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FE<strong>AT</strong>URE FOCUS<br />
Quota deal<br />
satisfi es both<br />
East and West<br />
The recent agreement between China and the US<br />
to widen the revenue-sharing quota has been met<br />
with enthusiasm by all parties and is driven by<br />
consumer demand, reports Liz Shackleton<br />
It rarely happens that when the relaxation of an<br />
import quota is announced, both sides believe<br />
they have come out on top. But this would<br />
appear to be the case with the recent agreement<br />
between the US and China to widen the revenuesharing<br />
quota by an additional 14 enhanced-format<br />
films a year, and increase the foreign<br />
distributor share to 25%. While some Chinese<br />
companies and fi lm-makers are reacting cautiously<br />
to the news, there are many — particularly the<br />
larger private and state-owned companies — who<br />
are saying “bring it on”.<br />
Yu Dong, CEO of Chinese studio Bona Film<br />
Group, recently told a roomful of fi nance analysts<br />
that it was great news for Chinese companies,<br />
especially private outfits with distribution and<br />
exhibition capabilities. “Companies with a vertically<br />
integrated business model, including cinema<br />
ownership, will benefi t directly from the distribution<br />
of Hollywood blockbusters,” Yu said.<br />
Hong Kong fi lm-maker Peter Ho-sun Chan, who<br />
has worked extensively in China, says he remembers<br />
when Taiwan’s quotas were removed and the<br />
market share of Taiwanese and Hong Kong fi lms in<br />
that territory collapsed overnight. “I don’t think<br />
anything as drastic would ever happen in China,<br />
not only because of state control, but also because of<br />
the taste of the Chinese audience,” says Chan.<br />
“When you look at what is making money in China,<br />
only a few exceptional titles such as Transformers<br />
and Kung Fu Panda are as big as we think.”<br />
Indeed, many believe the widening of the quota<br />
is a necessary step in the evolution of the market<br />
and could even have a positive impact on the local<br />
industry. The real issue is that a market which is<br />
adding eight new screens a day needs a lot more<br />
product, and while the local industry is growing<br />
quickly, its bigger films such as Bona’s Flying<br />
Swords Of Dragon Gate tend to cluster around<br />
just two major holiday periods: October’s<br />
National Day, and Christmas to January/February’s<br />
Chinese New Year. Though the agreement<br />
followed years of US lobbying and<br />
World Trade Organisation<br />
wrangling, Motion<br />
Picture Association of<br />
America (MPAA) chairman<br />
Chris Dodd says it<br />
was this “bottom-up pressure for<br />
content” that convinced China the time<br />
was right.<br />
But the devil is in the detail, and more important<br />
■ 16 Screen International at Filmart March 20, 2012<br />
‘Companies<br />
with a vertically<br />
integrated<br />
business model<br />
will benefit’<br />
Yu Dong,<br />
Bona Film Group<br />
Kung Fu Panda 2<br />
Flying Swords Of Dragon Gate<br />
Green Lantern<br />
than quota numbers and percentages is<br />
how the agreement is interpreted and its<br />
knock-on effects. Certainly it has the<br />
potential to shake up China’s domestic<br />
distribution sector, which remains heavily<br />
monopolised and under state control.<br />
Though it is not included in the agreement,<br />
there is great hope among private Chinese<br />
studios that they will get a stab at<br />
distributing some of the additional revenuesharing<br />
fi lms. Currently, state-owned China Film<br />
Group and Huaxia Film Distribution are the only<br />
companies allowed to distribute foreign movies and<br />
their dominance is not likely to end any time soon.<br />
But it is understood the Film Bureau under the<br />
State Administration of Radio, Film and Television<br />
(SARFT) is already asking some private players to<br />
submit their credentials, and will favour compa-<br />
nies with a strong track record in distributing Chinese<br />
fi lms both locally and overseas. As always, the<br />
authorities are likely to experiment with new distributors<br />
before proclaiming their entry as offi cial<br />
policy (even before the US-China trade agreement,<br />
a handful of 3D fi lms such as Rio and Green Lantern<br />
were being imported each year outside the<br />
quota), but the fact they are already fi elding submissions<br />
is seen as a positive step.<br />
The promise of reciprocal market access should<br />
also lead to a stronger working relationship<br />
between the US and Chinese film industries —<br />
indeed, between the Chinese and all international<br />
fi lm industries — as the trade agreement is not limited<br />
to the US. As China tends to learn quickly and<br />
adapt Western business models, rather than being<br />
overwhelmed by them, this is not necessarily a bad<br />
thing. Again, Dodd says it is this desire to learn and