Why China is the New Hollywood

HollywoodBack in 2012, China overtook Japan to become the second biggest box office market in the world . Predictions last year said 2017 would see it eclipse the US to be the biggest.

Despite an unanticipated dip at the end of 2016, movie revenue in the Middle Kingdom has been almost doubling year on year since 2009. The country is building an average of 26 new movie screens every day for a current total of over 41,000 – more than all of North America combined.

After such success, China doesn’t just want to enjoy Hollywood, it wants to become the new Hollywood, making both Chinese and English-language films with a long term view to export, much like Hollywood does today (plenty of movies that bomb in their native US market can be blockbusters from their revenue in China alone).

The first strong signal about the intentions of the Chinese government for its native industry is the strict quota on foreign films admitted to Chinese theatres. At 34 per year, the number was relaxed only slightly after the unexpected downturn.

But even more prescient is the government’s effective hobbling of Chinese businesses’ interests in Hollywood. Chinese companies have spent several years buying into, partnering with or taking over names at every stage of the Hollywood system from studios to movie theatres chains.

Just weeks ago, the government’s National Development and Reform Commission announced new categories of investment restrictions applying to Chinese companies, and films and entertainment were both included, putting the brakes on the spending spree companies like Dailin Wanda and the Fosun Group have been enjoying in America.

But they’re not alone in Hollywood. Wanda still owns the AMC theatre chain (as well as Australia’s Hoyts cinemas) and production company Legendary (The Dark Knight and Jurassic World franchises), and Shanghai Film Group and Huahua Media has agreed to finance 30 percent of the film slate of venerated studio Paramount.

A past highlight of the relationships China shares with other markets – one it hopes will cement its reputation as a force in the moviegoing world – is in co-productions.

Back when it started to seriously court Chinese money, Hollywood jumped firmly on the bandwagon, staging scenes in China or casting Chinese actors for films like Iron Man 3, Transformers: Age Extinction and The Great Wall.

The results have been mixed. The Hong Kong set fourth film in the Transformers franchise made only US$245m from its $210m budget in the US, but the $222 it earned in China made it the country’s biggest movie ever, toppling the record set by Avatar.

At the other end of the scale, Matt Damon vehicle The Great Wall – a movie made as much to connect the US and Chinese markets together as to tell a story, bombed in the US and only made enough to cover its budget in Chinese theatres.

But co-productions with China are still manna from heaven for many film markets as they don’t fall under the foreign film barrier, and the Australian film industry is an eager partner-in-waiting. Bank in April Screen Australia announced the eighth movie to get approval from officials (the fourth since 2015).

In addition, AusFilm have been hosting delegations of Chinese directors and production companies to showcase Australian locations and facilities through an annual event called The Australia-China Film Industry Exchange.

Such efforts have resulted in high profile Chinese/Australian co-productions made here at home featuring international stars (like Bleeding Steel, which stars Jackie Chan and was filmed in Sydney), and agreements and partnerships show no signs of slowing down.

China, it seems, is set to conquer the entertainment world the way Hollywood did a century ago.