Hollywood's Asian Strategy 6/7 | Asian American Features

HOLLYWOOD'S ASIAN STRATEGY
Page 6 of 7

o one is happier about Hollywood's spotted Asian successes than the office of the United States Trade Representative (USTR) whose burden of combating perceived "unfair trade practices" has been markedly lightened as a result. So-called "non-tariff trade barriers" in a number of Asian nations have tumbled significantly since the Warner-China Film Accord, yet more evidence of the Chinese ripple effect.
"Hollywood's strategy is very simple. They want as much money as they can get, and not give any back"
     Restrictions on the number of importable prints in Taiwan, for example, have all but diminished while Corean limits on the number of days that theaters could play foreign product also appear to be disappearing. In more restrictive societies, especially those like Malaysia and Indonesia, which have large Muslim populations, censorship is still an obstacle. Recent problems with films like Babe, an otherwise wholesome film by American standards but offensive to the Islamic view of pigs as "dirty" animals, underscore the lingering challenges. Centralized distribution monopolies like China Film's are also a characteristic of strict regimes like President Suharto's in Indonesia, where local laws even prohibit the opening of studio offices.
     But these are minor issues when considering the bigger picture. If the next 15 years in Asia even remotely mirror Europe over the course of the past 15, Hollywood's ultimate domination seems all but certain. Key to this success is the development of multiplexes throughout the region, a trend which nearly doubled Hollywood's European revenues in just over a decade.
     "The real quantum leap is definitely the development of multiplexes," says Gray. "Revenues have jumped five-fold from when there was just the old system of duopolies in certain countries with old theaters. Multiplexes are changing the face of Asia dramatically like they did here and in Europe."
     Surprisingly, despite the better efforts of American companies like Warners, United Artists Theatres and AMC, an Asian-Australian consortium, Golden Roadshow (a joint effort of Golden Harvest and Village Roadshow) is leading the multiplex revolution. Following the examples of multiplex developers in Europe and the U.S., Golden Roadshow and its competitors are focusing their efforts primarily in major metropolitan suburbs like those around Singapore and Bangkok where commuting to downtown theaters can take as long as two hours in heavy traffic. Unlike the multiplex boom in Europe and the United States, however, Asia has more than enough room to sustain growth well into the next century.
     In Japan, Asia's oldest and most reliable market for American movies, there is still only one screen for every 85,000 people compared with one screen per 10,000 in the United States. Other Asian markets are even less saturated. Should the current rate of economic growth and multiplex development continue, Asia could conceivably command as much as 60% of Hollywood's box office revenues by 2015.
     But some in Hollywood, like former Carolco Vice President of Production Financing Marichu Walker, fear that a rush to develop China could leave less-developed Asian nations behind, like Walker's native Philippines. "There has always been a market in the Philippines for American movies," she says. "But in China there wasn't. Many of those other countries are going to be left behind because they are politically less stable and the populations are smaller."
     The most enduring hindrance to Hollywood's Asian relations remains the doggedly persistent problem of piracy. It's a subject that Asian nations are loathe to discuss, for obvious reasons. According to the Intellectual Property Rights Alliance (IIPA)--a lobbying organization whose members include the AFMA and its studio-supported sibling, the Motion Picture Association of America (MPAA)--Asia remains the world's piracy mecca with China, Japan, Corea and Thailand among the worst offenders. Underscoring the severity of the problem, this past April the USTR, added Hong Kong to its priority list for the first time. Needless to say, the move didn't sit well with previously cooperative Hong Kong officials who angrily demanded hard evidence be brought forth to back up the accusations.
     Sadly, Hong Kong's protests smack more of desperation than indignation. Recent revelations about the toll that piracy has taken on Hong Kong's own industry help highlight the dangers for even presumably strong film industries. Already stung by economic recession and an exodus of talent to the U.S., the past two years have heralded a rare downturn in the overall quality of Hong Kong films. And that, in turn, has made the colony uniquely vulnerable to piracy for the first time. So severe is the problem that ticket sales have plummeted 33% in two years. Exports that used to reach as many as 26 million filmgoers now reach half that many. As a result, more and more theater space is being consumed by American films, ironically, just as Hong Kong talent is finally starting to attract global attention.

Miramax turned Chen Kaige's Cannes festival winner Farewell My Concubine into a stateside art house hit and an Academy darling, earning a pair of Oscar nominations.

     If nothing else, Hong Kong's problems serve as a microcosm of the problems that await Hollywood and other growing Asian industries if something is not done soon. The real problem, of course, has less to do with securing intellectual property rights legislation than with obtaining enforcement of legislation already in place. Of the major offenders, the USTR and the IIPA have consistently praised Japan and Corea for their tireless cooperation. China, conversely, acceded to U.S. demands only when threat of a serious trade war appeared imminent. And China, say insiders at the USTR and the IIPA, is where most of Asia's piracy problems originate.
     Enforcement in most cases has been rendered ineffectual by what is known as guangxi, or "high political connections." Far from the basement and backroom operations that are typically associated with pirates, many of China's massive videotape and laserdisc factories continue to operate openly and, in some cases, with government blessings. A case in point, according to the IIPA, is the notorious Shenzhen Shen Fei Laser Optical Systems Company, a pirate factory responsible for, among other offenses, a glut of Jurassic Park laserdiscs throughout Asia prior to the film's official release. The niece of the factory's owner, says the IIPA, is married to the son of Premier Li Peng.
     Nonetheless, thanks to threatened implementation of the Special 301 provision of the Trade Act of 1974 which authorizes the USTR to impose trade sanctions as leverage, the Chinese have finally begun taking significant steps at resolving piracy concerns. One of the first steps, this past April, was the setting up of an anti-piracy training center in Beijing to educate officials, consultants, judges and lawyers on the relevant intellectual property issues. Other moves have included the establishment of wholesale audio-visual markets in cities like Shanghai to "foster healthy growth of the legitimate business." If successful, the experimental markets will be expanded throughout the country. In addition, to help insure that films being shown in China were acquired from the proper authorities and through the proper channels, the government has promised increased cooperation with the title verification efforts of the MPAA's anti-piracy wing, the Motion Picture Association (MPA). But China's previous failure to live up to terms of its 1995 accord evoke skepticism over its future trustworthiness.
     "I think the concept is different for them," says Phoenix Pictures chief and former TriStar Pictures president Mike Medavoy, who was born in Shanghai. "Eventually I think I'll be optimistic, but at this point I don't see any reason for optimism yet." PAGE 7

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