Changes and challenges of the Chinese film industry

Opinions matter. Wondering what professionals from different backgrounds think about the current Chinese film industry, this June, I invited a banker, a professor, an industry consultant and a festival programmer to talk about its changes and challenges.

Graduated from Peking University in 1998 with a BA in English and a BA in Economics, WEN Xin got her MBA from Yale School of Management in 2003. Worked as an investment banker for CICC, Goldman Sachs and Morgan Stanley for 12 years, Wen founded SWZ Arts & Entertainment and currently working as an independent producer.

The Chinese film industry need to be more professional, because there is no lack of money. As funding is not an issue now, there is a lack of connection between funding and the crew who needs it for the film. I think currently the film funding is quite random. Our producers or studios know somebody who is interested, and it’s very personally defined. If you are looking at a more sophisticated film market, you’ll find out there is a group of investors who are devoted into this industry. Maybe the fund itself is devoted to the whole industry, or part of the fund is devoted to the industry. Professional film investors are needed.

On the other hand, there are actual producers, professional producers who know those investors or have the resources to access those investors: different investors will have different appetites. Some investors prefer quick and high return. Some care more about longer-term, reasonable return and film genres. In China, money is definitely accumulating in this industry including capitals, I mean professional financial capitals, but they are not direct into the projects. Company funds like Carlyle or the other very big international private equity or funds are already starting to look into this industry in China. But what are they looking into? They are looking into private equity investment into the company who is making film or film related products, so very few professional investors are looking into investing into a project itself. So that’s an area that needs a lot of time and accumulation, especially needs attraction for professional investors.

If we look at the second category: that is the professional producers the current market needs because once you have the money and you have professional filmmakers, you need somebody to really link them together. It is not like buying things in a morning market where you just bargain. I think things are getting more professional. For example, there will be more co-production films so people are going to co-produce with an international or Hollywood studio, or a Japanese or Korean studio. Those studios have already had very sophisticated practice and rules they want to follow, but for the Chinese side, if you are not familiar with their rules of the game or if you are not sophisticated enough, then you need to speed up to catch up. For example, Dreams of the Dragon Pictures co.,LTD invested $10 million in CLOUD ATLAS: the whole process involved lots of lawyers and advisers negotiating and making contracts, in English and in Chinese. Those are very sophisticated processes to get into. The glad thing is this industry is moving fast into that area because there is more co-production and Chinese funding is also looking for investing in overseas film as well.

Those are the situation in China, but if you look more internationally, you would find content producers or productions will be very promising in the industry as well. Content used to be very important, then high-tech and energy companies sort of won the world’s attention, but I think now content is more emphasized than before. Most people in this industry are not familiar with how the News Corp. or how Time Warner group performed financially last year. I would say the first quarter performance in this year is huge, so their stock prices went up. People are really into contents because there are so many channels that need contents: TV and new media. The new media is a much fast machine for capital producing: they attract capital very quickly and they make money very quickly as well. It took Coco Cola a hundred years to grow this big while Google ten years. So content is very important now for those new media and the competition scenario for cinemas will be changed accordingly.

Within three to five years, the players in the film industry may not be the players in this industry now. Even the names of the companies are going to be very different. It’s a replacement. I think current players need to be more international and professional. The old type of businessmen, producers are going to be gradually replaced. For example, ZHANG Yimou, I don’t know the inside story how he broke up with his producer and signed a contract with LeTV, but I am curious to see what is coming afterwards. People are looking forward to changes. Zhang is a very smart person, as he knows how to look forward, but there are going to be new things and he needs to learn to work with people in Le Vision Pictures. Even for the young directors born in the 1970s, like LU Chuan, ZHAO Wei, XU Zheng, WU Ershan and NING hao, it depends on their own quality and whether they want to embrace this change or they just want to face the change. They need to think about how to position themselves once again. Are they going to change what they want to do or finally are they going do what they want to do? Since there is more tolerance in this market, they may want to take more risks to try the other categories. Also, we see a new generation or even newer generation of directors or scriptwriters coming back to China from the U.S. or Europe. Some of them are struggling to get funding, and then a few of them have already been able to make films and get recognitions at international film festivals. Let’s see how those people make into the market with a new set of rules: these days, viewers are more interested in films that can reflect their own life. That’s why films like SO YOUNG, AMERICAN DREAMS IN CHINA, and even LOST IN THAILAND are so attractive at the box office.

I know the Bank of Beijing when I was a banker as they were a corporate client, so I know they started to support the creative industry earlier than other financial institutions. I think it is time for them to get in now because it’s big money. If you look at the same industry in other more developed markets, you will find out that the timing to get into this market is very critical. For the credit holders, they look at a certain opportunity very differently from equity investor. They look at the opportunity and they need to see safe and stabilized cash flows, and relatively low risk.

When the banks really get into the Chinese film market, there will appear one or two categories of films that are able to generate stable return or relatively predictable return. For example, the film AMERICAN DREAMS IN CHINA is a very typical representation of very sophisticated film. It is very complete. It has all the necessary elements of a commercial film. It tackles one of the most popular stories, successful stories as its foundation for the script. And the director is very experienced: he knows how to make artistic films as he made artistic films before, but this one he did it very differently. He dives into the psychology of the ordinary viewers, and satisfies the audiences’ need to fulfill their dreams. I think people went to the cinema to watch this film to get excited about their own lives. It’s all about positive hope there. So that’s what this society needs and all the technique that he applied in the film are very sophisticated. He even used some popular techniques from microfilms or even from advertising: the beginning of this film is very punchy when those several guys went to the U.S. embassy. So it doesn’t give you time or space to think, just give you the answers. Peter Chan really uses that well as he did research, and he found out people are very attractive to this kind of technique in this market. I think when this kind of film comes out, it’s a guarantee of success and a guarantee of return. The specific ratio may be different, but it guarantees a reasonable or even pretty high return: that the debt holders come to this industry is a signal that this industry starts to generate stabilized viewer group. More specifically, this market starts to have a stabilized pattern of a certain type of market-oriented film, so they know what the major factors are to shape a successful film.

That’s actually what happened in Hollywood. If you look at 2008 when financial crisis happened, a lot of money was actually drawn from the stock market and flew into Hollywood. People know there are certain types of movies with factors A, B, C, D or E included is a guarantee return. So it’s great to see that is happening in China as well. We cannot have only one simple category of film in the market but it is a necessary element, because without the viewer base, you will not be able to differentiate, within the viewer group, what the even smaller segments are. To have an expanded and stabilized viewer group is very important, and that is happening in China, thanks to those types of movies. Those are relatively inexpensive movies compared with action movies, but they influence people’s emotions and feelings. It’s a very good sign. I think it’s a sign that the industry is getting onto the right track to become a healthier one.

The Bank of Beijing is among the first movers so they will be able to accumulate a team of professional bankers who understand the film industry better than other banks. These professional bankers will be able to support other banks when they start to realize the importance of this business and decide to hire a banker to start a new team. Then they will probably call The Bank of Beijing saying: “I’m offering a high compensation, do you want to start a team here?” As the first mover in the industry, they are able to accumulate experience, teams and know-how. And very quickly, this team is going to be dispersing into other banks so each elite of this team will be hired by other banks. It will be a very wise move if The Bank of Beijing is negotiating with foreign banks for cooperation as it will be able to expand into foreign currency. Once you have foreign currency, you will be able to do international cooperative projects.

But remember: it won’t be difficult for other banks to catch up because, for example, The Bank of China has already expanded internationally many years ago and it’s easy for them to pick up this industry, although they might be a late bloomer. Things moving fast and you never know. In China, most big banks get resources from the government. If the government says “Han Sanping, you need to work with The Bank of China, of course he will work with The Bank of China.” It’s pretty easy.

I’m not a really expert on co-production films. Based on my judgment, I think this cultural conflict is always ignored but it is the most difficult part to tackle, but you can always hire professional parties to handle money the negotiation. And you can even hire professional producers to handle the whole production logistics. However, the cultural thing, for example, in CLOUD ATLAS you see Korean elements, you see Chinese elements, but you can see how the Chinese element not very much merged into it. Even the Korean actress was doing fine in the film, but she is not recognized as Korean at all coz she speaks perfect British English and nobody knows she’s coming from Korea. So I think it’s about how to present the culture and then how people from different culture can work together. I think, for Chinese, we can start with our Asian buddies, like Japanese equivalent crews and also Korea and Taiwan as well. So those are easier to communicate, even given the language difference, but it’s relatively easier for people especially if you are working on drama type of film and movie, those Asian peoples’ feelings are very connected. They can totally understand each other’s feelings, but definitely language is a different thing.

I will say these are my personal judgment or personal views of the current market. Obviously, I am a new entrant into this market, so I don’t know how much what I said would be helpful to other people, but it’s my personal view; I guess that is what I am offering.

Director of the HCI Film Industry Research Center and the Chief Consultant in Harmonious Civilization International Co., Ltd, HUANG Xing is the project designer and executive supervisor of LOVE IS NOT BLIND (Teng Huatao, 2012) and FAKE FICTION (Shao Xiaoli, 2013).

Chinese films’ overseas competitive edge and market potential should be evaluated on a case-by-case basis.

The American film market is likely to accept Chinese action films. A recent example is Jackie Chan’s CZ 12 that has its fan base in the United States.

The European film market is quite another story and different Chinese genre films have certain marketability there. About Japan and South Korea, RED CLIFF is a good example as it was very well received in Japan due to the unique Asian culture: a historical costume drama based in the Three Kingdoms Period of China, which has a regional appeal and influence to people in East Asia.

Apart from that, it is almost impossible for Chinese comedies to find a large audience overseas. I am relatively pessimistic about Chinese film’s going international and the status quo of co-production films. A sustainable and effective export of Chinese quality films is still yet to be seen.

The biggest problem of the Chinese industry at the moment is that filmmakers need to figure out the nature of film. We cannot take film as a pure art form; it is in fact a consumer product. Also, there are not enough market-oriented minds. Worse still, there is no diversity: too many similar themes and projects. What we need most now are fine products, qualified project managers, and professional film-making supervision. If we are not able to sort out the above issues, there is little ground to talk about international competitive edge.

People might think those who have come back from Hollywood could find it difficult to mingle in the current Chinese reality, but this is not necessarily true. CHEN Rong, Executive Producer of the box office hit LOVE IS NOT BLIND, is a great example who brought tremendous experience and value to this small budget film. Communication among professionals is essential as they are not in the same channel when talking about basic concepts and values. For the overseas returnees, first of all, they need to adjust themselves into the local working environment to better collaborate with others; also, they need to make a close study of the local audience’s tastes and preferences.

Professor CHEN Shan is a Ph.D. supervisor at the Department of Literature in Beijing Film Academy after graduating from Peking University and working in the rural areas for years. He teaches CHINESE FILM HISTORY, HONG KONG FILM HISTORY and CONTEMPORARY WORLD CINEMA. He was a visiting scholar in the University of Paris VIII.

The competitiveness of Chinese cinema is a comprehensive topic as it covers that of the market, the art and the culture. In recent years, Chinese films have been experiencing cultural integration of Mainland China, Taiwan and Hong Kong; meanwhile, they have been competing with Hollywood films. Since primitive accumulation in the mainland market has accomplished, Chinese filmmakers has more awareness of the film market.

FENG Xiaogang’s THE DREAM FACTORY in 1997 marked the emergence of a new type of film targeting at audiences and the film market. This distinguished itself from the previous mainstream propaganda films or the so-called auteur films. 1997 is the first year of commercialization of the Chinese film market. Since then, Chinese filmmakers have started to think seriously about the market. FENG Xiaogang made use of the screening slots and amplified films’ entertainment value; furthermore, he brought contemporary cultural elements, like fashion, popularity, entertainment, stars and social issues into his films, making them more open and interactive. Later, he directed BE THERE OR BE SQUARE (1998), SORRY BABY (1999) and IF YOU ARE THE ONE (2008), etc., and this marked the first phase of Chinese commercial films.

At the same time, Hollywood films commenced to target at the Chinese film market after China had joined the WTO, and they were serious about entering this film market. Since 1992, THE FUGITIVE (Andrew Davis, 1993), TRUE LIES (James Cameron, 1994), JURASSIC PARK (Steven Spielberg, 1993), TITANIC (James Cameron, 1997) which topped the domestic box office. KUNG FU PANDA (Mark Osborne & John Stevenson, 2008) also landed in China successively: Hollywood became familiar with and made use of the Chinese elements. 3D AVATAR (James Cameron, 2009) was the representative of a brand new film form, and many other Hollywood films marched into the Chinese market in recent years. Hollywood corporations actually conduct research on the Chinese film market every year. If Chinese films want to compete with Hollywood films, our main strength still lies in big-budget films. Although there were a few low-budget romance films turning box office hits latterly, it is necessary to produce big-budget films in order to compete with Hollywood blockbusters.

The second phase started with HERO directed by ZHANG Yimou in 2002. Inspired by Ang LEE’s CROUCHING TIGER, HIDDEN DRAGON (2000), Zhang Yimou set his foot in martial arts genre and made a big-budget film. However, he was not so familiar with this genre because most directors of the Fifth Generation made art house films only. Two directors made the first move towards martial arts films: CHEN Kaige and Zhang Yimou. Unfortunately, Chen Kaige’s THE PROMISE (2005) failed, although he invested over 100 million yuan (US$16 million). In my perspective, THE PROMISE (2005) should have functioned as the Chinese AVATAR, a high-tech film, but Chen Kaige did not realize that possibility. On the other hand, Zhang Yimou’s HERO (2002) was relatively successful, and he illustrated that filmmakers in the Mainland are capable of making big-budget films and could have remarkable performance at the North American box office. Even though his later work HOUSE OF FLYING DAGGERS (2004) was not that successful, HERO demonstrated that mainland directors could be competitive.

Talking about the censorship and Chinese audiences, Feng Xiaogang took the lead once again. He made a popular film THE ASSEMBLY(2007) with remarkable earnings, which seemed to be a propaganda film but was quite artistic. Then he made AFTERSHOCK (2010) and 1942 (2012) which survived China’s censorship, received both artists’ and critics’ recognition and made profits. Apparently, filmmakers from Hong Kong and Taiwan were immediately aware of the huge film market and copied this formula and made films like THE MASSAGE (Chen Kuo-fu, 2009) and the IP MAN franchise.  

However, there were still problems. How could films made by film-school graduates win the mass market? In other words, how could filmmakers who received strict film education (directors of so-called fifth and sixth generation or even later generations) break through the shackles of their knowledge and then make some films with a good market performance? How could they pocket their pride and present their artistic accomplishments? In fact, NING Hao’s CRAZY STONE (2006) displayed a brand new image, and it achieved high box office revenue; additionally, XU Jinglei’s GO LALA GO! (2010) presented a modern fashionable style. LOVE IS NOT BLIND (2011) written by BAO Jingjing demonstrated that a film directed by someone who graduated from film school also could sweep the box office. Its director TENG Huatao started this film based on Bao’s online novel, and he did a lot of research. Recently, XU Zheng’s LOST IN THAILAND surprisingly earned more than 1.2 billion yuan (US$196 million). These are extraordinary cases, and even the directors have never predicted that. What should those directors do to lead the market and make popular films without compromising their artistic accomplishments? The market itself has actually given a response to the question.

The success of FINDING MR. RIGHT (XUE Xiaolu, 2013) can reflect that Chinese directors have raised their awareness of making a specific genre film. Although there are still lots of flaws, this is the first film made by a director who has put her dogmatic education and followed the market rules. The second is ZHAO Wei’s SO YOUNG (2013), and directors like them take the initiative and enter the film market.

Before Feng Xiaogang’s THE DREAM FACTORY, Chinese filmmakers had been experiencing the Cold War and cultural dislocation during the Great Cultural Revolution in China. Consequently, they were making films in state-owned studios under the planned economy. During the Republican period, the film industry was a whole package: from financing, production to distribution and marketing. After liberation, this industry chain was broken. To be more specific, production and distribution for films were disconnected, and there was no communication between production studios and distributors. They turned a dynamic industry chain into a vertical system, and there was not much interaction within the system. Production studios were only responsible for producing films but not for marketing, and they had no idea about financing as they were funded by the government. Furthermore, there was no cinema chain as people could only see films in assembly halls, clubs or outdoor places. Film was merely a part of political propaganda in the country. Although, the era has already ended, a lot of filmmakers still follow this pattern without considering the market and costs. THE FLOWER OF WAR is a typical example as it can never make ends meet. The director only cared about making an ideal film and ignored its costs: this does no good for the sustainable development of the film market.

With regard to cultural competitiveness, Chinese films just entered the first phase in which the market is on the way to maturity. How could we spread the message of Chinese cinema? The answer is China’s cultural charm. We have traditional cultural resources, for instance, classical literature, poetry, Peking Opera and classical arts, etc. During the 17 years, from 1949 to 1966, we made an animation with Chinese ink paintings and it was a delight to the global audience. Even during Mao’s time, our Yue Opera THE BUTTERFLY LOVERS touched audiences from other cultures. Hong Kong filmmakers understand this, and that is why they successfully borrow the artistic conception from Peking Opera and traditional dance performance into film production, thereby making action films that rocked the world. Ang Lee’s CROUCHING TIGER, HIDDEN DRAGON (2000) is a demonstration of the possible effects that Chinese cultural resources could deliver in a film.

In addition to Chinese traditional culture, we also have folk cultural resources. China is a multi-ethnic country with diversified cultural regions. China has varied landscapes, architectures, folk custom and cultural products, such as folk songs and folk arts. There are lots of things that remain to be explored, for instance, folk epics like Tang Ka, architecture like watchtowers and stilted buildings as well as some natural landscapes in South Xinjiang, North Tibet, Yunnan and Sichuan. Besides, we have modern stuff, such as pop singers, sports stars, modern cities like Beijing, and some buzzwords including online jokes, Internet languages and online incidents. The three categories of cultural resources are still yet to be incorporated into our films.

I often use this example: when THE ROMANCE OF THREE KINGDOMS comes to the point of the Battle of Red Cliff, it is no longer a simple battle anymore, but a wrestling among politicians and there is a need for strategic planning and competitive edge. Thus top players, like the taste-makers in Mingxing Film Company and Lianhua Film Company before the Liberation, are needed in a mature film industry. Also, developed film media including convincing film critics, a set of comprehensive laws and regulations, a cultivation of our audience and filmmakers are essential elements to the industry. Especially the main crew: they need to have a very good education as well as a deeper understanding of film and its trend, and they need to look beyond the stereotypes of the film market.

Maria A. Ruggieri is a sinologist specialized in Chinese cinema. Graduated from Oriental Languages and Literature at Cà Foscari University in Venice with a thesis on Chinese cinema of the 1930s, Maria moved to Beijing to continue her studies at Beijing Film Academy in 1998. A programmer consultant of Udine Far East Film Festival since 2001, she is currently working as the Media Director of Meta Consulting Company based in Beijing.

I came to live in Beijing in 1998 when things opened up gradually and China was ready for its own film industry: the potential and efforts were there. The production companies, they were working with film studios, and after that they wanted to analyze the market potential. And it was interesting to try and push at the same time the development of the industry, the cinema and more screens, because that’s what the industry needs. More and more production companies started to create “Hollywood” style movies, and filmmakers started to create a star system. You can name so many stars.

The idea then was to convince investors there is a market here, even though there is no guarantee that it would work. China opened up around 2001 and started to call things different names that were already here. Hollywood was pushing because it saw the potential in China, but China was a little bit shy and skeptical. China needed to see to believe, but for the rest of the world, it was the opposite: they believed it, so they found it. At that time there were lots of pushing and resisting: China needed to see the market while everyone else was sure.

In the film industry, cinema always needs to struggle and fight to exist. The only difference was trying to believe the movie was worth making: how to make sure that the film works, since there’s so much money involved. It’s more than the love for cinema. Decision-makers care more about money than cinema.

 But now it is possible for people to make movies in their own way, and believe this new situation is an opportunity to diversify cinema. It is now the film market generation, allowing everyone of all ages, from all eras of film-making. The market potential was there. You can hardly define it, but everybody needs to learn how to express his idea; how to transfer a trend into profits. All in all, one needs to convince the producer, make a movie, and see if it works with the audience. Use all sorts of publicity to promote the film, try some film festivals, and see if it works with the audience.

In 2001, I started to work for Udine Far East Film Festival, which came into existence in 1997, with brilliant ideas in Asian movies. 1997 was the year that Hong Kong was returned to China, and Udine celebrated it by inviting Hong Kong movies: the very first year was dedicated to that. The success and the fact that the audience loved it convinced Udine that there was space and a need to amplify it. Since 1998, it has gone beyond Hong Kong movies, and invited as many Asian movies as possible and 2013 marks its 15th anniversary.

Through my involvement with Udine, I notice what is not necessarily a big success in Mainland China might work overseas. Possibly, this is a transitional period when people try to figure out what works and what does not. Audiences are unpredictable and it’s difficult to produce movies that work for all audiences. To make a comparison with Hollywood: they took 100 years to develop their idea of cinema, their idea of working as an industry. The system would like to know if they can change the film language to change the American mainstream. What happened over there was people embraced both the idea and art of cinema and the language inside the system, which would allow Hollywood to grow up in a smart way, in an original way. The result is that Hollywood movies are a formula that works almost all over the world, though that doesn’t mean everyone loves it.

Chinese filmmakers have to step out of the comfort zone. Otherwise, you are not trying new visions, new languages. To all filmmakers who feel they have something to say and don’t want to give up, my suggestion is: to make your own team of producers and producers and producers. Do not turn to friends; find professional producers, people that allow you to translate your idea, your story, into something that would work in a bigger system like the film industry. I mean there is space for all filmmakers and there is compromise, but that is not necessarily bad: if you have an idea and believe in your vision while they believe in what they want to make.

Filmmakers need to convince the producers and this is an effort probably worth doing. Cinemas are about telling stories! Producers cannot tell stories; distributors cannot tell stories: they do not know how. That is why they need filmmakers, and why filmmakers should not give up and could not give up, because they are the only ones to tell stories. The effort is to study this situation and be idealistic about what cinema could be about.

Filmmakers are not like painters, unfortunately, or sculptors as they have to work with others to produce even more sophisticated cinemas works and masterpieces. So to be credible, one needs to be professional: it is important for Chinese filmmakers who want to stay in the creative field and not to be obstructed by the practical. You need professionals.

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