China & Hollywood Co-Productions: Are They Worth it?

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When The Great Wall trailer was released, there was an outcry about the casting of Matt Damon as the main hero. In response to the negatives criticism, director Yimou Zhang issued a statement defending The Great Wall against accusations of perpetuating the white savior narrative, claiming that Damon was one of 5 important heroes in the film (the remaining four are Chinese) and neither was Matt Damon playing a role that was originally conceived for a Chinese actor. Instead, he drew attention to the film being “deeply rooted in Chinese culture, with one of the largest Chinese casts ever assembled”—pointing out that the film, one of Hollywood and China’s latest exercises in co-production, is part of a trend that should be “embraced by Hollywood.”

Courtship

China and Hollywood’s courtship goes way back to the simpler days when it consisted of simple pandering. If they ever wanted to see their films premiere in China, films like Iron Man 3 and World War Z needed to revise a few scenes so they could pass China’s SARFT (State Administration of Radio, Film, and Television) laws.

Both China and US film companies cope with SARFT’s laborious censorship rules and have mastered the art of appeasement to tap into the world’s second largest box office, which is even projected to surpass the US in 2017. Hollywood films like Transformers: Age of Extinction and Furious 7  owe much of their $1 billion revenue to China, so it’s no surprise that US productions would go extra lengths to placate China with slight modifications in exchange for a hundred million USD or bringing their film out from a deficit.

However, SARFT’s regulations extend beyond pro-imaging—The People’s Republic also imposes an import quota on foreign films to safeguard its domestic market. But, there is one loophole around that films like The Great Wall have taken advantage of: co-production.

Transformers: Age of Extinction

This form of collaboration allows both U.S. and China’s production companies to create a film together, which technically slides past import regulations and renders the film as non-foreign. Still, co-production has a whole new set of regulations. A joint-produced film requires one third of cast members to be Chinese actors. If not, the film may file as an assisted production but must use China’s production facilities, equipment, staff, and shooting locations. In addition, they must go through the same censorship rules.

The takeaway is that a film is granted access to the world’s second largest box office, but it is worth it?

Previous Co-productions

A few Hollywood producers have previously seized the opportunity and experimented with a few films (i.e.: The Forbidden Kingdom and The Karate Kid) but failed to generate a substantial profit. However, in 2014, Paramount reignited the dead practice and ventured into co-production with Jiaflix Enterprise on Transformers: Age of Extinction. The film had a heavy marketing campaign, an abundance of Chinese product placements, and even inserted China’s government propaganda catering to SARFT–  it was literally asking to be greenlit.

SARFT approved and the film struck a goldmine earning a total of $1.1 billion worldwide, with almost a quarter of earnings grossed in China with $320 million–more than the US. Indeed, China’s untapped audience enticed Hollywood producers (and investors) to look at co-production with new eyes.

Kung Fu Panda 3

The Trajectory

DreamWorks, with the help of Chinese investors, has established an Oriental DreamWorks (yes, that’s the actual name) in Shanghai. Their first feature film, Kung Fu Panda 3, grossed $519 million worldwide.

Paramount Pictures recently signed a co-finance deall with Huahua Media and Shanghai Film group, who will also be distributing their films in China along with investing in their films over the next three years.

It’s not just Hollywood alone, but China’s media giants are on board too. Alibaba Pictures partnered with Stephen Spielberg’s Amblin Pictures Group to create films targeted to a global audience. The catch, of course, is Alibaba will have a minority stake in Amblin Partners.

Kong: Skull Island is Legendary’s upcoming film was also co-financed by China’s Tencent Pictures.

Dalian Wanda Group chairman Jianlin Wang, the owner of AMC Entertainment, made a name in Hollywood for his aggressive buys. Last year alone, Wang bought Legendary Entertainment, sealed a deal to merge with Carmike Theater Chains, and acquired Dick Clark Productions—a television production company that produces the Golden Globes and the American Country Music Awards.

Wang’s latest adventure in co-production was The Great Wall, starring Matt Damon. Producers recruited A-list actors and high profile director Zhang (Hero) to work on China’s most expensive film ($150 million) in hopes they could emulate a Hollywood blockbuster. Film critics panned the film for its plot contrivances, but the producers expect The Great Wall to be the poster-child for future co-productions.

So far, the results are tepid. The film earned a total $203.5 million, but compared to its budget and slow earnings, the film most likely won’t surpass Age of Extinction.

Which brings back the question: Is it worth it?  

Co-production offers Hollywood the opportunity to sell their films to China’s market and reap rewards measuring up to a few hundred million USD. It’s a safety net if their films don’t do as expected at the domestic box office, but score high in the second largest movie market. Ideally, it would create a great form of “cultural exchange” between two different countries. (But is that even possible considering China’s latest crackdown on Western Influences and Hollywood’s continual pandering?)

This trending form of business venture, designed to loosen China’s byzantine bureaucracy, clearly opens both countries to more growth. Future partnerships, which could also be threatened by Trump’s trade war, all relies on China prioritizing its broader economic growth over protectionist policies and image control. And, for the most part, they do. In 2016, China temporarily expanded its foreign movie slots from 34 to 38 films to bolster box office growth and allowed foreign films to premiere on blackout dates where foreign films couldn’t be screened.

Although it’s a temporary solution, the Communist party does share its concerns about the market’s well-being. With the right incentives, hopefully, China will begin to de-censor themselves. It all starts with collaboration.

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