By Robert Cain for China Film Biz

February 7, 2012

Yesterday’s flurry of press articles regarding the newly announced Harvest Seven Stars Media Private Equity Fund (HSSMPEF) got me thinking about how easy it is these days to get tongues wagging regarding the promise of Chinese money for Hollywood movies, and how difficult the reality of putting that money to work can be.

The purported $800 million fund is a co-venture between private equity firms Harvest Alternative Investment Group and Sun Redrock Investment Group. The latter company is managed by Bruno Wu and Yang Lan, the Chinese media power couple who I profiled here last week.

The fund’s ambitions, as described by Wu, are lofty: to source and distribute “global movies, primarily English-language films that are not just going to be released in China, but really produced by Hollywood and released on a global basis.”

As a big booster of China-Hollywood cooperation, I’m pleased to see such an ambitious venture mounted. But on the other hand, I’ve seen too many of these sort of initiatives fail to get very excited about what is, after all, just a concept at this point. Other, far larger Chinese investors have attempted to accomplish the same feat that Wu and his partners say they’re pursuing, and all have so far failed to even get to the starting gate. I was close to two of these previous initiatives (confidentiality obligations prohibit me from naming them) and I’m wondering how the new fund will avoid the obstacles and pitfalls that doomed those prior undertakings.

Let’s start with this question: Is the $800 million really there? Is it really $400 million? $100 million? Is there really any committed capital at all? There’s no way to know for sure; China’s securities laws don’t allow for the sort of transparency that other countries require. The new fund’s principals have long track records and their continued success presumably rests on their reputations, so I’m willing to accept that the money’s there. But then again, if it isn’t, it wouldn’t be the first time in recent months that a ‘major’ Chinese-funded film investment partnership turned out to be nothing but vapor.

Another fundamental issue: where’s the film development, production or distribution experience in the HSSMPEF partnership? As far as I can tell, the principals of the two funds have made and released exactly one movie between them. A made-for-internet movie.

But money and experience aren’t even the biggest problems. There’s plenty of money in China, plenty of money interested in funding movies. And relevant experience can be bought (warning: don’t click that link if you’re easily offended by shameless acts of self-promotion). The real challenge, the one that has yet to be surmounted by Chinese investors or their co-production partners, is the creative challenge.

The creative challenge boils down to two fundamental sticking points that caused other, similar film investment schemes to fail. First, China’s censorship strictures. For anyone doing business in China who wishes to continue doing business in China, it is critically important not to anger the Chinese Communist Party (CCP). That means ensuring, with no risk for error, that none of the movies you fund will in any way violate the rules and taboos promulgated by SARFT, or make China or the CCP look bad.

This is a very big deal. Even a cursory review of the SARFT rules reveals that they are antithetical to popular, commercial filmmaking. Without sex, violence, horror, or crime, there’s not much room for entertainment in movies made for adult audiences. Any Chinese fund investing in films–whether made in China, in Hollywood, or anywhere else–will be held strictly accountable to these rules. But Hollywood filmmakers will find it almost impossible to be governed by them. Balancing these opposing tensions has proven an unattainable goal for previous Chinese investment fund hopefuls.

The second creative obstacle is the severe shortage of available co-production screenplays. Very few in Hollywood know how to write a script that can satisfy China’s censors while also serving as the basis for a film with appeal to Chinese audiences as well as global ones. Almost no one in China can do this either. My company, Pacific Bridge Pictures, has a team of writer-producers focused on this very challenge, and there are a few others who have the necessary cross-cultural backgrounds and development skills needed to thread that needle. But an $800 million fund is going to have a very difficult time finding or generating enough material to fill its production pipeline.

In short, for HSSMPEF to succeed, it will have to pull off a major balancing act. Wu, Yang, and their partners are all smart, capable, successful people, but they’re rushing headlong into uncharted territory on a tightrope.

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.