Film Industry: American Muscle To Chinese Skeleton

US and China gang-up to save their film industries.

Piracy by China on IP rights of Hollywood. Cartoonist Clay Bennett takes a swipe at China and Hollywood. Sourece & courtesy – claybennett.com | Click for source.

Davids & Goliaths

The two biggest economies in the world, US and China have at least one ‘threat’ in common. And the threat is actually from much smaller economies.

US and China have allied to ensure that the threat is ‘managed’.

The Chinese and the US film industry have no answer for old warhorse Bollywood and the upstart Nollywood.

Between Bollywood and Nollywood, they occupy the Top-2 positions in the world film industry. Bollywood with little support from mainstream banks, and Nollywood with no support at all have left Hollywood and the Chinese trailing far behind.

Boom Time In China

Even though

Cinema in China is booming. In 2010 box-office revenues grew by 64% to just over 10 billion yuan. | Image source & courtesy – economist.com | Click for image source.

Cinema in China is booming (see chart). In 2010 box-office revenues grew by 64% to just over 10 billion yuan. More than 520 films were made—about as many as in America. Only India produces more. (via China’s film industry: Kung fu propaganda | The Economist).

What The Economist does not mention is that India alone produces as many as China and US together. And that Nollywood comes in at No.2 position.

Globalized and organized Hollywood is finding that Bollywood and Nollywood is increasing their leadership in viewer and production numbers – without the advantages that Hollywood has.

The only relief that Hollywood has, is from China.

Hollywood is already doing well in China. Blockbusters like Avatar have been hugely popular and foreign films – usually big-budget Hollywood fare – account for about half of the country’s box office takings.

For the past decade, China has only permitted 20 foreign films to be shown in cinemas. A new deal agreed last month allows a further 14 movies to be shown in cinemas, provided they are in Imax or 3D formats.

China is certainly rich in potential. Box office takings surged 29% to $2.1bn (£1.3bn) in 2011 and are expected to see similar growth in 2012. While that’s only a fraction of the $10.2bn taken at the US box office, US ticket sales are declining. (via BBC News – Hollywood plays China card as audiences dwindle at home).

In the last ten years, mainland China has promoted its domestic industry – and taken control of it. Using various front companies, the Chinese Government has bought out and put up studios that will increase production along Party lines.

Along the way, Chinese actors and directors have found traction in Hollywood. And Hollywood blockbusters have gained significant market share in China.

Where the Japanese have gone before

In turn China, with its bulging foreign exchange reserves has decided to take a stake in Hollywood. Much like the Japanese bought in Hollywood back in the 1990s. Sony into Columbia Tristar (1989) and Matsushita (in 1990, Matsushita Electric bought MCA+Universal Studios for $6.5 billion)

BEIJING — Hollywood studios, facing steep challenges in the North American movie market, are taking more interest in China.

The Walt Disney Company and Marvel Studios, a division of Disney’s Marvel Entertainment subsidiary, are producing “Iron Man 3” in China. An agreement with Chinese authorities will allow more American companies to distribute more movies and reap a greater share of the box office in China, the world’s fastest-growing economy.

But at least one billionaire businessman is betting that the American movie market is still the ticket to international success. And he is Chinese.

Wang Jianlin, a rags-to-riches tycoon, is taking over AMC Entertainment, North America’s second-largest movie theater chain behind Regal Entertainment. And he is promising to integrate it into a new, made in China, global brand called the Wanda Group.

Wanda is a private company in a nation dominated by state-owned enterprises. But the AMC deal is closely aligned with the Chinese government’s priorities, which include encouraging Chinese companies to “go global,” pushing an overhaul of Chinese media and entertainment properties and placing greater emphasis on consumer spending. Policy makers in Beijing also want to bolster China’s “soft power” capabilities to extend its cultural influence internationally, and the film industry is considered one of the most promising avenues for doing so.

Which raises the question: Why invest in the United States cinema market at a time of weakness, when box office receipts are sluggish and American film producers are looking to China?

Some analysts have suggested that Mr. Wang’s acquisition of AMC was political, an effort to curry favor with Chinese leaders, who are pushing their nation to enhance its influence by exporting cultural products. Others contend that Mr. Wang is eager to establish himself as China’s first global corporate chief.

But to pull off the deal, Wanda needed plenty of that: more than $3 billion in cash, including $500 million it has promised to invest in AMC in North America. In the end, much of the cash came from China’s big, state-controlled banks. (via China Tycoon Places Risky Bet on U.S. Movie Market – NYTimes.com).

Soft Power – China?

China’s expected rise as a global soft-power has been beset with unexpected difficulties and slower if not zero growth. From the time that Joseph Nye coined the term soft-power, China has been positioned, by Western media as the challenger to American (& Western) soft-power. To Western media, India, seemed like an unlikely candidate as Emerging Soft-Power, has been ranked highest among emerging economies.

But curiously, the more China tries to become a soft-power, the more incapable it finds itself. Most recently, the Chinese President, Hu Jin Tao, lamented the lack of Chinese soft-power – and cautioned the Chinese nation of the dangers from Western culture.

To add heft to China’s quest for soft-power, the Chinese film industry has been significantly supported by the Party and Chinese banks. Investments into construction of film exhibition theatres, studios, animation labs, have been liberal and copious. At the same time, severe restrictions have been on import of films – to twenty in a year, from all sources.

On left y-axis read the zero at top as 100. On the right y-axis, percentages are based on 2005 as base year with 1 deal.

In 2009, the State Administration of Radio, Film and Television promulgated the Interim Provisions on the Qualification Access for Operating Film Enterprises, Interim Provisions on the Administration of Chinese-foreign Equity and Contractual Joint Ventures of Radio and Television Program Production and other policies in succession. In the capital operation process, Chinese film industry ushered in the market reform, mitigating the problem of capital shortage and vitalizing the market.

There has been a continuous increase in the number of Chinese home-made films since 2003. In 2009, the number hit 456, up 12.32% on a year-on-year basis. The year 2009 has been a banner year in the output of home-made films since 2006. In certain sense, the year 2009 was a critical period of development for Chinese film industry. In the very year, the gross revenue of the Chinese film market reached RMB10.67B, up 26.47% compared with RMB8.43B in 2008.

Huayi Brothers Media Group and Beijing Polybona Film Distribution Co., Ltd. (Polybona Films) are the leading private film bodies. Take Huayi Brothers Media Group as an example, under the flagship of Huayi Brothers Media Group, Huayi Brothers Pictures Co., Ltd. realized the complete industrial chain system from screenwriting, direction, filmmaking and marketing to distribution.

The films, including the Rabe’s Diary and The Message, which Huayi Brothers Media Group invested in and participated in the operation in 2009, acquired good box-office takings in succession. Furthermore, the film, such as Tangshan Earthquake and You Are the One 2, which Huayi Brothers Media Group invested in 2010, are expected to obtain the good box-office takings and worth waiting for.

On Oct. 30, 2009, Huayi Brothers Media Group listed on Shenzhen’s ChiNext Board. The rapid development of the private film bodies, including Huayi Brothers Media Group, Orange Sky Entertainment Group (International) Holdings Ltd. and Polybona Films, not only aggravated the market competition between state-owned film enterprises and private film bodies but also vitalized Chinese small-and-medium-budget film-making market.

The Chinese film-making market showed a sound development gradually. PE/VC took a wait-and-see attitude towards the Chinese film-making market in general. According to the latest China Film-making Industry Investment Research Report 2010 issued by Zero2IPO Research Center, there were 28 investment deals in Chinese film industry from 2005 to 2009, including 26 deals whose investment amount was disclosed with a total investment of US$256.00M and US$9.85M in average. There were nine investment deals in Chinese film industry in 2009, which has reached the peak since 2005. (via Investment in Chinese Film Market Strong in Words but Weak in Action – PEdaily.cn – Zero2IPO Group).

Since 2004, the number of Chinese animation production enterprises has been on the rise, with the number of enterprises engaged in the production of TV cartoons rising to 200 in 2010 from 15 in 2004. Meanwhile, a host of registered animation film production institutions have emerged, with the figure increasing to 68 in 2010 from 25 in 2008. | Caption & image via Global and China Animation Industry Report, 2011 – ResearchInChina.

Echoes from Japan

Interestingly, animation films in China have been a big success – unlike India. Vastly different from the traditional lines of Chinese films.

Keep in mind, that Japan is a big consumer of anime, gaming, cartoons. 

Kung Fu Panda, a 2008 American computer-animated action comedy film is enough proof of this.

“Kung Fu Panda,” the animated movie about a bear named Po with a passion for martial arts is a huge hit in China.

The film, from DreamWorks Animation and Paramount Pictures, has already grossed more than $12 million after less than two weeks in release.

Globally, the movie has brought in $275 million (via ‘Kung Fu Panda’ is a success at the box office in China – The New York Times).

Was the success of Kung Fu Panda and its sequel, in China a flash in the pan?

Kung Fu Panda and its sequel are arguably the most successful Chinese-themed Hollywood movies to date, and the movie’s screenwriter, Glenn Berger, says Hollywood’s China infatuation is not necessarily a passing fad. (via BBC News – Hollywood plays China card as audiences dwindle at home).

Quiet Flows Buddhism

For long the Chinese needed and used Buddhist story props and ideas in Chinese films – especially made by the centurion Shaw Brothers – Run-Run and Run-Me. Based out of Hong Kong and later Singapore, the Shaw Brothers was the global face of Chinese cinema from 1950-2000. Devout Buddhists, their story-lines incorporated Japanese colonialism, Buddhist monks, great belief in the Chinese identity. Some Chinese dynasties like the Manchu, Ching and Mongol Yuan dynasty of the 14th century was a favorite target.

But in the last 10-15 years, the Buddhist monk has disappeared. Instead gangsters and underworld have become dominant themes in Chinese films.

The pre-occupation of Hollywood with death, war, violence, crime is well-known. Is that the way Chinese will ‘progress’?

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