It takes two to tango

Updated: 2011-10-28 09:26

By Wang Chao (China Daily)

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It is not just the Chinese element that is drawing foreign directors to Chinese shores, says Shi Nan-Sun, a Hong Kong-based producer. She says the real motivator for most foreign filmmakers to come up with co-productions is the higher revenue realization.

According to regulations passed by the State Administration of Radio, Film and Television, an imported Hollywood blockbuster can get only 17 percent of the box-office revenue from China, while co-productions can get as much as 30 percent to 40 percent.

"Everyone is jumping on to the bandwagon," says Hong Kong-based producer Bill Kong. Kong co-produced the 2000 hit Crouching Tiger, Hidden Dragon, directed by noted Chinese director Ang Lee.

"Ten years ago if you made $3 million in China you would be jumping up and down, today it's more like one or two hundred million," Kong says.

US-China co-production films such as The Forbidden Kingdom and The Mummy: Tomb Of The Dragon Emperor, released in 2008, got global returns of $120 million and $400 million respectively. Notably, the films, while incorporating Chinese elements in the story, had US directors at the helm.

Quota muddle

While no one doubts the huge potential of the Chinese market, the major hurdle for most filmmakers is the import quota system whereby screenings of just 20 big-ticket foreign films are permitted every year. To some extent that also explains the reason why most of the global players are keen on co-productions.

Under the quota systems foreign filmmakers need to share box-office revenues with Chinese distributors such as China Film Group Corp, and the cinemas. After fees and taxes, the share foreign producers get is roughly around 13 percent to 17 percent.

Another 20 to 30 overseas films, or "flat-rate films", usually with less potential to sell as many tickets as the "revenue-sharing" ones, are bought by Chinese distributors at international film festivals. The Chinese distributors, however, hold exclusive screening rights for the movies in China.

Compared with the 4,000 films produced worldwide every year, the 40 to 50 foreign films allowed in China is just a meager number, meaning nearly 99 percent of the global films are locked out of the Chinese market.

Ten years ago when China signed the WTO agreements, the government made a promise that it would drop the import quota on films in 2011.

"Though theoretically there is no import quota after 2011, foreign films still have to go through the censorship laws of the Chinese government," says Yin Hong, associate dean of the School of Journalism and Communication, Tsinghua University and an expert on the Chinese film industry.

"Co-production is a good way to bypass the quota system and even censorship in China," he says.

Yin feels that the cooperation route is also a strategic consideration for foreign filmmakers as Chinese policies are far more unpredictable than those in the US and European markets. "By partnering with Chinese film companies, foreign companies can avoid most of the regulatory problems."

Deng Meng, director of cooperation and contracts at China Film Group Corporation, says foreign film studios did not realize the importance of the Chinese market until the success of blockbusters such as Avatar and 2012.