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Co-production will benefit Chinese, US film industries

The year 2013 brought bountiful returns for the Chinese film industry. The film market crossed the RMB20 billion ($ 3.6 billion) threshold with the Chinese films doing remarkably well at box office, edging out the Hollywood blockbusters in the Chinese Box Office top 10 list and, for the first time in many years, beating the Hollywood blockbusters in the overall Chinese box office revenue. The Chinese films are increasingly becoming a force to reckon with as the robust Chinese film market is drawing the attention of the world’s film makers.

Hollywood’s attitude towards the Chinese market has gone through a marked change in recent years, “from demonizing China to kowtowing to China”, because of the enticement of a piece of the rapidly expanding pie that is the Chinese film market, which is widely estimated to surpass the US film market in five years, and no later than 2020. However, rather than seeing an ingratiating Hollywood, both the Chinese and American film makers are looking forward to seeing a cooperation relationship between Hollywood and China, which is believed to be mutually beneficial.

China welcomes co-production

In view of the limited quota the Chinese government grants screening of imported films in China each year (34 altogether, 14 of which have to be 3D or large-format films), co-production offers an alternative way, perhaps even an easier and more profitable way, into the Chinese market as coproduction films claimed a much higher share of the box office (around 38%) as opposed to imported films (25%).

The Chinese government’s attitude towards co-production, contrary to popular belief, is welcoming and encouraging, according to Zhou Tiedong, president of China Film Promotion International (CFPI), a company set up in 2004 by China Film Group Cooperation (CFGC) to provide assistance and service for the promotion and commercial distribution of Chinese films overseas.

The 2010 box office success The Karate Kid featuring martial art star Jackie Chan and Jaden Smith is a good example of China/Hollywood coproduction. Photo:

China revised its co-production standards in 2012 to fight against the trend of what was called “fake co-production”. Three conditions have to be met in order for a film to be considered as a co-production: no less than one third of the investment has to come from China; Chinese actor(s) has to take the dominant role(s); and the film needs to include China as one of the filming locations. But the new rules do not spell a change of attitude towards co-production, according to Zhou. “The Chinese government remains very supportive of co-production,” he pointed out. “In addition, it is the most effective way for Chinese films to increase their overseas revenue.” The overseas performance of the Chinese films has been lackluster compared to their booming domestic box office success.

Bennett Pozil, executive vice president at East West Bank Photo: Courtesy of East West Bank

Until 2013, seven countries have signed co-production agreements with China, including Canada, Italy, Australia, France, New Zealand, Singapore and Belgium. Hollywood has not yet joined the club. Despite Chinese government’s supportive attitude, the lack of actual tax incentives is a big hindrance to joint production of films. But that does not seem to dampen the spirit of the Americans. Bennett Pozil, executive vice president at East West Bank, who has rich experience in financing over one hundred motion pictures, expressed his view as an investor on co-production.

Overseeing East West Bank’s Entertainment Lending business in the United States and China, Pozil said he would love to see “much more organic co-productions”. “The Chinese companies and companies outside of China should work on a script together, and cast a film together,” Pozil said. “There are a lot of reasons for co-production. With regards to China, it’s more about access to a great market.”

Censorship not a barrier

As for the censorship, both Zhou and Pozil dismissed it as a hindrance to co-production. Pozil's advice is “if censorship is part of the deal, then work with it instead of complaining about it. After all, most film makers are making their own art, they want to tell a story, and the story is about common people. Most of them are not intended to upset anybody.”

Zhou said censorship should not be an excuse for the subpar quality of many of the Chinese films, nor is it an excuse for not engaging in co-production. “Granted, it is like dancing with chains, but you can still dance beautifully. Restrictions are what make a master stand out,” Zhou said.

Both mentioned Hollywood’s Hays Code which was first introduced in the 1930s and lasted for over 30 years before being replaced by the rating system. “Hays Code was even stricter than the censorship we have now,” Zhou said. “But it did not stand in the way of the rise of Hollywood.”

Benefits of partnership

The Chinese film market has been growing at a record high speed with an average annual increase of 30% for 10 years since 2003, following the marketization of the industry by the Chinese government in 2002. “Such growth is unheard of anywhere else in the world,” Zhou said, adding that the rapid growth will continue for many years. “The Chinese film market is still far away from the point of saturation.”

Zhou Tiedong, president of China Film Promotion International (CFPI) Photo: Courtesy of Zhou Tiedong

Zhou made a simple comparison to prove his point. In the US, 313 million Americans visit the cinema for a total of about 1.4 billion times per year, which supports over 40,000 screens throughout the country. But in China, a country with a population of 1.4 billion, there is only 566 million annual theatre attendance and the numbers of screens stands at a mere 18,000 of which there are only 10,000 effective screens.

“In a country where entertainment such as watching films used to be deemed as bourgeois pastime and had been suppressed for a long time, the Chinese people’s desire to satisfy the need for entertainment as a social person is only just awakening. It is a rigid demand,” Zhou explained. “The Chinese government's support of the industry is another important factor behind its rapid growth. If you have the government's support, everything is possible. Last but not the least, there is also this invisible hand of the market pushing the industry forward.”

“The Chinese film industry is largely dependent on capital, which is good news because the drive for profits will keep the industry growing bigger and better. And we need the Americans in the process. What we need from them is not capital, which we have in abundance, but rather their industrial wisdom which cannot be bought. That is why co-production is so important. We welcome more co-productions with film makers from Hollywood,” Zhou said.

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