Tag Archives: Hollywood

Dream Factory Or Conspiracymonger?

Back in 2018, GQ, a US men’s magazine published by Conde Nast, ran an article raising the question of whether the Chinese government might be behind a series of thefts of Chinese antiquities from European museums since 2010.

The article was speculative, and its evidence circumstantial. It should also be noted that it was well reported. The Beijing-based author talked to Chinese sources and offered other plausible explanations for the series of museum robberies, including patriotic collectors finding ways to acquire items and return them to China.

Even if the article came to no very definite conclusion, it waved a finger generally in the direction of an officially inspired effort to regain looted artefacts. That would be in line with Beijing’s long-standing position that any cultural artefacts that have been removed abroad belong to China, regardless of who outside the country claims ownership, and should be returned. The National Cultural Heritage Administration is tasked with such reclamation work.

However, the dotted line that led to the implication of government sponsorship for the thefts was a research trip to international museums the year before the thefts started by a team from the China Poly Group, a state-owned enterprise under the supervision of the State-owned Assets Supervision and Administration Commission, which is a State Council agency.

China Poly combines the unlikely businesses of acting as an international arms seller for China’s defence industry and running the world’s third-largest art auction house. However, it has always played a role in locating and returning Chinese antiquities that have found their way out into the world.

When the article was published, the suggestion that the government had dispatched ‘a treasure-hunting delegation’ to find looted Chinese art caused outrage, with China Poly, refuting the allegations and threatening to sue Conde Nast. There is no record this Bystander can find of that happening, and the issue seemed to fade away.

However, the article is now being turned into a Hollywood movie called The Great Chinese Art Heist. The film will focus on a 2015 robbery of 15 pieces from Fontainebleau, the former royal chateau near Paris. The bulk of the collection there had been taken from China by French soldiers in 1860 when Beijing’s Old Summer Palace was sacked.

That being the subject of a film alone would touch a nerve in China. However, the word from Hollywood is that ‘it was the Chinese government that bankrolled it’ will be the dominant plotline.

Whether that turns out to be the case on not, it has already sparked renewed outrage in China, with social media buzzing with accusations that the movie is another Western ploy to discredit the country. The company producing the film, Warner Bros. has been widely accused of insulting China.

The director will be Jon Chu, who directed the hit movie Crazy Rich Asians. That film’s success makes it likely that The Great Chinese Art Heist will get a high-profile launch.

Yet the sequel this Bystander is now awaiting is to the hack of Sony Pictures in 2014 after the film studio upset North Korea with a movie that included the fictional assassination of the country’s leader, Kim Jong-un.

Warner Bros is part of a media assets spin-out that its parent company, AT&T, is currently undertaking. WarnerMedia is to be merged with another media company, Discovery, which owns Conde Nast. The merged company will be called Warner Bros. Discovery, with the tagline “The stuff dreams are made from”. This deal is due to be completed next year.

The potential cyber nightmares are endless. A ransomware attack of ambiguous attribution between signing and closing the deal to fund an art repurchase fund, perhaps? Or a deepfake version of The Great Chinese Art Heist with an alternative plotline that it was all planned in Ft Detrick?

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Filed under Arts & Culture, China-U.S.

Lights! Camera! Trade Action!

Tian Jin, China’s vice-minister for film and TV, complains that the film industry trade deal struck between Washington and Beijing in February is working as intended. The deal exempted 14 U.S. 3-D and large format films from China’s annual import quota for foreign films, of 20. It also gave Hollywood a bigger cut of the takings on its films, raising it to 25% from 13%, albeit still short of the 30% American producers typically get on foreign distribution. The consequence, Tian says, is that “the past dominance of domestic firms in the Chinese market has been shaken.”

Such is the power of art, or at least the popular art form that is the Hollywood blockbuster movie. But there are serious lessons in all this for any industry that has been able to shelter cosily behind domestic walls of protection (and not just in China).

First is that more free trade increases business all round. Box office revenues at Chinese cinemas, at 13.3 billion yuan ($2.2 billion) in the first ten months of this year, have just passed 2011’s total of $2.1 billion. Domestically produced films took 41.4% of those receipts, down from 2011’s 53.6%. “A huge drop,” Tian says, but the overall pie is larger. Domestic films’ share will increase by year’s end as foreign films have evaporated from cinema’s schedules for December, just as they did mid-year for a month.

Second is that given a choice, consumers will take it. There is a well observed effect worldwide that increasingly cosmopolitan and upwardly mobile middle classes go through a phase of looking down upon local films as cheap and tawdry. That Hollywood blockbusters appeal to Chinese audiences can scarcely come as a surprise to China Film Group Corp., the state-owned film producer and distributor whose remit includes the monopoly on the import of foreign films (and their distribution schedule). The three top grossing films in the country last year were Transformers 3, Kung Fu Panda 2 and Pirates of the Caribbean: On Stranger Tides.

Third, if the Chinese film industry is going to hold its ground against foreign films–and remember to set against the quota of 34 foreign films a year now allowed, the U.S. alone releases 8,000-9,000 new films a year, so the market is barely opened–it will have to improve the quality of its product. It is not the first national film industry to wilt under the assault of Hollywood. Three-quarters of a century ago, France, Germany and the U.K. all had flourishing domestic film industries. Neither France nor Germany’s had the size of market to sustain French and German-language filmmaking on a global scale. Britain, too, though not hampered by language, lacked the resources to compete with Hollywood.

The most notable example of national film industry thriving regardless is India’s. Like China it has a large domestic language film industry that has also been protected. But Bollywood, and its smaller Kanada-language sibling Banglawood, is very good at what it does, and is so on industrial scale. So, too, is Hong Kong’s film industry, before 1997 the third-largest producer of films after Hollywood and Bollywood. It found an identity distinctive enough to have imposed itself on Hollywood’s action movie genre, even if its own filmmakers have become more muted over the past 15 years. China’s filmmakers will have to emulate that craft. And it is what Beijing will push them to do if it wants to emulate the soft power that Hollywood projects for Washington.

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Lights. Camera. But How Much More Action For Hollywood In China?

There may be less than meets the eye, and certainly less than the hype, to the trade concessions the U.S. has won for Hollywood from Beijing. The deal raises to 34 from 20 the number of non-Chinese films than can be distributed in China each year, by the device of adding 14 3-D or IMAX films to the base quota. As China has only 2,500 3-D movie screens and 48 IMAX theaters the significant concession is that those 14 will also be allowed in in their 2-D formats, which will be able to be seen on China’s 10,500 conventional cinema screens. The U.S. has 40,000 screens. The U.S. also releases 8,000-9,000 new films a year.

Most of the 20 foreign films a year that have been allowed into China for the past 20 years are American. The three top grossing foreign films in China last year were Transformers 3, Kung Fu Panda 2 and Pirates of the Caribbean: On Stranger Tides. They took $170 million, $98 million and $76 million at the box office respectively. Even more pleasing for Hollywood, under the new deal, its cut on box-office takings will rise to 25% from 13%. Hollywood typically expects a 30% fee on foreign distribution, but with 13% and all the other restrictions having been the rule for China for two decades, this feels like the “very big deal” it is being proclaimed to be in Hollywood, at least for the blessed 34 films.

The American movie industry has long complained about its treatment in the world’s fastest growing movie market. The WTO ruled in 2009 that China’s limits on movie distribution fees was a violation of international trade rules. Beijing has not rushed to come into compliance, and promoting China’s own cultural heritage has become a national priority. Yet even as China tightened restrictions on foreign TV imports, Xi Jinping’s visit to the U.S. allowed the logjam in negotiations over movies to be broken. It was something that China would have have to have done at some point anyway, and is far less expensive than settling the outstanding issues with the U.S. over intellectual property. It would be a brave man, though, to this Bystander’s mind, who would bet that the showing of 14 more Hollywood movies in China each year will dampen the demand for pirated DVDs, a main prop of Hollywood’s argument for increasing the distribution fees.

China is expected to double the number of movie screens it has to 16,000 by 2015. The ones it had took in $2.1 billion at the box office last year. The key question is how much of that will the U.S. movie industry actually get its hands on. Hollywood distributors may soon understand why the old saw, there’s many a slip twixt cup and lip, applies so readily to doing business as a foreign firm in China. We’ve heard of one distributor who gets the house photographed each screening to settle arguments of how many tickets have actually been bought. The right for foreign film distributors to audit box-office sales might turn out to be the most important provisions of the new agreement.

The position is even worse for foreign co-producers operating in China. Some 40 independently produced foreign movies are distributed in China each year outside of the quota system. These independent films don’t get a cut of the box office, but a licence fee based on the film’s budget. It is about a third of the standard international fee. Under the new rules, filmmakers and distributors will be able to negotiate license fees closer to international norms. But the fee is just the beginning of what seems regularly to turn into a nightmare. The China Law Blog has had a series of excellent posts on this subject last year that don’t make pretty reading if you are a would-be film producer.

Why is it so hard for foreign co-producers to get paid? There are three main reasons:

1. There are no trusted intermediaries for film in China. Collection agents, escrow account holders, trustees and the like simply do not exist here in China. The foundations of international film finance are not in place. In itself, that makes you wonder how completion guarantors can underwrite Sino-foreign co-productions.

2. You need to rely on your Chinese co-producer to collect the box office and pay your share to you outside of China. Good luck with that.

3. Even if you are lucky and your Chinese co-producer has some vague intention of paying you, they cannot pay you unless they can show the Chinese tax authorities that income tax has been paid on the gross receipts and that the withholding tax on their payment to you will be deducted. Even then, they will still need State Administration of Foreign Exchange (SAFE) approval before being able to send money overseas. The vast majority of Chinese businesses will not want to do business this way.

We hope that DreamWorks Animation, which has just signed a $300 million joint venture to make movies in China, is a reader.

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Cut!

Not only is Hollywood having to deal with a writers’ strike, now China has halted the import of its films, according to U.S. Commerce Secretary Carlos Gutierrez, who is in China for the biannual bilateral dialogue talks. The Hollywood trade rag Variety reports that the ban will last for 3 months.

Why isn’t clear, and there has been no comment from Chinese officials, even to confirm or deny the ban.. China imposes an import quota of 20 foreign films a year. Foreign films account for nearly half of China’s box-office revenues, which topped $350 million in 2006. (Global box office receipts are $40 billion by way of comparison.)

This year’s quota may just have been filled, as has happened in the past, Gutierrez says. But it may also be tit for tat retaliation against the U.S. for taking China to the World Trade Organization over intellectual property piracy, including of Hollywood films.

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