Magazine article Variety

Amid Massive Opportunity, China Remains a Reluctant Partner

Magazine article Variety

Amid Massive Opportunity, China Remains a Reluctant Partner

Article excerpt

Despite increased access for their movies, and a territory that continues to grow, the studios face a number of headaches

With more and more foreign films now being allowed into China, and potential revenues that can be earned having risen to 25% (from as little as 13%), one might think that doing business in China is getting easier for Hollywood.

But that"s simply not the case.

The U.S. Trade Representative had to intervene when China Film Group-which distributes Hollywood movies in China-tried to pass on a national value-added tax by withholding money on revenues earned by American films that played in the territory. And while that dust-up seems to have been resolved, plenty of other tensions remain.

A recurring migraine is the selection of release dates, determined by China Film Group and industry regulator the Rim Bureau. The Hollywood studios maintain they have little advance notice of dates, that slots change suddenly, and that many movies dont fulfill their potential because they are intentionally programmed in close proximity to each other.

And even though the studios now conduct marketing alongside China Film, the murkiness of release dates makes it is difficult to build sustained promotional campaigns, which in tum makes media-buying tricky.

Moreover, the Rim Bureau still appears to be operating blackout periods, in which foreign films are not allowed to opea While this year's summer blackout was comparatively limited, the studios expect October and December to be largely out of bounds for their films. December sees the release of at least three big Chinese films - "Police Story 2013," starring Jackie Chan in the sixth film of the franchise; Feng Xiaogang's "Personal Tailor"; and "The Monkey King" with Chow Yun-fat.

The job of the studios' Beijing offices remains, crucially, a lobbying effort, trying to persuade China Rim and the Film Bureau which pictures to pick for import. And although the quota has expanded from 20 revenue-sharing movies per year to 34, with the additional titles being in 3D or Imax formats, gaining entry into China does not appear to be getting much easier.

China Film seems to be intent on cherrypicking movies that do well at the U.S. box office rather than choosing evenhandedly among all of the studios'offerings.

And China's government organizations aren't the only ones that have been dogging the studios. In April 2012, the Ü.S. Securities and Exchange Commission sent a letter of inquiry to 20th Century Fox, DreamWorks Animation and Disney regarding their dealings with the Chinese government. …

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