The PRC's film industry is growing at a fantastic pace in every aspect: be it in production, exhibition, admissions or box office. In early 2012 China surpassed Japan as the world's second largest theatrical market.
Designated next PRC President Xi Jinping's decision to make the (moderate) opening of China's film market a key topic for his first official visit to the US in February 2012 can be regarded as a promising step towards a more open and globally integrated Chinese media market. However, the overall situation of limited market access for foreign films and foreign film production companies is unlikely to improve significantly in the near- to mid-terms.
International film production companies aiming to secure a share of China's skyrocketing box office receipts should therefore seek alternatives to direct film importation on flat-fee or revenue-share bases. A promising alternative, which has gained increasing attention from both foreign and Chinese players in the recent past, is co-production. Provided that certain requirements are adhered to, a Sino-foreign co-produced film is considered a domestic production and hence does not fall under the import quota and other restrictions imposed on foreign films.
However, the co-production business in China is tough, fraught with difficulties and unclarity about the rules. Knowledge, patience, intercultural competency, persistence, and last but not least, experience drawn from trial and error are all keys to success when co-producing in and with China.
To support companies interested in Sino-foreign film co-production in their quest for success, this report provides a general market and regulations overview, introduces the main goals that drive Chinese and foreign parties to engage in co-production and explains challenges that have to be overcome. To provide insight into the previous economic success of Sino-foreign co-productions, we analyzed the box office performance, origin, genre and global success of the top 50 films in Chinese theaters each year from 2006 to 2010 and the 143 Sino-foreign co-productions exhibited in China during the same time period.
This report puts the spotlight on one of the hottest topics in China's, and in fact the global media industry today: co-producing feature films in and with China. It does not claim to supersede the need for foreign producers to conduct a thorough vetting of Chinese co-production partners and the claims and promises they make. Instead, the purpose of this report is to provide readers with the relevant knowledge and tools to define, (re-)assess and optimize their China-related co-production plans and to enhance foreign co-producers chance at success in one of the fastest growing, but murkiest film markets in the world. SHOW LESS READ MORE >
- Growth Trends in Box Office and Admissions
- Screen Expansion
- Domestic Film Industry
II REGULATORY ENVIRONMENT FOR FOREIGN FILMS
- Historical Background
- Film Quota and Industry Targets
- Import and Distribution
III REGULATORY ENVIRONMENT FOR CO-PRODUCTIONS
- Ideological Government Support
- Modes of Co-Production
- The China Film Co-production Corporation - Service, Requirements, Experience
- Production Approval
- Screening Approval
- Co-Production Treaties
IV NUMERICAL ANALYSIS OF CO-PRODUCTIONS
- Market Share in Box Office
- Global Impact
- Motivations behind Co-Productions
- Success Strategies
- Receiving Revenue
- Meeting Chinese Consumer Taste
- Mushrooming Productions
- Excessive Bureaucracy
- One Size Fits All
- Attracting Global Audiences
VII WRAP-UP & LOOKING AHEAD
- Appendix A – Interview with Wellington Fung,
- Secretary General of the Hong Kong Film Development Council
- Appendix B – Interview with Mathew Alderson, Lawyer, Harris & Moure
- Appendix C – Interview with Isabelle Glachant, Producer of 11 Flowers
- Appendix D – Interview with Wang Yu, President of Ray Production
- China's box office reached US$1.56 billion in 2010, an increase of 64% over 2009. Growth slowed in 2011 to about 30% with total box office reaching US$2.08 billion. In early 2012, China surpassed Japan as the world's second largest theatrical market..
- Growth of China's box office is enabled by massive screen expansion, with the number of screens increasing 42% in 2011 y-o-y to a total of 9,286, and supported by simultaneous growth in household income, disposable income and recreational spending.
- Patterns of increasing income leading to higher levels of spending on non-essentials such as entertainment are consistent with the economic histories of developed countries, but in China the changes are taking place on a more massive scale and at a faster rate than has been witnessed elsewhere.
- However, with an average of 0.3 admissions annually, per capita movie attendance in China lies far below its Asian neighbors, let alone the US.
- With 582 feature films produced in 2011, China is currently the #3 producer of feature films in the world, topped only by India and the US.
- Domestic films, which by regulatory definition include Sino-foreign co-productions, generally account for around 55% of China's annual box office, a ratio artificially implemented by the Chinese government that set an unofficial rule requiring domestic films to reign in over 50% of annual BO. A tight-knit regulatory system restricting foreign film import, the manipulation of film release dates and screen allocation are tools the government employs to achieve that goal.
- By far the biggest portion of the "guaranteed" share is generated by Sino-foreign co-productions, mostly Chinese-Hong Kong co-pros, rather than by purely domestic productions.
- As for foreign films, US films historically dominate import and box office in China. In 2011, 39 of the total lot of 61 films imported into China stemmed from the US.
- Under China's regulatory system, only 20 foreign films per year can be imported into the country on a revenue-sharing basis for nationwide theatrical release. This quota does not apply for films imported in their 3D or IMAX versions only. Additional films can be imported on a flat-fee basis.