Page 374 - 2018 White Paper on the Business Environment in China
P. 374
8 White Paper on the Business Environment in China
Global Times announced in February 2016 that China China’s March 2017 film law was the first piece of
was likely to up the quota to allow more Hollywood Chinese legislature to officially target the country’s
films into the Chinese market. Under the current five- film industry. Its 60 articles represent both a challenge
year deal, which was signed on February 17, 2012, China and an opportunity. Aware of domestic deficiencies,
permits 34 films to be imported from all countries per Beijing wants to nurture its domestic productions while
year, 14 of which should be 3D or large-format films. piggybacking on foreign movie-making expertise,
That was increased from the annual quota of 20 films protecting overseas investments, and squishing
when China joined the WTO in December 2001. A dozen potentially disruptive social influences at home. As a
more films may be added to the quota with no rider for set of broad policy statements, many of the new film
3D films. The negotiation for a new agreement comes law’s articles are open to interpretation. As China’s film-
amid mounting uncertainties in the wake of the Trump related policies and processes move from an ad hoc
administration. Trump’s rhetoric on China has worried system to a more permanent, professional framework,
some Hollywood executives, as they don’t know “how it reinforces the idea that China is an increasingly
high a priority Hollywood’s interests will be for the new welcoming environment for those creating, marketing,
administration,” according to a Bloomberg report. The distributing, and financing original, big-screen
Wall Street Journal talked about a scenario where China entertainment. Under China’s new film law, foreign/
could use the Hollywood negotiations as retaliation domestic co-produced films will continue to be treated
against Trump’s rhetoric on economic relationship as domestic productions. As such, the law will benefit
between the two countries. Trump’s China policies may both Chinese and co-production studios by making it
weigh on the talks. However, even if the import quota easier to move projects from development to production
was raised, Hollywood filmmakers are likely to have a and then to distribution phases. The law also abolishes
bumpy ride in the domestic market as industry chains the requirement that Chinese film companies must be
in the two nations differ drastically, experts noted. For approved as “studios” or applies for permits on a film-
example, in terms of the marketing strategy, the U.S. by-film basis before they can start making movies. This
film producers rely heavily on online promotions, but very well could benefit foreign producers by increasing
domestic distributors focus more on offline campaigns the number of potential Chinese partners looking to
because of the celebrity effect. The potential increase in engage in co-production. The new law also attempts
the number of imported films has ramped up pressure to clarify what was previously a gray area regarding
on domestic moviemakers. China’s top film regulator, subject matter. By requiring the relevant government
the SAPPRFT warned domestic film industry executives authorities to spell out censorship rules by formulating
in December 2016 to “prepare themselves for greater “concrete film examination standards”and making those
competition from foreign movies,” according to industry standards open to the public, it should see censorship
website chinafilminsider.com. The box office share move toward a more transparent system, with objective
between domestic and U.S. should tilt slightly in the expert opinions and formalized rights of appeal. The
favor of the U.S. if the quota negotiations are successful. ever-increasing importance of cracking the Chinese box
Currently, domestic producers reap around 60 percent office has seen many Hollywood studios revamp their
of box office receipts while U.S. counterparts receive the entire production line, with films created specifically to
remaining 40 percent, according to Huang. The concern appeal to audiences on both sides of the Pacific (Allen).
over being squeezed out by foreign competitors is also
providing an impetus to the domestic film industry (Li).
China’s film regulators offered some encouraging hints
of relaxation in late 2016. In an effort to counteract
a downturn at the domestic box office, regulators
packed the December [2016] release schedule with
additional Hollywood films, bringing the year’s total to
39 imported titles instead of 34. Regulators classified
the extra releases as special “cultural exchange projects,”
denying that the usual limit had been breached — but
most analysts viewed the move as a modest de facto
expansion of the quota (Brzeski, China’s Quota).
374
Global Times announced in February 2016 that China China’s March 2017 film law was the first piece of
was likely to up the quota to allow more Hollywood Chinese legislature to officially target the country’s
films into the Chinese market. Under the current five- film industry. Its 60 articles represent both a challenge
year deal, which was signed on February 17, 2012, China and an opportunity. Aware of domestic deficiencies,
permits 34 films to be imported from all countries per Beijing wants to nurture its domestic productions while
year, 14 of which should be 3D or large-format films. piggybacking on foreign movie-making expertise,
That was increased from the annual quota of 20 films protecting overseas investments, and squishing
when China joined the WTO in December 2001. A dozen potentially disruptive social influences at home. As a
more films may be added to the quota with no rider for set of broad policy statements, many of the new film
3D films. The negotiation for a new agreement comes law’s articles are open to interpretation. As China’s film-
amid mounting uncertainties in the wake of the Trump related policies and processes move from an ad hoc
administration. Trump’s rhetoric on China has worried system to a more permanent, professional framework,
some Hollywood executives, as they don’t know “how it reinforces the idea that China is an increasingly
high a priority Hollywood’s interests will be for the new welcoming environment for those creating, marketing,
administration,” according to a Bloomberg report. The distributing, and financing original, big-screen
Wall Street Journal talked about a scenario where China entertainment. Under China’s new film law, foreign/
could use the Hollywood negotiations as retaliation domestic co-produced films will continue to be treated
against Trump’s rhetoric on economic relationship as domestic productions. As such, the law will benefit
between the two countries. Trump’s China policies may both Chinese and co-production studios by making it
weigh on the talks. However, even if the import quota easier to move projects from development to production
was raised, Hollywood filmmakers are likely to have a and then to distribution phases. The law also abolishes
bumpy ride in the domestic market as industry chains the requirement that Chinese film companies must be
in the two nations differ drastically, experts noted. For approved as “studios” or applies for permits on a film-
example, in terms of the marketing strategy, the U.S. by-film basis before they can start making movies. This
film producers rely heavily on online promotions, but very well could benefit foreign producers by increasing
domestic distributors focus more on offline campaigns the number of potential Chinese partners looking to
because of the celebrity effect. The potential increase in engage in co-production. The new law also attempts
the number of imported films has ramped up pressure to clarify what was previously a gray area regarding
on domestic moviemakers. China’s top film regulator, subject matter. By requiring the relevant government
the SAPPRFT warned domestic film industry executives authorities to spell out censorship rules by formulating
in December 2016 to “prepare themselves for greater “concrete film examination standards”and making those
competition from foreign movies,” according to industry standards open to the public, it should see censorship
website chinafilminsider.com. The box office share move toward a more transparent system, with objective
between domestic and U.S. should tilt slightly in the expert opinions and formalized rights of appeal. The
favor of the U.S. if the quota negotiations are successful. ever-increasing importance of cracking the Chinese box
Currently, domestic producers reap around 60 percent office has seen many Hollywood studios revamp their
of box office receipts while U.S. counterparts receive the entire production line, with films created specifically to
remaining 40 percent, according to Huang. The concern appeal to audiences on both sides of the Pacific (Allen).
over being squeezed out by foreign competitors is also
providing an impetus to the domestic film industry (Li).
China’s film regulators offered some encouraging hints
of relaxation in late 2016. In an effort to counteract
a downturn at the domestic box office, regulators
packed the December [2016] release schedule with
additional Hollywood films, bringing the year’s total to
39 imported titles instead of 34. Regulators classified
the extra releases as special “cultural exchange projects,”
denying that the usual limit had been breached — but
most analysts viewed the move as a modest de facto
expansion of the quota (Brzeski, China’s Quota).
374
