HOLLYWOOD'S ASIAN STRATEGY
Page 4 of 7

hat has taken many industry pundits off-guard, ironically, is the popularity of American films in mainland China, once considered among the region's most challenging markets. The aftermath of 1994's landmark revenue-sharing accord between Warner Brothers and the state-run China Film Export & Import Corporation has, if anything, surpassed all expectations. Under the accord, Hollywood studios are allowed to share revenues from ten "outstanding" films each year, receiving 40% of net revenues after the government deducts a 30% tax on the grosses.

"Multiplexes are changing the face of Asia dramatically like they did here and in Europe."

     Financially, the dividends are negligible: earnings remain roughly on a par with tiny Singapore. What is significant is the rate of growth. Since March of 1994, when the accord was signed, revenues have increased at a steady 50% annually, outpacing growth in many smaller nations with better developed cinema infrastructures.
     Having been deprived of exposure to American films for nearly a half-century, Chinese audiences are understandably enthusiastic about quintessentially Hollywood fare like The Lion King, Forrest Gump, Speed, The Fugitive and True Lies. But action films, usually a Chinese favorite, have not necessarily been the most consistent winners. The unabashedly American The Bridges of Madison County proved an unexpected blockbuster by setting a Beijing box office record of 1.9 million yuan ($228,900) in its first three days.
     The film's popularity was so widespread that security guards were posted at cinemas after scalpers began asking as much as 100 yuan ($8.30) per ticket, more than three times the usual ticket ceiling. A survey published in the Beijing Youth Daily found that 47.6% of audiences wept during the film, in stark contrast to the lukewarm reception the film received from American audiences.
     None of which is to say that China has been an entirely hospitable partner. If anything, the past two years have taught both sides the fine art of compromise and tolerance, while spreading more than enough frustration to go around. With two consecutive trade wars averted at the eleventh hour and a host of unresolved issues between the two trade giants, Hollywood is finding itself increasingly at the mercy of broader trade issues. Nor have internal Chinese politics proven any less unpredictable. Soon after announcing a partial dissolution of China Film's distribution monopoly wherein China's 26 independent studios would be allowed to gradually distribute Hollywood films on their own, the changes were rescinded and the state monopoly reinstated. The ensuing shakeup forced the resignation of both Tian Congming, the top government official in charge of film, and China Film's Wu Mengchen.
     Speculation about the continual flip-flopping centers around Communist Party propaganda chief Ding Guangen, one of the government's foremost opponents of Western influence and considered a key obstacle to the importation of films like Apollo 13 and Goldeneye because of perceived "glorification" of Western technology and economics at the expense of socialist ideals. Chief among Ding's concerns are statistics that show native Chinese productions suffering, even while Hollywood films elevate the once-sagging national box office to record earnings. As a partial remedy, a Ding-supported 5% tax on box office revenues has been introduced to help build a fund for domestic filmmakers.
     Facts, however, paint Ding's rhetoric as considerably less than sincere. Despite their international acclaim, Fifth Generation directors Zhang Yimou, Chen Kaige and Tian Zhuangzhuang are ill-appreciated by their government, many of their most accomplished and awarded films either banned or censored with a regularity unbecoming a government purportedly concerned with the health of its domestic industry.
     Chen's Temptress Moon, to be released here by Miramax in January 1997, is the latest high-profile mainland production to get the ax, reportedly due to its treatment of sexual themes and opium addiction in 1920s Shanghai. Nor have the censors limited their actions to prominent directors. In April of this year five other films were axed for precisely the same reasons. Naturally, Chinese authorities deny that such films are representative of Chinese culture, claiming instead that the objectionable themes are actually the result of Western influence--yet another justification for restricting the importation of Hollywood product.


80% of the Asian directors signed by Hollywood agencies were signed after Rumble in the Bronx effectively kicked down Hollywood's racial and cultural barriers."

     The more accepted view, though, is that political impediments like these will become less troublesome as China is forced to integrate itself more with the rest of Asia, a process which should be accelerated following the 1997 return of Hong Kong. If anything, the power struggles within China hide a silver lining; they expose a nation striving to accommodate economic growth and internationalism while maintaining cultural and political sovereignty--struggles whose eventual consequences will carry weight throughout the entire continent, particularly in nations like Indonesia and Vietnam whose restrictive political and social systems in many ways resemble the Chinese model.
     No one is willing to speculate as to what effect that the Hong Kong reversion will have on both Hollywood and Asia. But with many Hong Kong directors and stars affirming their intention to keep permanent residence in Hong Kong, China may eventually have no choice but to accommodate a growing influx of American movies.
     Yang, who helped pioneer the first fruitful exchanges between China and Hollywood during the early '80s, urges caution and patience in dealing with the Chinese. "I do not underestimate the Chinese at all when it comes to the extent to which they want to gain control and sovereignty of their country, the extent to which they don't particularly feel it's anyone else's business, the extent to which they feel they really know what's best for them, and the extent to which they can get away with it, too. They are in a very powerful position. And I think it's going to be a roller coaster ride all the way. I don't think it's ever going to settle into a creative complacency where we've figured them out. Anybody who's spent much time in China will tell you that the more time you spend there, the more complex things tend to get. When there are little changes, they are big changes. My experience in China is that while you're there, things seem as though they're going agonizingly slowly. But when something happens, it has huge reverberations."
     "They really don't want these movies to come in and pollute the minds of the people," explains Rim's Gray. "It's this cry that's going on in Europe about, 'If we let the Americans in, it will kill off our native cinema, as has happened in many countries around the world.' But there are ways to getting around those points and assuaging the Chinese to open up. And they eventually will."
     To anyone who has had to deal with either Hollywood or Beijing, the squabbles smack more of jealous siblings, each trying to pull the same trick on the other. "So many people have lost money investing in China," says Mun. "They're just as bad as Hollywood. They belong in business together." PAGE 5

| Page 1 | 2 | 3 | 4 | 5 | 6 | 7 |