Relaxation or removal of foreign film quota to pose a challenge for mainland film makers
Not long ago, in a film industry not too far away, the game changed.
Four decades of reform in mainland China has reshaped its film market and given the latest instalment of Star Wars a very different welcome than the first film – which wasn’t allowed in at all.
Hollywood movies were still banned on the mainland in 1977, when the first Star Wars movie hit cinemas around the world. The Cultural Revolution had ended only the year before and the start of economic reforms was still a year away.
The seventh movie in the series – Star Wars: The Force Awakens – is now showing around the world, apart from mainland China. It will debut there next month when fresh quota for foreign films becomes available. There’s been a lot of promotional activity in the lead-up, including putting 500 replica Stormtrooper characters on the Great Wall.
Regulatory reform, growing wealth and lifestyle changes have seen the China film market grow rapidly to an annual box office of 40 billion yuan (HK$47.83 billion) – a figure no one in Hollywood or any other film industry can ignore. Credit Suisse analysts predict the mainland film market will overtake that of the US and become the world’s largest in 2017. China’s box office has grown by an average of 30 per cent a year for the past decade, while the US saw tickets sales fall 5 per cent last year.
The mainland is expected to relax its quota on overseas movie imports in 2017. Film industry players say the quota will increase to 44 a year, from 34 now, and could even be removed completely.
China also seeks to protect the local film industry with a blackout period every summer, when only locally made films can be shown.
Dong Ping, executive director of Hong Kong-listed mainland film company Huanxi Media, said the quota and protection measures would go sooner or later.
“China has been gradually relaxing the film regulations over the past 20 years,” he said. “Twenty years ago, all domestic films need to get approval by the authorities but now we have a free hand to make various type of movies.
“China is keen on promoting cultural industry. As such, we expect there will be more relaxation to boost the industry and the removal of the overseas film quota will happen soon.”
Dong said that would pose a challenge for local film makers, but he was confident the local players could compete with overseas films.
“The local audience would like to see locally made movies because the comedy or topics touches their lives and concerns,” he said. “There’s also an audience that likes to watch high-quality movies such as Star Wars or the Mission: Impossible series.
“The audience will make the wise choice. Only a good movie can sell. The removal of the quota won’t help a poorly made, bad Hollywood movie sell in China.”
Local films, including mainland-Hong Kong co-productions, accounted for 59.2 per cent of the mainland box office this year, and there are more than 1,000 film companies on the mainland, with some big players making blockbusters in China or investing in Hollywood movies.
The best selling movie on the mainland this year was a local film, Monster Hunter, which hit the screens in July and sold 2.44 billion yuan in tickets, just beating Hollywood blockbuster Fast and Furious 7 with 2.42 billion yuan.
Huanxi invested in the comedy Lost in Hong Kong, which was shown during the National Day holiday in October and ranked as the top 2D movie in China with 1.6 billion yuan.
“Comedy and romance films are the two major film genres popular with the mainland audience,” Dong said, adding that Huanxi planned to produce five to six movies a year in the coming years.
“With a huge population and growing numbers of young people who can afford to watch movies, China will definitely overtake the US in a few years’ time,” he said. “Some Hollywood movies have sold more tickets in China than in the US.”
Fast and Furious 7 sold US$390 million in tickets on the mainland in April, more than the US$353 million it reaped in the US.
“Many locally made movies have also sold well,” Dong said. “However, they are only successful in China and cannot match the quality of international films. The next step forward for the Chinese film industry is to develop more movies which have entertainment and cultural value to break into the international market.”
Teaming up with an international studio is one possible path.
In September, Li Ruigang’s China Media Capital (CMC) and Hollywood giant Warner Bros Entertainment announced an international production and distribution joint venture called Flagship Entertainment, headquartered in Hong Kong, to explore the global film market.
Meanwhile, megastar Tom Cruise’s summer blockbuster Mission: Impossible – Rogue Nation, shown in China in September, was the first investment of Alibaba Pictures.
Shenzhen-listed Huayi Brothers also has teamed up with Hollywood studio STX Entertainment to produce and distribute up to 15 films this year and next year.
Huayi spokeswoman Zhang Yijun said the partnership had already yielded a profit, with the first joint production, the Hollywood film Gift – made for US$5 million – taking US$40 million at the box office when it was shown in the US in August.
“The major challenges of these types of cooperation projects between the US and China are the fact that the two countries have a lot of differences in law, marketing, company policies and culture,” Zhang said. “Huayi Brothers is among the first mainland film companies to work with an international film company and we take this as a good opportunity to learn the Hollywood system. This will pave way for Huayi to develop into an international entertainment company.”
A number of productions from the Huayi-STX partnership, including the movie Boy, will be shown next month. Another film, The Free State of Jones, starring Oscar winner Matthew McConaughey, will debut in March.
Separately, Huayi Brothers has also been working with Batman film producer Michael Uslan to develop the super hero franchise T.H.U.N.D.E.R. Agents.
“This is our first international investment in superhero movies,” Zhang said. “We want to develop more franchises. We will continue to invest in talented movie stars, directors and related games to promote our film and entertainment business.”
Dong said he believed movie making would developed in two directions, with one being blockbusters targeting the more than 30,000 screens in mainland cinemas. A big blockbuster in China could make more than 1 billion yuan, he said.
Meanwhile, at the other end of the scale, would be small budget movies that could be shown on mobile phones or the internet. Dong said that on average, mobile streaming of such a film could reap about 40 million yuan.
“The young people on the mainland like to watch movies in theatres as social gathering event,” he said. “They also like to watch movies on their mobile phones.”