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Entertainment

The opportunity

The opportunities in the Chinese entertainment industry unfold in four dimensions. 

Firstly, the mainland market is ‘gigantic’. As Oriental DreamWorks’ James Fong puts it, ‘in China, niche is mass.’ After decades of limited diversion options, the new middle class, now 300 million strong is clamouring for choice. China seems more open to foreign investment in entertainment companies than in ‘strategic’ sectors such as health care, education and financial services.

Secondly, China’s mass market is apolitical, unbothered by censorship regulations. Most folks are eager to take a break from the stresses of modern life and like light-hearted fare. Big hits such as Goodbye, Mr. Loser, Tiny Times, Lost in Thailand and Pancake Man are irreverent comedies that depict a regular guy striking it rich or getting the girl.

Thirdly, a dynamic, expressive online creative community has blossomed. It is only a matter of time before Internet celebrities become creative forces, both online and offline. For example, Chinese story telling skills are evolving quickly. Web series such as Go Princess Go, Surprise S1 and Year Hare Affair are hugely popular.

Lastly, e-commerce presents opportunities to experiment with new monetization models. Online shopping is instant for consumers and cheap for companies. Content-hungry consumers do not waste time driving to DVD stores to buy a Toy Story video game or the Frozen soundtrack. The ubiquity of mobile phones eliminates set-up costs and lowers incremental cost-per-unit sold. Marketers also anticipate convergence of online and offline properties. IP-based content, easier to enforce online than offline, will drive offline merchandising, and vice versa.

 

Challenges

China’s entertainment landscape is handicapped by low margins, largely due to lack of developed ancillary revenue streams (though this situation is gradually changing). In the Western world, box office sales represent only a small fraction of any property’s potential revenue. DVD sales, video games, apparel merchandising and even theme parks extend the value of a brand’s franchise. In China, these markets are nascent, held back by substandard marketing and, again, unenforceable IP laws.

Last but not the least, China’s government is ‘hostile’ to creative expression. From reality television where winners are chosen by text votes to provocative films, anything that smacks of controversy is verboten. This limits the range of films available for theatre release and television fare on Internet portals.

 

Solutions

Chinese partners required

The number one obstacle facing foreigners in the movie industry in China is that, by law, they are not allowed to operate independently. Several challenges that arise from this ground rule. Film-making activities within China are subject to laws that restrict foreign entities from setting up their own companies or joint ventures with Chinese partners, and content is subject to approval and censorship.

One way for foreign filmmakers to increase their involvement in the Chinese movie industry is through working with a Chinese studio. A number of countries have formalized co-production treaties with China, including New Zealand. Under the Chinese regulations that govern film productions, foreign filmmakers have three options – co-productions, in which both parties contribute funding, talent, and production assets; assisted productions, where the foreign party provides funding and the Chinese party is paid to provide support such as production equipment, facilities, and labour for a film shot in China; and commissioned productions, in which the foreign party commissions a Chinese company to produce a film in China.

Check for yourself

Watch everything that has made it to the big or the small screen in China the last 18 months to gauge what is currently likely to navigate the ever-shifting political winds. Even if your film bears a passing resemblance to other films in a popular genre, it is subject to rejection. The early 2016 Marvel hit Deadpool, for instance, was rejected in China for being too violent – this after a string of Marvel films, and films with comparable levels of violence outside the comic-book genre, made a lot of money in China.

Know the red flags

Be especially mindful if your film addresses any aspect of Chinese history, especially the modern topics of the Chinese Communist Revolution, the Cultural Revolution, and the famines of 1959-1961, or if it is in some way related to the leaders of the Chinese Communist Party (CCP) and their families. If your project touches on any of these areas, expect that the CCP History Research Centre and the Party’s five leaders and their living family members will be a part of the censorship process.

Listen to Chinese filmmakers

In the last decade, with the rise of a viable movie marketplace where real money can be made and lost, Chinese filmmakers have experienced the brunt of their government’s censorship and have valuable experience to share, both positive and negative. Director Feng Xiaogang is among the most outspoken critics of the opacity of the censorship process. "Every time I want to shoot something, I have to consider 'Can this pass (the censorship review)?’ "

 

Talk to us

Please contact us to see how we can help you engage with the Chinese entertainment market.

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