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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India’s Silent Revolutionaries

“Mr. Bond, they have a saying in Chicago: “Once is happenstance. Twice is coincidence. The third time it’s enemy action.” Ian Fleming, in Goldfinger.

In 60 years of post-colonial India, 3 significant developments will win the award for deepest impact – but least appreciated or known.

Potti Sreeramulu - Spirit Of The Linguistic State Reorganization (Image source - hindu.com). Click for larger image.

1953 – The Language Genie

An issue on which the colonial rulers ‘set up’ the new rulers of India for failure was on the contentious issue of language. Rightly, the colonial rulers pointed out that there never has been a successful country with so many languages.

Nehru, Subhash Chandra Bose were all for one national language – much like numerous western countries, whose success they so wanted to rival or exceed. And the language of their choice was Hindi.

What kept Europe divided, amongst many things (not that they need help), is language. Belgians (a country with 1 crore population; smaller than Chennai) are being prepared for probable split between the Flemish and the French speaking populations. Canada has been at the precipice for 100 years – torn between two languages. The Balkans , homeland of Alexander the Great (who wanted to make one world), have been at each other for the last 80 years – after they became independent of the Ottoman Empire.

There never has been a country, in modern history, which has had 2-3 languages, without splitting at the seams. One man, who is forgotten and who made a difference was Potti Sreeramulu. A believer and follower of Gandhiji, he pushed Nehru for re-organising India on linguistic lines. Nehru vacillated. Potti Sreeramulu, like Gandhiji, went on ahunger strike. Nehru ignored Potti Sreeramulu’s hunger strike. Potti Sreeramulu died.

The ground swell of international (and also domestic) opinion forced Nehru’s hand. He was left with little choice. And India has since then been administered on linguistic lines. This has given enough space for every sub-culture – without diluting their renewed Indian identity.

In the meantime, Indians have become adventurous in their integration. Idli and Dosa are a part of a Punjabi households and salwar kameez have become popular in Kerala. Hindi film industry is second only to Telugu film industry.

If India had followed colonial administration’s advice of one national language, Tamil Nadu would definitely have seceded in the 1960’s. Ask Sri Lanka. I do hope that Malaysia does not make the Sri Lankan mistake.

1991 – Problems From Outside

Rajiv Gandhi came back from Sriperumbudur in a coffin. Assam problem seemed beyond resolution. The common Indian had given up on Punjab. The 1984 anti Sikh riots only strengthened the negative outlook. Kashmir was simmering. The Indian electorate had given a fractured mandate. A hung Parliament.

Indian economy was going downhill – and nothing seemed to get the economy out of the “Hindu rate of growth”. India was on the verge of a debt default. Indian debt was downgraded by western rating agencies. The Asian Tigers had done wonders – under US tutelage. China was furiously reforming – and succeeding at it. USSR India’s faithful ally, was breaking up. Corruption was endemic and every politician was an Untouchable – nobody or anything could touch them. There were no laws. Many across the world shook their head and could be heard saying, “I knew … I told you … It had to happen …”

All bets on India were off.

A “intellectual” politician, was called back from retirement – to become Prime Minister PV Narasimha Rao. Forgotten today.

By 1995, he set up India for today’s growth. In a matter of 4 years, he cleared 40 years of cobwebs. The direction that he put India on has been now been followed for more than 15 years – with great success by more than 5 Prime Ministers. His biggest success was accountability. Heads of administration do not appear in a court of law – which PVN did. Election Commission, CAG, Supreme Court acquired fangs – earlier docile shadows of their purported design of BR Ambedkar.

1992 – The New Paradigm

One of India’s chronic under performer, Andhra Pradesh got a new Chief Minister – N. Chandra Babu Naidu. In the next 9 years, Andhra Pradesh moved in the Top 5 investment destinations.

Technology savvy, focused, driven – he changed the political idiom in India. State governments now pattern themselves along Naidu’s lines. Privatisations (instead of expanding public sector), tax cuts (instead of increases), administration automation (instead of increased recruitments), hand picked bureaucrats with a development agenda (instead of personal loyalty agenda earlier) were the cornerstones of his strategy. His state administration reform agenda convinced PM Vajpayee to commend Naidu’s template to other state governments to follow.

The Source

These 3 reformers were from Andhra Pradesh – carved out of the earlier Nizam state. The Nizam state was the largest Indian state (in Europe or any other part of Asia, it would have been a few countries) – ruled by an Indian ruler. The last Nizam of Hyderabad, considered at one time the richest man in the world, was also a very simple man. Famously, he never threw away half smoked cigarettes – frugality for world’s richest man. Especially, when other Indian Nawabs out did each other with their spending and peccadilloes in London and Paris.

Andhra Pradesh (most of) was not administered by colonials. Hyderabad is the largest modern Indian city – without a history of Colonial administration. Kolkatta, Chennai, Bangalore, Mumbai, New Delhi were cities ruled by Colonial India administration before the creation of the Indian Republic.

Indian consumer companies test market their products in Hyderabad frequently – as it lends itself to the Indian idiom. Other major metros (with a history of colonial administration) many a time give a “false positive”. Andhra Pradesh supports the world’s largest film industry – bigger than Hollywood and of course, Mumbai film industry.

Two significant creative minds were adopted by Hyderabadis as their cultural mascots. One was Allama Iqbal of “सारे जेहान से अच्छा हिंदुस्तान हमारा” “Saare Jehan Se achcha Hindustan Hamara” fame.

Chirkan, the second mascot, is the “poet” of dirty ditties. Chirkan was the irreverent break from the feudal and colonial Indian mindset – before the Indian Republic.

His rhymes on Qutub minar (a phallic symbol of feudal /colonial majesty of another era) have been repeated by every school child as his very own. He was feted at cultural events – and was a legend in his lifetime. His “sher” on a princess (the Nizam’s daughter) is repeated by schoolboys even today with raging hormones. It is to the Nizam’s credit that Chirkan was not persecuted – but given a token punishment of banishment from Hyderabad.

Forgotten today by the mainstream, Chirkan’s books still circulate in the underground. Chirkan’s rhymes and jokes spread to all of India. 75 years later, every teenager makes his rites of passage with Chirkan’s jokes. Most of Mumbai film industry’s dirty jokes are a take off on Chirkan.

Related articles

• ‘India’ (nytimes.com)