L.A.’s Next Must-Attend Event: The U.S. China Film Summit, 11-5-13


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U.S.-China Summit

By Robert Cain for China Film Biz

October 22, 2013

Here’s an important heads-up: the U.S.-China Film Summit, North America’s biggest and best annual gathering of Hollywood and Chinese filmmakers and industry executives, will take place on November 5th at downtown L.A.’s Millenium Biltmore Hotel. Since its inception four years ago the Summit has grown bigger and more influential each year, and with the doubling of its size and scope this year it’s an absolute must for anyone participating in or planning to join the booming cross-Pacific movie trade.

I’m both on the planning committee for this year’s Summit and I’ll be a speaker as well, so I can tell you from an insider’s perspective that this is an unparalleled opportunity to hear from, and meet, many of the luminaries of the China film biz. Here’s a small sampling of the 30+ speakers who will attend:

Senator Christopher Dodd, Chairman and CEO, 
Motion Picture Association of America – Former United States Senator Chris Dodd is Chairman and CEO of the Motion Picture Association of America, Inc., which serves as the voice and advocate of the U.S. motion picture, home video and television industries around the world.

Dennie Gordon, Director, “My Lucky Star” – Director of the teen cult hit “Joe Dirt” starring David Spade, Christopher Walken and Dennis Miller, and “What a Girl Wants” starring Oscar winner Colin Firth and Amanda Bynes. Dennie’s latest film, the romantic comedy “My Lucky Star,” featured Chinese stars Zhang Ziyi and Wang Leehom, and was a bona fide hit at the Chinese box office.

Ellen Eliasoph,  President and CEO,
Village Roadshow Pictures Asia – Ms. Eliasoph leads the company in its business of identifying, developing, financing, producing, marketing and distributing feature films which are filmed principally in the Chinese language and designed for audiences in the Mainland China and other Greater China markets.

Li Bingbing, Actress, “Forbidden Kingdom,” “I Do” and the upcoming “Transformers 4” – One of China‘s biggest cinema and television stars, Bingbing has also had a successful crossover career in American film. She was most recently seen in Screen Gems’ “Resident Evil: Retribution,” directed by Paul W.S. Anderson.

Zhang Zhao, CEO,
 LeVision Pictures -
 In 2008, Mr. Zhang was named one of the top 10 most influential people in China Film and Entertainment Industry. Several films he produced and directed have won many international awards and have been recognized by the U.S. independent film committee.

The Summit will include luncheon keynote speeches from IMAX President Greg Foster and China Film Co-Production Corp’s Zhang Xun, and six panel discussions on topics ranging from digital media business opportunities in China to practical discussions on how to make films there.

The day will be capped off with a Gala Dinner and awards presented by the Asia Society to Senator Dodd and Ms. Li Bingbing.

For more information and to register for the event, please click on this link.  I look forward to seeing you there!

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

Why is Wanda Group Working So Hard to Win Hollywood’s Favor?


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By Robert Cain for China Film Biz

September 25, 2013

I’ve seen more than my share of Chinese movies over the years, but not one has been nearly so entertaining as the show that Wang Jianlin and his Wanda Group have been putting on recently for Hollywood’s benefit.

With its $20 million investment in the Motion Picture Academy museum and its star-studded publicity blitz for a new mega-studio complex in the Chinese city of Qingdao, Wanda is mounting a big, fascinating show to win favor in Hollywood.

And it’s perfectly reasonable to ask “why?”

Now reportedly China’s richest person, Wang has styled himself as the P.T. Barnum of his age, a billionaire grandstander and showman who has brought panache to an industry that—in Hollywood, anyway—has become as moribund as a funeral parlor. Like the great 19th century circus master who preceded him, Wang has seized the global entertainment industry’s center ring with a wink and a nod and a fervent belief that there’s an endless line of suckers ready to buy what he’s selling.

And if you bought all the press that came out of Wanda’s $50 million media circus in Qingdao the other day—the event where the company assembled Leonardo DiCaprio, John Travolta, Nicole Kidman, Jet Li, Zhang Ziyi and Christoph Waltz (the new cast of The Expendables 3, perhaps?) to announce an $8 billion studio investment in a city better known for beer than for entertainment—if you took this Barnum & Bailey style dog and pony show at face value, then you, my friend, have been suckered too.

Wanda has set the movie world’s tongues wagging over a plan that defies logic. This is a company that has invested in barely a dozen pictures, most of which have failed to crack $1 million at the Chinese box office, that now claims it will soon dominate the global film business.

It’s a company that has announced designs to build the world’s largest film production base in a country that’s already glutted with underutilized sound stages, post houses, and state-of-the-art production facilities. Again, why?

If Wanda were able to time travel back to, say, 1940, then sure, it might make sense to construct 20 new soundstages and 100,000 square feet of production space, but this is the age of digital, baby, of green screens and GoPro cameras and desktop video. An age where technology and economics have made location shooting preferable and giant stages an overpriced luxury for most. The last time an American production company considered building such a grand filmmaking campus was back in 1994, when DreamWorks penciled out the cost/benefit and wisely decided to forego a massive bricks-and-mortar capital outlay.

And why Qingdao? It’s a lovely city, often described as China’s most livable, but Qingdao offers virtually zero advantages in the highly specialized and skilled labor-dependent entertainment business. It’s as if Rupert Murdoch suddenly announced he was moving his Fox empire to Annapolis, Maryland or Little Rock, Arkansas.  Wanda will need a huge proportion of China’s entertainment industry to uproot itself and relocate to Qingdao in order for this new complex to achieve long-term economic success.

But maybe he doesn’t care about all that. Wang is a shrewd operator with a phenomenal record of business success, so it would be foolish to dismiss his schemes as pure hubris. I’ve become a fan of Wang’s larger-than-life theatrics, and I think there’s a brilliant method to his madness.  To fully grasp what’s going on here it’s helpful to understand how a conglomerate like Wanda makes money.

Real estate.

Real estate.

Real estate.

One of the surest ways to make a quick buck (or a billion) in China is to syndicate a massive real estate project. First, you persuade your government buddies to grant you a sweetheart deal on a few square miles of land. You come up with a plausible, marketable plan for using that land. Then you attract your investor buddies to provide seed financing for the project.  Market the project properly and billions more will follow. And for every brick that gets laid, for every bucket of concrete that gets poured, you and your buddies take a healthy percentage of the churn. It’s a way to transfer wealth without actually creating economic value.

This is why China has so many huge ghost cities with no residents, so many luxury shopping malls with no customers, and so many production facilities with no productions.

And it gets even better. Movies are an even more liquid way to skim cash. There’s no completion bond industry in China because there are no producers willing to tolerate auditors looking over their shoulders. Some of the budget makes its way up onto the screen, and some of it goes, well, elsewhere. On each movie that Wanda funnels through its “Qingdao Oriental Movie Metropolis” it will make money coming and going, regardless of box office performance.

Which brings us back to Wanda’s outreach to the U.S. film business. What better way to gain global attention and sex up a project than by leveraging the glamor of Hollywood? Wanda has created a halo effect for itself and its Qingdao venture by presenting a huge check to the Academy museum, by touting its barrels of cash and its thousands of movie screens, and by surrounding itself with movie stars and major studio executives. It’s all about curb appeal. It’s a smart, creative, and ultimately reliable way to make lots of money.

P.T. Barnum would undoubtedly approve. As he himself once put it, “Without promotion, something terrible happens… nothing!”  And then again, “Every crowd has a silver lining.”

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

China’s Monster Summer


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By Robert Cain for China Film Biz

August 22, 2013

The disturbing drought that plagued Hollywood’s movies in China through the first half of 2013 has been quenched, at least temporarily, by a string of box office successes that began in July. Chief among these has been Pacific Rim, a monsters-meet-robots spectacle that couldn’t have been more perfectly aimed at Chinese moviegoers. In its first three weeks of PRC release (as of Thursday August 22nd) the film has devoured $109 million in receipts, good enough for 2nd place this year among all Hollywood imports, and better by far than the $98.7 million the film has earned in North America.

While some might attribute Pacific Rim’s PRC success to its giant CG robots—the Transformers franchise is after all the highest grossing movie series in China’s history—I’d like to make the case that the film’s massive monsters are at least as responsible for scaring up Chinese ticket sales. Chinese audiences love a good monster movie as much as anyone, but the country’s strict censorship policies have restricted the homegrown monster movie quotient to practically zero. It’s a quirk of the Chinese film administration’s policies that monsters can invade China—or its theaters, anyway—from overseas, but they’re generally prohibited from breeding, hatching, or emerging from slimy lagoons onshore in the Middle Kingdom.

Further proof of my theory can be found in this week’s monster opening of Jurassic Park 3D, Universal’s reissue of the 20-year old Steven Spielberg dinosaurs-gone-wild classic. With almost $17 million in Chinese revenue in its first three days, the film ranks as the fourth biggest foreign opener of 2013 and is is well on its way to becoming the biggest grossing re-release of the past 12 months. Although the grosses for reissues tend to quickly fall off, the pattern so far suggests a final gross in the $30 million to $40 million range, which would make it China’s second highest grossing 3D re-release ever—albeit a far distant second—to 2012’s Titanic 3D.Top-grossing HW rel

The next ‘monster’ movie up is of a more kid-friendly variety, Pixar’s Monsters University, which is scheduled to open on Friday, August 23rd. China’s monster mania may help the film to break the Pixar curse, which has seen most of that animation studio’s films open poorly in the PRC and quickly fade away. With little family-fare competition I expect Monsters U to take at least $25 million in China, which would put it well above Toy Story 3’s $16.7 million gross in 2010, Cars 2’s $11.9 million in 2011, and Brave‘s dismal $4.7 million in 2012.

Last week’s box office saw Pacific Rim win its third week in a row, the first time that’s happened for a Hollywood film in 2013 (the China/Hong Kong co-pro Journey to the West won 5 straight weeks in February and March). Tiny Times 2, the sequel to July’s teen girl-oriented hit Tiny Times, ran up its total to $44 million with a $17 million second place finish. And Fan Bingbing’s romantic comedy One Night Surprise from writer-director Jin Yimeng (Sophie’s Revenge) took third with $15 million, proving the rom-com genre’s continuing strength with Chinese audiences.Box office for week ending Aug 18, 2013

Bona’s boxing flick Unbeatable took fourth place with $9 million on generally positive reviews. Rounding out the top 5 was Wanda Media’s disappointing release  The Palace, which managed just $7.4 million in its first 7 days despite the huge opening screen count allocated by its sister company, theatrical exhibitor Wanda Cinema Line. This marks Wanda’s second flop in a row after Man of Tai Chi. Wanda is new at the feature production game, and with its deep pockets the company presumably has the staying power to get enough at bats to eventually generate some homeruns.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

Can China Save ‘Earth’?


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By Robert Cain for China Film Biz

July 12, 2013

The Will Smith-M. Night Shyamalan sci-fi /adventure After Earth arrives in Chinese theaters today with high hopes for a ‘do-over’ after its weak opening in the U.S., Europe, and the rest of the world. With its reported $135 million production budget and $100 million more in marketing costs, the Relativity Media/Overbrook Entertainment flop needs big China numbers if it is to recover from the financial crater it has dug for its investors.

A China box office recovery scenario has its precedents, as Chinese audiences often go against the global tide. Some stateside under-performers enjoy surprisingly big results in China; Battleship and John Carter, for example, ginned up China grosses of $50 million and $42 million respectively, accounting for 15 percent and more of their worldwide theatrical totals. The reverse is often true as well, as recent releases like Django Unchained, The Artist, and Les Miserables have left Chinese audiences cold and earned 2 percent or less of their worldwide revenues there.Image

Early reports have After Earth winning the PRC box office race on Friday, beating The Rooftop, the romantic musical starring, written and directed by, and featuring the music of Taiwanese multi-talent Jay Chou (The Viral Factor, The Green Hornet). Rooftop opened to an excellent $2.6 million total on Thursday, but suffered on Friday due to competition from After Earth, which took in a projected $4.1 million, including Thursday’s midnight grosses.

The week ending July 7th was a decent, if somewhat uneventful one at the theaters. Tiny Times continued to dominate the field, taking another $24.4 million out of the nationwide total of $65.3 million. As of today the youth-oriented romance has extended its gross to $75 million, which, believe it or not, is considered a disappointment by its producers and distributor Le Vision. The film has been blasted by some of the worst reviews and most scathing weibo criticism in recent memory. Le Vision has responded by moving up the sequel, Tiny Times 2, from December to August 9th, perhaps, in the words of my Chinese correspondent Firedeep, to “cook another meal while the pot is still hot.” The August date will be a competitive one, but December will be even more so, and Le Vision may have lost its nerve about facing the tough December field with such a critically panned franchise.

Last week also saw the opening of Andy Lau’s Blind Detective with a $13.7 million bow, and the winding down of Man of Steel, which has surpassed Skyfall to become the third highest-grossing American film in China this year. Man of Steel has collected just over $62 million to date and will end up around $63 million. And as we previously noted, the U.S.-China co-pro Man of Tai Chi fell flat with just $2.9 million in its opening weekend. That picture has cumed $4.1 million through its first 7 days and will probably fall short of $10 million over its PRC run.

Image

Looking ahead to next week, on Thursday July 18th Huayi Brothers will release the family comedy Mr. Go, a South Korea-China co-production about a Chinese teenaged girl who inherits a baseball playing gorilla and takes him to Korea where he becomes a star major league slugger. Silly? Perhaps. I expect it will do big business. Tune in here next week and let’s see what happens.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

 

Keanu’s Big Swing and a Miss in China


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By Robert Cain for China Film Biz

July 8, 2013

Nearly a decade in development and more than two years in production, Keanu Reeves’ directorial debut, Man of Tai Chi, was supposed to accomplish several ambitious goals:

  1. Enable Reeves to make the leap from actor to respected film director.
  2. Propel Reeves’ friend and Matrix kung fu mentor Tiger Chen to his own breakout as an action star.
  3. Establish a China beachhead for Reeves and enable him to make more movies there.
  4. Earn lots of money for the film’s investors, who include China Film Group, Wanda Media, Village Roadshow Pictures Asia, and Universal Pictures.

But the tepid audience response to Man of Tai Chi’s opening in China last weekend spells disappointment for everyone involved.  Although Reeves may still have a directing career ahead, his first film now appears more hindrance than help in advancing him toward that goal. I haven’t yet seen the movie so I can’t comment on Reeves’ directing capabilities, but the trailer has an odd direct-to-video feel to it and, according to Weibo chatter, lacks appeal for many in its targeted demographic.

At a reported $25 million budget, the picture will need to do a much better job drawing audiences in the U.S. and other territories if it is to turn a profit.  Wanda is said to have put up a substantial percentage of the negative cost in exchange for Chinese distribution rights, and turned over some 60 percent of its 1000+ screens to the picture. In hindsight that looks to have been a costly decision; given its $2.87 million nationwide total for the 3-day weekend, Man of Tai Chi will likely finish with less than $10 million in theatrical gross receipts over its entire China run. Wanda would have been better off allocating more of its screens to local hits Blind Detective and Tiny Times, or to the popular Warner Bros release Man of Steel.

Wanda and its partners in Man of Tai Chi  made a bet that audiences would turn out for Reeves because of his Chinese heritage and his track record as an action star with a genuine martial arts pedigree. My feeling is that the core moviegoing audience may simply be too young to know who Reeves is, and so he didn’t draw as well as had been hoped.

The U.S. market probably won’t offer much support, as the film still doesn’t have a scheduled release date there. According to The Hollywood Reporter, Weinstein Company’s Radius division picked up U.S. rights at Cannes with intentions for a fourth quarter U.S. release, but has not yet announced any firm plans. Universal’s decision not to handle the film despite having invested in it suggests they lack confidence in its North American prospects.

In Reeves’ and his backers’ defense, their task was not an easy one; few recent action or martial arts films have been successful both in China and abroad. Here’s hoping  Man of Tai Chi finds better luck in the global market.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

‘Tiny Times,’ Gargantuan Grosses


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by Robert Cain for China Film Biz

July 4, 2013

Happy 4th of July everyone, it’s America’s Independence Day. As a person who enjoys the uninfringed right to express my thoughts to readers around the world, I’m extremely grateful for the precious freedom America’s founders fought for and bequeathed to their descendants.

On another note, I’m dedicating this post to Dominic Ng, Bennett Pozil, and their superb team at East West Bank. They recently hosted me at two of their events and made invaluable introductions for me to their clients. Dominic was kind enough to publicly recognize my work in a room full of heavy hitters at his “U.S.-China Economic Relations“ summit at the Biltmore Hotel in downtown Los Angeles. And since Bennett has been after me to keep writing this blog, pleading that in its absence he’s been forced to read trade papers like the Hollywood something-or-other and another thing whose name I forget that starts with the letter “V”, I suppose anyone who gets some use out of this humble publication should thank Bennett for his persistent cajoling.

It has been an eventful month or so since I last wrote about China’s film biz. In recent weeks Iron Man 3 finished its run at $121 million, edging out local romantic drama So Young to become the second highest grossing film of the year so far behind Journey to the West. Dreamworks’ animated movie The Croods defied everyone’s expectations, including my own, running up a magnificent $63 million, which places it among the highest grossing animated films in Chinese history. Legendary East announced a partnership with China Film Group; local film American Dreams in China ran up an $86 million gross; Man of Steel opened on 6,500 screens, the biggest launch to date in China; and Paramount’s World War Z was barred by the censors, despite the producers having made pre-emptive changes to avoid offending them.

Also, the July release schedule was announced, and with four big Hollywood titles opening (After Earth, White House Down, Fast and Furious 6, and Pacific Rim) the U.S. studios might finally get a chance to make up some ground against their Chinese competitors. Finally, the release schedule for December 2013 has been set, and it looks to be a blockbuster holiday, with Tiny Times 1.5, Jackie Chan’s Police Story 2013, mega-director Feng Xiaogang’s Personal Tailor, and possibly Overheard 3 and the star-studded Monkey King (with Donnie Yen, Chow Yun-fat and Aaron Kwok) all set to open within a two-week period. My Chinese correspondent Firedeep predicts that four of these five films will wind up out-grossing Iron Man 3.

Which brings us up to the present. China’s exhibitors and producers are enjoying another stellar year so far, with almost $1.7 billion in grosses in the first half, nearly 40 percent ahead of the first half of 2012. Given the patterns of prior years, I expect a $3.7 billion final tally for the year. It’s worth noting that China is now routinely grossing more each month than it did in the entire year of 2006. At the current rate of growth the PRC market will surpass North America as the world’s largest territory in 2017, and even if growth slows considerably the succession will take place in 2018 or 2019 at the latest.

The week ending June 30th was the third biggest so far this year, at $87.5 million. Tiny Times set new records for the opening day of a local film at $12.4 million, and went even wider than Man of Steel, running on nearly 50 percent of China’s 15,000+ screens. Look for the teen female oriented Tiny Times to wind up at around $100 million when its run ends.Box office week ending 6-30-13

Man of Steel continued strong, with $21.1 million in its second week. Heavy competition from Tiny Times will curtail its grosses, and it will likely finish in the $55 million to $60 million range, which is where many recent U.S. blockbusters have settled.

Star Trek Into Darkness finished up its run right in that same range, with $57 million. To the surprise of many observers Star Trek outperformed in China, earning a healthy 13 percent of its worldwide gross in the PRC. Compare this to, say, Skyfall, Oz the Great and Powerful, and The Hobbit, each of which earned only 5 percent of their respective worldwide totals in China.

In the coming days I’ll write more about China’s first half results and the U.S. studios’  performance. Until then, happy independence day!

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

Value Creation vs. Value Capture in China’s Entertainment Market


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NYT Room For Debate

by Robert Cain for China Film Biz

June 2, 2013

Over coffee in Hong Kong last week I received some sage advice from my friend Cole Sirucek, a former investment manager for Singapore’s Temasek fund and now a successful entrepreneur. “Mind the difference between value creation and value capture when you do business in China,” he advised.

It’s a distinction that many in Hollywood tend to overlook. It’s fairly easy to create value in China with American entertainment content and ideas. But capturing that value and repatriating it to one’s own bank account remains a difficult challenge.

When the New York Times’ Hilary Howland asked me to write an opinion piece on U.S.-China entertainment trade, I thought value capture would be an interesting topic to explore. The Times published my op-ed essay today, and I’ve provided below a slightly longer version of the same piece.

Capturing the Value of American Movies in China

Transnational trade and investment between America’s and China’s entertainment industries revolve around four fundamental sources of value.

  1. Access to American content, particularly (but certainly not limited to) globally commercial “tent-pole” films, popular television programs, and reality show formats.
  2. Access to American creative and managerial talent, with their proven abilities to generate content and profitably exploit it.
  3. Access to China’s very large, rapidly growing market, soon to be the world’s biggest source of entertainment revenue.
  4. Access to production capital, with America’s investment capacity in relative decline and China’s on the rise.

American legislators, investors and entertainment industry managers must recognize the difference between value creation and value capture. America’s entertainment sector is by far the world’s greatest creator of value for distributors and audiences around the world, and it has traditionally succeeded in capturing much of that value wherever it has operated. Roughly fifty percent of all global filmed entertainment revenue currently goes to American companies.

But whereas Americans have been extremely successful in creating value in China, capturing that value has proven a much tougher challenge. With its protectionist policies, its lack of business transparency, and its indifference to intellectual property rights, China returns to American content owners not more than twenty percent, and probably less than five percent of all the value U.S. content generates there.

This value loss has serious long-term implications for U.S.-based entertainment companies. Until recently Chinese exhibitors and distributors needed American content to build up their domestic industry. American movies brought in the ticket revenues that built China’s movie theaters, and ad dollars from American TV shows helped develop China’s digital distribution infrastructure. But the Americans have missed the opportunity to leverage the value they’ve created, ceding profits and market power to Chinese suppliers who have not only amassed huge amounts of investment capital, but who have also gotten better at creating their own successful content, dramatically reducing their need for American programming.

Unfortunately for the Americans, they need China now more than ever. As our domestic market matures we must increasingly look overseas for growth. And no market offers better growth potential than China: in the next four or five years China will surpass the U.S. in absolute revenue, and by the middle of the next decade it will dwarf the American market.

U.S. government regulators should bear in mind the principle of value capture as they evaluate cross-border transactions. China prohibits U.S. investors from owning entertainment distribution companies in the PRC, effectively neutering their ability to capture value there. U.S. rules present few such prohibitions to Chinese investors, so it is entirely conceivable—and even probable—that more and more of the U.S. entertainment production and distribution infrastructure will come under the control of Chinese owners.

China treats entertainment as a strategically critical industry, and the U.S. should too, by insisting upon more fair and balanced value capture policies.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

No Climbing, No Dabbling in China’s Movie Biz


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By Robert Cain for China Film Biz

May 8, 2013

I spotted the sign shown above as I was exiting Shanghai’s Pudong airport last week, and although the signmaker’s translation skills are sorely lacking (the bottom sentence should read “Please don’t play in the water.”), the message stuck with me as an appropriate one for those looking to earn their fame and fortune in China’s movie business.

No climbing, no dabbling. Precisely! Understand the hierarchy, especially the government culture, don’t try to overstep your bounds, and don’t dabble because things are moving so fast here that if you fail to move and adapt quickly you’ll get left behind. It’s a culture that Hollywood’s studios generally abhor, and for that reason they’re mostly opting out of the China boom, leaving the money and opportunity to entrepreneurs and risk-takers.

And there’s so much money and opportunity, even (perhaps especially) for foreigners who respect the rules. From small private startups to the biggest state-owned enterprises, China’s film industry is awash in cash, hungry for success, and eager to partner with people who possess know-how and international access.

In my recent China travels I’ve met a 30ish entrepreneur who has poured at least $25 million of his own money into a state-of-the-art post facility; a former government employee who controls an enormous production facility and sizable production fund; and countless others who are prepared to fund movies and entertainment ventures if they can only find investable projects.

Recognizing that commercial filmmaking skills and business savvy are in short supply in China, most of these folks are happy to collaborate with–and in many cases finance–foreign professionals. Even the huge and stodgy China Film Group, the supposed dinosaur of China’s film industry, has aggressively embraced foreign talent, reportedly placing more than two-thirds of its upcoming film projects with international directors. One of the biggest budget films in China’s history, Beijing Forbidden City Film Company’s Wolf Totem, is in the hands of French director Jean-Jacques Annaud. It’s a sign of the heady times in the PRC that Annaud was granted approval to direct Wolf Totem even though he’d been previously banned for making the anti-PRC film Seven Years in Tibet.

One major way that foreign influences have seeped into China is the increasing prevalence and success of Hollywood-style storytelling in locally made films. Pictures like Lost in Thailand, Finding Mr. Right, So Young, Drug War and American Dreams in China have attracted giant Chinese audiences by co-opting western storytelling techniques, and in some cases adapting Hollywood hits to the local culture. This an encouraging trend, one that bodes well for skilled western writers and filmmakers who are willing to give China a go.

Of course there’s a catch to all of this. To play in China one must be willing to play by the rules. Here are a few to keep in mind:

1. Meet them more than halfway. Chinese investors tend to be more likely to place their capital at home than overseas. Co-productions are fine, whether in Mandarin or English, but don’t expect them to finance your quirky indie comedy or heartfelt drama unless it can shoot in China with Chinese elements. Chinese movie investors neither understand nor trust the foreign marketplace; most will only invest if they’re confident they can make their money back in China.

2. Brand name drop. If you want to get a Chinese investor’s attention, there’s no better way than to trot out some brand names with which you can claim some association. Can you get a major movie star involved? Are you or have you ever worked for one of the major Hollywood studios? Did you get a masters degree at Yale (or better yet, at Beijing University)? Can you work the words “Goldman” and “Sachs” into the conversation? Few PRC investors have the ability, or even the interest, to assess the quality of your screenplay, but a strong brand name they recognize will help you to swiftly cut through the clutter.

3. Be sensitive to the culture.  Just as in Hollywood, there are many cultural, social, and business rules that must be obeyed if you’re to have a reasonable shot at success. Too many foreigners show up with little understanding of how things work in China and reveal themselves as ‘barbarians’ who are best avoided.

4. Bring protection. China can be a rough-and-tumble place, and foreigners are often treated as targets for exploitation (and sometimes amusement). It’s best to have a local partner or ‘sherpa’ to guide you through the minefield. A great source of information and advice is the Harris Moure law firm’s China Law Blog.

Several friends recently asked me if I’d be attending Cannes this year, and I felt compelled to reply “What for?” The action is all in the East these days. Of my scores of Chinese film business contacts I’m only aware of two who bothered to attend the Cannes festival this year. Better to spend your time at the Shanghai Film Festival in mid-June, where you can participate in a relevant and rapidly growing scene. So don’t dabble, book your ticket and hotel room before everyone else squeezes you out.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

‘Iron Man 3’ – ‘So Young’ Duel Smashes Chinese Box Office Records. Are Hollywood’s Fortunes Turning?


Follow me on Twitter @robcain or Sina Weibo @robcain, or connect with me on LinkedIn.

By Robert Cain for China Film Biz

May 8, 2013

It’s happening so often in China these days that it’s difficult not to sound clichéd, but it was another record-breaking week at the national box office in the 7-day period ending May 5th.

So many records toppled that to list them all would fill up an entire column. To avoid making this article an overly long list, I’ll mention just a few.

First, at $148 million, last week’s cumulative PRC gross easily beat the all-time weekly record of $136 million that was set during Valentine’s Day week less than three months ago.

Although Iron Man 3’s $64 million 5-day gross fell about $10 million short of the all-time single week record that was set by last year’s Titanic 3D at $74.7 million—it did set new records for biggest midnight screenings total with $2.1 million, and biggest opening day with $19 million.

So Young, the Vicky Zhao directed romance, notched the biggest second-place weekly gross ever, with $53 million.

And The Croods became the highest-grossing original (that is, non-sequel and non-pre-existing franchise) animated film in China’s box office history, with a $36 million total as of Sunday.Box office week ending 5-5-13

So all of this is good for China and good for Hollywood, right?

Good for China’s producers and distributors, yes. For Hollywood, it’s hard to get too enthused. This past week was a positive blip in what continues to be a confounding and rather distressing trend for American studio films in China.

There’s no debating that Iron Man 3 is a solid success. Its PRC gross will roughly double the $60 million gross of the year’s second-best Hollywood release so far, Skyfall, and it will become the first Hollywood film in 12 months to reach $100 million.

But it still may not beat So Young, a melodrama from a first-time Chinese director with a production budget that was probably less than 3 percent what Iron Man cost. And So Young won’t even be among China’s top 5 grossers this year.

When you consider that Iron Man 3 is the biggest and best that Hollywood has to offer, that it enjoys the backing of a strong local partner in DMG and an unprecedented level of government support, yet it still struggles to beat a low-budget B-level Chinese language movie, you know something’s not working. Iron Man didn’t break the downward trend for Hollywood in China, rather, it’s the exception that proves the rule.

Chinese audiences like Hollywood movies, but they love Chinese ones. And that’s a major problem for Hollywood.

China’s box office is now up 41 percent year-to-date (36 percent in RMB terms) while North America is down by 11 percent. Chinese movies are getting better, and with $50+ million grosses now routine, they’re becoming much more profitable. Capital is attracted to ventures that offer profits, and Chinese movies, though tricky investments in some ways, are looking increasingly attractive.

Because Hollywood action movies like Iron Man remain extraordinarily expensive to produce, they need growth from overseas to compensate for their shrinking domestic market. China was supposed to be the solution to Hollywood’s math problem, but China isn’t cooperating. In the global market for film financing, U.S.-based projects are going to find it increasingly difficult to compete, unless they radically change their strategies.

Two strategic approaches that offer promising future prospects for foreign producers are:

1. Provide animated films and family fare. These genres have repeatedly gotten special dispensations from SARFT, enjoying prime distribution slots even during holidays and blackout periods.

2. Make local Chinese language films for low to moderate budgets. This is not easy, but at least it’s permitted, and as we’ve seen, a well-made Chinese film can generate windfall profits.

A third strategy, U.S.-China co-productions, remains extremely challenging, and it may still be a few years, if ever, before such productions become common. As Jiang Wei, general manager of Edko (Beijing) Films Limited, puts it:

“The Chinese film industry needs to grow for greater cooperation to be achieved. There is no real in-depth cooperation, in which staff from both countries work together, like what the English and Australian filmmakers have been doing in Hollywood. When China’s film industry grows as an equal partner and the box office becomes big enough, the Hollywood community will have to think of real stories involving Chinese culture and people who are real characters. Only then will real co-productions be possible.”

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

China Swoons With ‘Iron Man’ Fever


Follow me on Twitter @robcain or Sina Weibo @robcain, or connect with me on LinkedIn.Wang Xueqi and IM3

By Robert Cain for China Film Biz

May 1, 2013

I didn’t dare say it until now as I’ve been holding my breath for my friends who handled the Chinese production and release of Iron Man 3, but “WOW!” Their picture has just set new PRC revenue and attendance records for midnight screenings with over $2 million, and initial reports indicate it has easily surpassed Transformers 3’s full opening day record of $15 million, with a nearly $20 million haul in its first-day plus midnight receipts.

And after so many disappointing PRC releases of Hollywood films in the first quarter, IM3 now appears likely to become the first U.S. film in 12 months, since Titanic 3D last April, to crack $100 million at Chinese multiplexes.

I’ve gone on record several times here with the opinion that So Young might beat Iron Man 3 in total China box office revenue. But now it’s a real horse race, and I may wind up eating my words.

Barely a year ago it was conventional wisdom that super hero films don’t play in China, because audiences didn’t grow up with the characters and weren’t familiar with their stories. And until recently this was true; the last Iron Man movie grossed only a fraction of what Avatar, Inception, and several Chinese language hits did back in 2010.

But Disney and Marvel have worked hard to edify the Chinese audience with films like Captain America, Thor, and especially The Avengers, and together with the invaluable efforts of their Chinese partner DMG they made Iron Man 3’s release into a major cultural event. Despite increasing their initial midnight screen count from 1,500 to over 2,300, there was scarcely a ticket to be had in most theaters, and commentary about the film has lit up China’s social media networks.China B.O. Perf of U.S. Films

The China-U.S. collaboration on Iron Man 3 faced numerous challenges and risks, and its success was far from a sure thing, but today’s box office results have vindicated the Disney/Marvel/DMG strategy. Congratulations to all involved for boldly and successfully pioneering new ground in the China-Hollywood relationship.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.