7 Ways to Tell Whether You Have an Effective China Strategy

by Robert Cain for China Film Biz

May 7, 2012

If you’re looking to engage in China’s booming film business and you don’t have a clear, action-oriented strategy, then you’re not maximizing your chances for success and you may even be wasting your time there. Although China is now the world’s second biggest and fastest growing box office territory, it presents unique business challenges that even the most experienced entertainment industry players won’t have encountered anywhere else. Many of the pitfalls of doing business in China can be avoided through proper planning. Ask yourself the following questions to determine whether you have a winning China strategy:

1. Are you clear on your outcomes? You must be clear about your goals if you want to achieve them. Is your aim to make co-productions with global crossover potential? Mandarin language box office hits? Or are you mainly aiming for a share of China’s burgeoning VOD business? Each of these goals requires a customized approach, specifically tailored tactics and the right local partners and government contacts to enable success. Make sure your goals are realistic and achievable, and put yourself on a timetable for achieving them. Be as specific as possible. In order to choose the correct strategic roadmap you first have to know where you’re going.

2. Are you working with the right local people? There’s no question that local partners are essential to reaching your goals in China. But it can be extremely difficult to find the right people, those who will act as reliable, trustworthy partners and who can get things done. Lacking information and reliable methods for vetting Chinese collaborators, foreigners often rely at their peril on fancy government titles or inflated claims of connections to key decision-makers, only to wind up sorely disappointed or even cheated. If you don’t have the requisite knowledge and contacts to evaluate your prospective partners and to choose the right ones, then consult with experts who do.

3. Is your content appropriate for the Chinese market? I receive dozens of scripts and pitches every week that producers think appropriate for China, but I turn away 95 percent of them because they don’t pass the following simple tests:

  • Is the content censorship friendly? It never ceases to amaze me, but the majority of the scripts I receive involve gang violence, corrupt officials, graphic sex, and countless other elements that are taboo under Chinese censorship strictures. Know the rules before you invest your time in a project that has no chance of obtaining SARFT approval.
  • Is the story commercially viable for Chinese audiences? Your buddy comedy or political thriller may be perfect for English-speaking audiences, but its humor, language, foreign context or cultural references will likely bewilder Chinese moviegoers. Pay attention to what’s working commercially in China. Just because a story has Chinese characters doesn’t mean it has Chinese audience appeal. Teens and twenty-something ticket buyers in China are just as likely to avoid Ming dynasty costume dramas or tired kung fu action remakes as are their American and European counterparts.

A small investment of time and effort in understanding China’s rules and its movie-going audience will not only help you to avoid wasting time on inappropriate projects, but could also guide you to those projects that are primed for commercial success.

4. Are you taking appropriate action? China’s entertainment industry presents a perfect trifecta of opportunity: a huge potential market that has only begun to be tapped; growth that is unprecedented in the history of the movie business; and local competitors who have limited experience—especially in the global marketplace—and who know they need outside help to reach their potential. If you’re not making China a major priority then you’re probably squandering the opportunity of a lifetime. If you’re an executive of a big company who’s visiting China once a quarter or so and you have an executive or two on the ground, then you’re merely dabbling. Before you know it China will be the world’s largest movie market, and if you’re not thinking and acting on that reality every single day then you’re not doing enough.

5. Are you focused on delivering value? If your China plan only involves receiving but not giving back, then you have a short-term strategy, not a long-term one. Guanxi, or relationships, are the essence of business success in China, and guanxi involve give and take. What’s your plan for fulfilling the needs of distributors? Of ticket buyers? How do you intend to benefit your business partners? Are your interests aligned? Does your plan allow them to profit together with you? What else can you offer, to your partners, your customers, and to China itself? Consider supporting projects that meet the Chinese government’s ‘soft power’ ambitions, that present a positive image of China to the world. If you come to China with giving on your mind and in your actions, you should have no trouble with the receiving part.

6. Do you have adequate information? China is not only growing fast, it’s changing fast too. A critical component of success there is the ability to adapt, to revise your strategy and tactics in step with changes in the business environment as they occur. If you don’t have constant, timely, reliable information about box office trends, technological advances, personnel changes, shifts in government policy and the like, then you’re at a dangerous competitive disadvantage. Be prepared with the necessary insight to assess information and understand trends. Make sure you are properly positioned to stay on top of each wave of change, to benefit from rather than get swamped by every shift in the currents.

7. Do you have the right team? Given China’s extraordinary growth prospects, and thus its critical importance, you need to put your “A” team on the China beat. Make sure you have the right people in your lineup. Chances are you don’t currently have them. From your employees to your legal and business representatives, what you want is people who have been effective in cross-Pacific business, who have worked in China and in your home country. Take generalists over specialists, people who understand story, production, and the business side of entertainment. People who have strong networks among key industry players in China and also around the world. People who can hit the ground running in China. It’s a country and culture that can take many years to understand, and you can save precious time by employing staff who already know the territory and business environment. Success in China will come from being “Chinese” in your behavior, not from acting like an outsider trying to come in and make a killing.

My company, Pacific Bridge Pictures, is here to help you in crafting and executing your China strategy and projects. Our partners have more than 40 years of experience in developing, financing, producing and distributing motion pictures and television programs, in China, the U.S., and around the world. We have built successful companies, and we have worked for or consulted to most of Hollywood’s major studios, for many independent producers, and with such leading Chinese media players as China Film Group, Shanghai Media Group, and CCTV. I began my career working for and learning under Harvard Business School strategy guru Michael Porter, and have applied that knowledge to lead more than 100 entertainment companies through the process of defining their strategies and achieving their goals.

For more information about Pacific Bridge’s strategic advisory and production services for China, please contact rob@pacificbridgepics.com.

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 Third Affliction and the Soft Power of Film

By Robert Cain for China Film Biz

December 11, 2011

China’s increasing focus on exporting its values could ironically spell opportunity for foreign filmmakers. Read on to learn how and why.

Back in 2008 the term “three afflictions” began appearing in the Chinese press to describe the major impediments that hampered China’s national strength during the past century. These were foreign aggression, poverty stemming from a weak economy, and the demonization of China by ‘hateful’ and ‘ignorant’ Western nations.

As the press stories told it, the first affliction was conquered by Mao Zedong when he unified China under the Chinese Communist Party (CCP) and expelled the last of the foreign occupiers, the Japanese. The second was thrown off when Deng Xiaoping declared “to get rich is glorious” and engineered the great Chinese economic miracle that continues to the present day.

With the first two afflictions licked, the CCP has now set its sights on tackling the third, which can be summed up as poor global public opinion. Government leaders are concerned that China’s negative image stands in the way of its international influence, and they’ve decided to do something about it.

A major party initiative to project China’s ‘soft power’—that is, its ability to shape global events by promoting its cultural values around the world—was announced in November by President Hu Jintao when he delivered a policy speech urging the country’s artists and writers to “get closer to the realities and lives of the masses, to uphold the spiritual torch of the Chinese nationality, and to produce a greater number of excellent works that live up to the history, the times, and the people.”

And then he said something that must have jolted every Chinese artist and intellectual: “Let all flowers bloom together and let hundreds of schools contend.” This statement directly echoed Chairman Mao’s famous 1957 statement “Let a hundred flowers bloom and a hundred schools of thought contend to promote progress in the arts and sciences and a flourishing socialist culture in our land.”

OK, enough history; what does all of this mean for filmmakers?

For one thing, it means money. Lots of it. Hu and his colleagues in the CCP are anxious that Western culture and values have gone global in a way that Chinese culture and values have not, so they are investing billions in the effort to export China’s own value system, building the world’s most modern soundstages, production facilities, post production houses, animation houses, and the like. ‘Soft power’ and the cultural means to promote it have been elevated to the highest level of strategic importance. This is tantamount to a war of words and ideas with the West.

But it takes more than artillery to win a war, it takes skilled personnel to operate the machinery. Winning minds takes the ability to generate creative ideas and the skills of persuasion, capabilities that the CCP sorely lacks. The post-1949 Communists have never before had to compete in the marketplace of ideas because in China they own and control the market.

To compete on the global stage China will need skills that it hasn’t needed before. Skills like story development and screenwriting for international audiences. Sophistication in marketing, advertising and distribution to successfully circulate movies to the far-flung corners of the globe. Above all, the ability to understand what makes international filmgoers tick: why they go to see the movies they do and why they don’t go to see Chinese movies.

These skills and capabilities aren’t going to magically appear inside China; they will almost certainly need to be imported. China’s top filmmakers—skilled directors like Zhang Yimou and Feng Xiaogang—have generated huge and loyal followings inside the country, but they do hardly any business outside. For instance, Feng’s recent Chinese blockbuster melodrama Aftershock, which racked up nearly $100 million in ticket sales in China, earned a paltry $62,962 from its release in the U.S.

More than either side realizes, China needs Hollywood. And for Hollywood’s legions of skilled but underemployed writers, directors, producers, rotoscopers, sound editors, marketers, distributors and other talents, this means money and opportunity. If you’re one of these talents, China has a shortage of your kind of expertise, and piles of cash to pay you for it.

Will seizing these opportunities mean selling out your values and becoming a mouthpiece (喉舌) of the Communist Party? Hardly. The past decade’s two greatest examples of films that successfully promoted Chinese culture were made by outsiders pursuing their own self-interest.

Crouching Tiger, Hidden Dragon, directed by Taiwan’s (!!!) Ang Lee, swept the world with beautiful and sensuous images of China, earning $200 million worldwide (nearly $300 million in 2011 dollars). And Dreamworks Animation’s Kung Fu Panda films have been highly praised by CCP members for their ability to entertain audiences both inside and outside China while remaining faithful to traditional Confucian values. The two Panda films have earned $1.3 billion in worldwide box office receipts, and  Dreamworks’ Chairman Jeffrey Katzenberg is in talks to set up a $300 million joint venture to make films in China. Although Katzenberg and Lee have done a great deal of good for China, no one is accusing them of being Communist Party lackeys or sympathizers.

Foreign filmmakers have an additional advantage over their Chinese counterparts: freedom. Remember Hu Jintao’s exhortation to “let flowers bloom and hundreds of schools contend”? His intent must have been to send a chilling reminder to the Chinese that their ideas and artistic contributions are welcome only so long as they toe the line of political correctness and espouse the party’s message. When Mao Zedong launched the original “100 Flowers” campaign in 1957, he encouraged uninhibited public discourse to uncover a variety of views and solutions to national policy issues. After six weeks of this ‘experiment’ with freedom of expression, Mao swiftly repressed or executed those whose views offended him. While Chinese artists must be extremely cautious to avoid a similar fate, the worst that can happen to foreign filmmakers is that their projects will be rejected by the censors.

As David Bandurski put it in his recent New York Times article, “China’s ‘third affliction’ is a self-inflicted malady” that it cannot cure by diktat. “Governments in countries with cultural censorship may no longer fear criticism at the hands of their own country’s cultural work, but they must endure the ridicule of the whole world.” China’s best hope for improving its global image will be to enlist outsiders—storytelling mercenaries, or modern-day de Toquevilles, if you prefer—to shine a light on that nation’s best, brightest, and most universal values. If you’re a Hollywood filmmaker, there is no shame in telling stories that explore the wonders of China’s magnificent 5,000 year old culture. If you can make globally successful films while you’re at it, China and its leaders will thank you.

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.