Business: China's film industry Lost in Shangywood
China's booming film market is tantalising but hard to crack.
“MY NAME is The Future.” So declares a heroic Chinese astronaut in Mandarin after saving the life of Stephen Colbert, an American comedian, during a recent episode of the “Late Show”.Dubbed the Pander Express, the sketch mocked how far Hollywood studios are willing to go in modifying their movies to pander to national pride and curry favour with Chinese officials.American film studios are desperate to win approval for releases in China because its film market is rocketing.From 2003 to 2010 box-office receipts on the mainland grew by an annual rate of more than 40% on average.In 2012 Chinese film revenues passed those of Japan, then the second-biggest market.
Chinese box-office receipts are forecast to top $10 billion a year by 2017, when China will be closing in on America as the world's biggest market.No wonder, then, that Western entertainment firms have been ploughing money into China.IMAX, which specialises in large-screen theatres, floated shares in its China division earlier this month to finance a big expansion there.In September Warner Brothers announced a joint venture with China Media Capital, a local investment firm, to produce movies palatable to China tastes.CMC is also an investor in Oriental DreamWorks, a local entity collaborating with DreamWorks, an American studio, to make the next in the “Kung Fu Panda” series.
Hollywood should beware the siren song.“The aggregate growth in numbers suggests the streets are paved with gold, but it's not that easy,” warns Peter Shiao of Orb Media, an independent production and finance company.There are only two ways for films made abroad to enter the Chinese market: 34 big foreign productions a year are let in via a quota system; Chinese firms are also allowed to acquire the rights to 30 to 40 smaller foreign films a year for a fixed fee.Because distribution of foreign films is controlled by politicised state-owned entities, even an easing of these quotas—as is now rumoured—will not help much.
Liu Cuiping of EntGroup, a research firm, points out that the film-opening schedule is an important protectionist tool.This July, typically a big month for movies, for example, no new Hollywood blockbusters were permitted on Chinese screens.She adds that subsidies and preferential taxation also favour local firms.