which has grossed $750,000 since its June 30 release.
The regular April blackout of foreign films -- intended to allow room for local movies in theaters -- appeared to protect nothing much at all. Now, with the exception of the imminent release of "Dragon Tiger Gate," all the big local titles are skedded for much later. These include "The Banquet" and "Rob-B-Hood" in September and Zhang Yimou's crucially important "Curse of the Golden Flower" in December. Another biggie, epic actioner "The Battle of Wits," may not be ready for release until early 2007.
State news agency Xinhua also quoted Liu Shusen, distributor of a number of recently released low-budget local films, saying, "The box offices of these movies would be guaranteed by SARFT, which required theaters across the country to allocate time spaces, and to organize officials, students and soldiers to watch." Seems this is what Hu meant.
Foreign distribs say China faces a restive constituency, which makes this a hugely sensitive and political area. "People want to participate in the first world," says one. "Part of that is watching big Hollywood movies."
Those aspirations apply to the political class, too.
Day-and-date releases are hugely popular -- the recent gala opening of "Da Vinci Code," which had its world preem in China, was one of the social occasions of the year -- and big premieres are used to showcase China's growing openness and tolerance. But while the politicos are happy to enjoy the night out, they are less happy with the commercial and political ramifications of hugely successful foreign product.
"If they close down the pirate market, where much of the demand is currently being satisfied, they will have to open up the legal markets, introduce a classification system and allow the public to make its own choices. That puts the politicians in a very difficult place," says another studio source. "The best thing for everyone, Hollywood and China, would be for the Chinese films to do better."
Certainly, local movies also suffer from China's underscreened and conservative exhibition sector and from piracy, as a recent MPAA report showed.
Meanwhile, the official frostiness toward the most popular foreign films may be extending beyond high-profile U.S. movies.
Despite improving relations between China and South Korea, "The King and the Clown" recently was barred from Chinese theaters (though it will be permitted a DVD release) on the grounds that the record-breaking movie, which grossed $85 million at home, contains homosexual themes and bad language. China also is reportedly putting the brakes on the wildly popular Korean TV drama series "Jewel in the Palace," which even state president Hu Jintao has admitted being addicted to.
Not watching "Jewel," however, will be a minor inconvenience for Hu and others if the U.S. decides to get tougher. Hollywood and the MPAA already have backed action being taken against China through the World Trade Organization and TRIPS (trade-related aspects of intellectual property rights) agreements over piracy.
If suspicions of China's movie-market manipulation harden into something firmer, the U.S. could return to the WTO with a restraint of trade complaint.
