China Buying Hollywood Filmmakers to Enhance its Soft Power

Several days ago, legendary Hollywood director Steven Spielberg and China’s richest man Jack Ma held a press-conference in Beijing. They announced a deal between Alibaba and Amblin Partners to co-produce and finance films for Chinese and global audiences.

They will also collaborate on the marketing, distribution and merchandising of Amblin Partner films in China, the companies said in a statement.

The financial details of the deal were not made public. It was reported that Ma will join the Amblin Partners’ board of directors.

"We can bring more of China to America, and bring some more of America to China," Spielberg was quoted as saying by Reuters.

The deal shows that Beijing is planning to use Hollywood magic as one of the most efficient tools of projecting soft power across the globe, an article in the Russian online publication Vzglyad read.

However, China has long been generating interest in being involved in the US filmmaking industry.

Until 1994, distribution of foreign-produced movies in China was banned. When the ban was lifted the government set a strict quota for foreign movies in Chinese theaters. Until 2009, the allowed number was 20 films a year, and now the quota is 34.

At the same time, over the recent decade, the number of cinemas and demand for tickets has been rapidly growing. In 2015, the Chinese market reached over $6 billion. Currently, it is the world’s second-largest film market, after North America. In 2018, China is expected to reach first place.

Hollywood studios have long been struggling to enter the Chinese market, but Beijing remains in strict control over the market. For a long time, foreign movies were distributed exclusively by Chinese companies, with no or minimum percent of the box office results paid to the studio. Moreover, each film must be approved for distribution by the State Administration of Press, Publication, Radio, Film and Television.

In order to bypass the quota of 34 films, foreign studios sign co-production agreements with China. The Chinese government encourages this strategy.

First, this approach guarantees to domestic companies a certain part of the box office revenues. Second, it gives Chinese companies access to the advanced technologies of the US. Finally, the strategy facilitates censorship. Thus, the Chinese government regulated the production of foreign films in exchange for access to its domestic market.

However, this strategy is also beneficial for Hollywood studios and companies. Since co-produced movies are considered national-made they are, thus, not restricted by government quotas. It also allows for increasing revenues from distribution in China. Currently, a Hollywood company receives at most 25 percent of box office revenues in China.

The deal between Alibaba and Amblin Partners was the second major step this year between Hollywood and China. Six months earlier, Chinese conglomerate Dalian Wanda Group purchased a control stake in Legendary Entertainment for $3.5 billion. A few months ago, Wanda was in talks to buy 49 percent of Paramount Pictures. In September, the Chinese company inked a deal with Sony Pictures Entertainment.

Chinese companies hold considerable financial resources and they are ready to invest in the filmmaking industry. The same strategy was embraced back in the 1980s when Japan’s Sony bought Columbia Pictures. However unlike Japanese companies, Beijing wants more control over the filmmaking process.

Any US film played in China must be approved by the Chinese censorship. The main requirement is that the movie must not contain any criticism of China and the Chinese authorities. And Hollywood studios seem to have no problem with that.

Western media has repeatedly bashed Hollywood producers for adulation before their Chinese partners. In September, a group of 16 US congressmen made expressed a growing concern over Chinese investments into the US filmmaking industry. However, producers responded to the criticism, saying that business is business.