New China-US film deal sparks speculation
- By Zhang Rui
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E-mail China.org.cn, September 28, 2015
Chinese President Xi Jinping rounded off his first state visit to the United States with a trove of important results, a film deal on his outcomes package list made China's booming film industry and moviegoers wonder if China will open up more to Hollywood.
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China Film Week opens at the National Geographic Society in Washington D.C., capital of the United States on Sept. 24, 2015 with famous actress Fay Bai and China's cultural officials attending. The Week event will screen five movies through to Sept. 28, including "Go away Mr. Tumor," "Wolf Totem," "To The Fore," "Monster Hunt," and animated feature "Monkey King: Hero is Back." [Photo/Mtime.com] |
During Xi's visit, China Film Group Corporation and the Motion Picture Association of America signed the Agreement on Cooperation in Importation and Distribution of Revenue-Sharing Films and expressed commitment to continue their cooperation in the film industry.
The United States initiated the underlying WTO dispute in April 2007. In the dispute, the United States sought to address significant market access concerns relating to China’s treatment of films for theatrical release, as well as other cultural products. With regard to films, a WTO panel found in a report issued in August 2009 that key Chinese film import restrictions were inconsistent with China's WTO obligations.
China and the United States signed a memorandum of understanding in 2012 when then-Vice President Xi Jinping visited the country. For the agreement, China will permit 14 premium format films (IMAX, 3D) to be exempt from the 20 film import quota, which remains in place, while the box office shares that United States studios will earn under the master contract increases to 25 percent from 13 percent. The memo agreement will expire in 2017.
Although the details of 2015 new deal are not known to the public, Chinese media outlets have started to speculate that the new deal may increase the space to allow more Hollywood movies into China and might abandon any quota on foreign film imports.
"On Entertainment Capital," a We-Media account team consisting of several senior entertainment and financial reporters in China, said it has learned from various channels about the new deal and was told that this is just a formal commercial deal based on the 2012 memorandum of understanding.
"The American party wanted every detail cemented in a trade contract," one source close to the situation said, "They pressed hard and would never let go any small interests." It was said that negotiations lasted for months and the content was confirmed just two days before Xi left for the United States.
"The permit for 14 premium format films (IMAX, 3D) and box office shares going from 13 percent to 25 percent are also in this new deal," the anonymous government official said, "Now we have an official trade contract, rather than the previous memo as provisional contract."
As the official who participated in the negotiation process said, the differences between the two sides are that the United States wants to fully open the Chinese market, and China wants to earn more time for its own domestic films to develop well enough. "The Chinese film industry has to walk step by step and there are many difficulties. We hope to win more time for Chinese films to grow as strong rivals are at the door and there are big risks also at home. Also, China may need 5 to 10 years more to better develop its film industry."
Other industry observers also thought the increase of quota will help the Chinese domestic film industry to learn and grow, but the full “opening up” of the Chinese market may hurt the industry as most Chinese home-made films are not good enough to compete with foreign films, especially those from Hollywood, though China is already the second largest film market in the world.
In the new deal and 2012 memo, opportunities are strengthened to distribute Hollywood films through private enterprises rather than the state film monopoly. United States-China co-productions will enjoy the same treatment as Mainland-Hong Kong co-productions, meaning they will not be limited by the quota.
Thus, many Hollywood studios have started to cooperate with Chinese partners on many blockbuster films and have even set up joint-venture in China to develop more businesses.
The fact that China Media Capital and Warner Brothers Entertainment are forming a joint venture ("Flagship Entertainment Group Limited") for film production and international distribution headquartered in Hong Kong is one example.
The State Council Information Office of China also signed cooperation agreements respectively with the National Geographic Channel and The Walt Disney Company for jointly organizing China-themed photo exhibitions, making and broadcasting China-related documentaries, collaborating in program production, promoting China-themed museum exhibitions and making Circle-Vision 360-degrees movies for the China Pavilion in Disneyland.
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