The Chinese film industry is continuing to grow but it still has a set of unique challenges to face. Asia Image takes a look at how China’s presence on the big screen has evolved over the years.

On the surface things are looking rosy for the film sector in China. More than 500 films were made in the country in 2009, compared to 100 in 2002. This means China makes more movies than any other country in the world, except for India and the US. Box office revenues in China have soared; increasing 44% to $908 million in 2008 according to the state-run body China Film Group. Of that $908 million, fi lms from China made up 56% of the revenue. More international companies are looking to shoot in China, and others are interested in investing in Chinese films. Hundreds of new cinemas are expected to be built across China in the next few years. And the story of the year has been the phenomenal success of Aftershock, which has become the highest-grossing domestic film ever. The film, directed by Feng Xiaogang, covers the experience of one Chinese family over 30 years following the 1976 Tangshan earthquake. Aftershock has been hugely popular in cinemas across the country with some believing that it is helping to commercialize the local film industry. Geng Ling, chairman of China Film Assist and executive director of audio company Soundfirm Beijing, believes the industry is in a good state. “It’s definitely booming,” Geng Ling says. Sally Fu, executive producer at production company TwentyOne Plus, agrees and points to the success of the economy as having an affect. “The film industry is booming,” Fu says. “It’s going well. Lots of people are going to the cinema.” William Pfeiffer, CEO of Tiger Gate, is another who believes the Chinese film industry is on the right track. Pfeiffer formerly headed Sony Pictures Entertainment in Asia, and founded and launched Celestial Pictures. “It’s in a very exciting state of growth,” Pfeiffer says. THE LOWDOWN But behind the figures, issues such as distribution, pricing and piracy remain. Production work may be increasing but distributing films is still problematic in China and attending a cinema screening is still highly expensive for most Chinese people. Pirated films are a much easier option, cheaper to buy and easy to download. Searching for the money to fund a film is still a tough practice. Geng Ling feels that the Chinese film industry urgently needs “a correct system and professionals to carry it out”. “It also needs the industry chain to be completed so the box office is not the only way of return for investors,” she says. “Merchandising is still very weak.” Sarah Zhang, producer at House Films, believes the industry is improving but more needs to be done. “Big budget films, both Chinese and foreign, take over the theatres and marketing budgets, small films have trouble getting distributed and they also suffer from a lack of marketing and promotion,” she says. Zhang believes the price of a cinema ticket is too high for the average Chinese movie-goer, while the country is lagging in post-production. “Only the top percentage of earners can afford to go to movie theatres,” she says. “A lot of people choose to watch movies on DVDs or online. Big films go overseas for post-production, for example to Australia, the UK, Japan, New Zealand and Thailand. High-end post-production facilities are hard to find in China.” Another issue facing the industry in China is the specter of censorship and government approval. Scripts must be approved by the government fi rst and permission to shoot in China must be sought, which is often restrictive. “There’s not really artistic freedom there,” Tiger Gate’s Pfeiffer says. “The real issue is getting the approval.” The amount of production work appears to be increasing in China, with companies recording strong amounts of business. Soundfirm, which specializes in supplying sound services such as soundtracks, dubbing, voice direction and mixing, set up in China in 2003. “At that time, big films were going to Australia for post and we knew there was a need for good quality films although at that time it didn’t look so optimistic,” Geng Ling says. “[Now] business is quite good. It’s a favourite place for highend directors and producers from mainland China and Hong Kong.” House Film’s Zhang believes there is a certain amount of production work in China, particularly coproductions between China and Hong Kong, but post-production work is lacking as most is completed overseas. TwentyOne Plus is involved in the production side in the film, television and music sectors in China. TwentlyOne Plus’ Fu describes China’s production market as being “competitive”, but says there is enough volume of work available. THE ROLL ON Western companies are certainly now waking up to the potential of the Chinese film sector. IMAX co-funded Aftershock, along with the Chinese outfit Huayi Brothers Media, and it is looking to open more than 60 theatres by 2014. Chinese companies like Huayi and Stellar Mega-media have made public claims about building hundreds of new movie theatres across the nation. The China Film Group recently invested $5 million into the Karate Kid, a remake of the 1980s film starting Jackie Chan, which was shot in China and was co-produced with Sony Pictures. China now has the world’s largest film studio, Hengdian World Studios, and Hollywood films like Toy Story 3 continue to do good business in China. While the American economy stutters China’s continues to purr along and the spending power of its richest citizens grows. In recent years several Chinese films have been very successful both internationally and domestically, such as Crouching Tiger Hidden Dragon, House of Flying Daggers, Fearless and Hero. Chinese companies have also reportedly been eyeing off studio acquisitions in the US to increase the global distribution of locallymade films. One criticism of the Chinese film industry is there are too many similar, big-budget films and not enough variety. While audiences are flocking to see Aftershock, which has been shown on around 4000 screens nationwide – a rarity – and has a decent marketing budget behind it – not enough people are going to see smaller, different genre films. There appears to be an audience for both Chinese and Hollywood films in China, but if a Chinese film doesn’t have a big budget or high production values it often never makes it to a theatre. Hundreds go straight to DVD. House Films’ Zhang says there are two extremes in China’s film sector. “Big budget films directed by big directors like Zhang Yimou, Feng Xiaogang, Chen Kaige, John Woo, these films took control of the fi lm market,” she says. “[Then there’s small films directed by young, unknown directors have trouble with marketing budgets and also getting decent timeslots at movie theatres. There are no middle-range films.” Zhang feels that Chinese audiences are hungry for good, local content. “But unfortunately, no one is investing to make quality local content,” she says. “When the American film Avatar opened in China it caused a huge storm here, with industry people and audience pondering ‘Why can’t a film of that quality be made in China?’. Kungfu Panda also created similar stir.” How can China’s film industry ensure further growth? Lowering ticket prices would be one way, while spending more time on the marketing of domestic fi lms would help. “It’s a little bit expensive [going to the cinema],” TwentyOne Plus’ Fu says. “It’s quite expensive a ticket, compared to the average income.” Another way would be to fix the distribution and investment system and to encourage different types of films to be made. Blockbusters and romantic comedies continue to dominate the local box office, but space must be secured for documentaries and other genres. “There’s too many one-style movies,” Fu says. Soundfirm’s Geng Ling agrees. “Production is booming, but distribution is still weak as it’s hardly disconnected from the old system and when all cinemas show one type of films, investors won’t be encouraged to invest in variety,” Geng Ling says. “In the long run, it won’t be healthy.” But there is a cause for optimism. Tiger Gate’s Pfeiffer thinks that China’s film industry is now entering a period of sustained growth thanks to the “tremendous proliferation of theatres”, which will lead to an increase in the available revenue films can make. “Therefore more money can go into films,” he says. This will then mean higher production values for future Chinese films, and then lead to more and better local films being made. The cycle will roll on and on. “They’re in a virtuous cycle,” Pfeiffer says. “You are going to see Chinese films exported more than before.” CHINA’S TV SECTOR: MOVING ONLINE? While many might have seen the WTO ruling that China must end its monopoly import system for foreign entertainment products as good news, a recent report from CMM–Intelligence concludes that the ruling will not help Hollywood in China. The report, The WTO Ruling on Importing Entertainment Products into China – What Does It Mean for You? says that the US entertainment industry must assess what it failed to accomplish in what it describes as an ‘adversarial’ dispute. In its assessment of the August 12 2009 WTO ruling that China must end its monopoly import system for foreign entertainment products, CMM–I say the action will fail to open significantly greater opportunities for global entertainment companies. Published by CMM–Intelligence and written by some of China’s most experienced media analysts, the report cites ample opportunities and precedent for China to circumvent the ruling and major market barriers that remain unaddressed. The report concludes that not only will the WTO ruling fail to deliver on its expected results, it may also backfire on the industry. “In the wake of the ruling the media industries must assess what they have failed to accomplish in their nearly three year–long effort with the WTO,” the report states. “An even more troubling prospect exists: will China seek to build barriers even as they comply with the letter of the ruling, thus negating its value – or worse?” The report takes to task the Bush Administration’s United States Trade Representative for fi ling the original action in 2007, and Washington– based lobbyists for continuing a confrontational approach that has yet to yield significant results. “The most significant effect of this action will be to solidify the adversarial nature of China’s relationship with the US entertainment business,” said report co–author David Wolf, a 16-year veteran of the Chinese media industry. “The day is coming when Hollywood and its media allies will have to decide whether to change their approach or abandon China altogether.” The paper also explores the implications for leaders of the film, music, and publishing industries and concludes with strategic recommendations for the leaders of entertainment companies worldwide. CMM–Intelligence has also recently looked into the growth of online video sites in China, outlining the challenges, as well as the opportunities afforded by this rising medium. The report, entitled China’s Online Video Sites – Competitive Landscape, Regulation, Monetization, and the Changing Habits of China’s Consumers, found that online video ranks as the fifth most popular online diversion for China’s internet population and is the country’s fastest growing entertainment medium. According to the China National Network Information Center, more than 65 percent of China’s 338 million Internet users spent a portion of their time watching videos online as of July 2009. The estimated 222 million, and increasingly growing, number of Chinese who are watching these videos have a vast choice of online sources for their viewing pleasure. The State Administration for Radio, Film and TV (SARFT), the primary regulator for online video, estimated that Internet users could stream online video from more than 1,000 websites in China by fall 2009 (but only some 400 sites were licensed). Inspired by the example of YouTube, Chinese entrepreneurs and broadcasters have created hundreds of online video sites, all vying for the attention of a young, educated, increasingly prosperous, and massive audience. Facing even greater opportunities – and more daunting challenges – than their overseas counterparts, are China’s online video sites set to displace the state– controlled television establishment and become the vector for China’s global soft power, or are they set to be crushed under the wheels of the nation’s rigid media policies? One international broadcaster to make a foray into China’s online space is Discovery Networks Asia– Pacific which mid–2009 teamed with China’s largest global Chinese search engine to launch Chinese website discovery.baidu.com – the first website of its kind to be launched in China. Ren Xuyang, Baidu’s vice president of marketing and business development, said, “Baidu’s mission is to help people obtain information and find what they need in the easiest and quickest way, while Discovery is a leading provider of high–quality factual content. By combining the strengths and resources of both Baidu and Discovery, we can integrate content from a traditional medium such as television with dynamic platforms such as new media, to satisfy the needs and demands of online users while continuing to explore newer and better ways for knowledge distribution.”

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