by Robert Cain for China Film Biz

July 18, 2012

After being pummeled for nearly 6 months by foreign competitors, China’s filmmaking community has made the most of this summer’s ‘Hollywood blackout’ period, bouncing back with record grosses for several Chinese language films in early July.

With a 4-week, SARFT imposed ‘blockade’ barring new foreign releases at China’s theaters starting the week of June 25^th, China/Hong Kong co-pros like Painted Skin 2 and The Four, and local Chinese film Caught in the Web have stepped up in admirable fashion to reclaim lost turf.

Most impressive has been Huayi Bros’ Painted Skin 2, which just crossed the $100 million mark and is now a lock to set a new record as the mainland’s highest grossing Chinese language film ever. Also strong is Enlight’s action co-pro The Four, which logged a $13 million opening this past weekend, the third best debut in 2012 for a Chinese language film after Painted 2 and the Taiwan/China romancer Love. And Chen Kaige’s romantic drama Caught in the Web notched the best full-week tally for a mainland picture since Guns ‘N Roses bowed back in April.

The Hollywood cease-fire will end on July 27^th, when Ice Age: Continental Drift opens wide, but the aforementioned Chinese successes have underscored several realities of the PRC movie market that may not have been apparent as recently as June:

1. Chinese audiences still want to see Chinese movies. China may not yet be able to compete head-to-head with the best—or even the middling—Hollywood offerings, but it’s clear that large audiences will turn out for the right movies that feature Chinese faces, themes, and stories. Formulas that are working exceptionally well include sequels or new installments of past blockbusters like Painted 2; and re-teamings of director-actor ensembles that created recent hits like The Four’s writer-director Gordon Chan and actors Deng Chao and Collin Chau, who had together made the 2011 hit Mural.
2. Blackouts are a big, and increasingly costly, fact of life for non-Chinese suppliers. More blackout periods will follow during the October National Day/Golden Weeks holidays and during December/January, and SARFT could conceivably extend these periods to allow the local film industry more breathing room to develop and connect with audiences.
3. Hollywood’s studios need to evolve their China strategies if they are to remain contenders there over the long term. The majors’ collective market share fell from 80 percent in mid-June to 3 percent last week, as SARFT showed them who’s boss in the PRC. To avoid being squeezed out through market manipulation tactics, American companies must become more ‘Chinese,–more locally entrenched–in their approaches.

At the risk of repeatedly stating the obvious, the optimal way for foreign producers to hang on to a share of the Chinese market is by ramping up their co-productions.  China is not a laissez faire market; the regulators will do what they can, within the limits of the law and WTO rules, to ensure that Chinese content retains a major share of moviegoers’ cultural diets. Foreigners who remain complacent about China risk losing their place at the table.

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.