Chinese Cinema Wises Up

By TANG YUANKAI

THE Chinese box office rocketed on the release of So Young， directorial debut of actress Vicki Zhao. With a whopping RMB 45 million in receipts， the movie shattered opening day box office records for a non-3D Chinese-language film. By day 16 the lowbudget rom-com had grossed RMB 600 million.

Chinas movie box office surpassed RMB 900 million during the International Labor Day week （April 29 to May 5）. Iron Man 3 earned RMB 396 million and So Young RMB 332 million， according to China Film Distribution and Exhibition Association statistics. These figures are all the more impressive when bearing in mind that， at the end of the year 2000， Chinas total annual box office earnings amounted to just RMB 950 million.

Follow the Market

Everyone in China knows So Young director Vicki Zhao. She became famous overnight in 1998 for her starring role in the highly successful TV drama My Fair Princess. The series scored record ratings – a 54 percent audience share the first season and 65 percent the second. But this was partly because at that time Chinese audiences had forsaken cinema for TV.

The same year， Zhaos fellow Beijing Film Academy graduate Jia Zhangkes Xiao Wu， about a provincial pickpocket， won the Wolfgang Prize and Netpac Award at the 48th Berlin International Film Festivals Young Filmmakers Forum. The leading sixth-generation director went on to win laurels at both Venice and Cannes. Jia， like most of his peers， wanted his films to be admired for their artistic， individual quality rather than the box office they generated. Their box office results were consequently lackluster.

The year 1998 also saw the release in China of the Hollywood mega-hit Titanic. It grossed a staggering RMB 360 million， and introduced Chinese moviegoers to the blockbuster concept.

Before 1994， foreign films that entered the mainland market were flat-fee imports. That year， China began importing 10 revenue-sharing blockbusters annually， a figure that later increased to 20. Movie imports stimulated the Chinese film industry by attracting audiences away from their TVs back to movie theaters， spurring local production. It was then that Chinas filmmakers experienced both the opportunities and disappointments of the market.

Cinema has existed for a century in China. During its golden age as the most popular form of entertainment， annual audiences reached 29.3 billion. This translates into 70 million movie theater tickets every day.

The industry reached its lowest ebb at the approach of the new millennium. It lost over one billion viewers every year， and film studios struggled to make ends meet. Survival hence became the main priority. It was against this backdrop that， in January 1993， the Chinese film authority issued the Several Opinions on Deepening Institutional Reform of the Film Industry. This marked Chinese cinemas transition to a market-based approach to film making. A decade later when the document expired， reforms continued and the film industry became more sophisticated.

Film Industry Evolution

China can now easily afford to produce block- busters like Titanic. Although big box office productions do not always live up to their advance publicity， and give rise to audience criticism， they nevertheless set box office records.

In 2002， Zhang Yimou astonished the world with his epic Hero， made with a massive investment of RMB 240 million – 54 times the average production cost of his earlier movies. The RMB 250 million it earned in domestic box office revenue was unheard of in Chinese cinema. It equaled that generated by 60 percent of all Chinese films released the same year. Until then， RMB 20 to 30 million in box office receipts was considered bountiful.

Ten years later， RMB 100 million in box office revenue is commonplace. There are 50 Chinese directors in the RMB 100 million club. Within just one decade， the national box office has grown 20-fold. China is the worlds third largest film producer and second largest film market. Insiders reckon that the Chinese film industry has entered a stage of explosive growth wherein it has advanced from an infant to a young adult.

“Big box office gains are the main goal of Chinas film industry. It is still working on building a complete industrial chain，” said Jiao Hongfen， vice president and general manager of China Film Group Corporation （CFGC）.

Upon establishment of the PRC， the government allocated funds for all films. The predecessor to CFGC was in charge of distributing and releasing them. Under the planned economy， profits were not the main goal of film studios because they could survive without high box office revenues. But this meant they had no money for reproduction. To make more films， they had to raise funds themselves， which was a risky business. They hence did their utmost to limit production costs. Trapped in this vicious cycle， Chinese filmmakers were constrained by tight budgets， which made blockbusters out of the question. Studios carried on this way for 40 years till January 1， 1993. They were then transformed into shareholding companies responsible for their own finances and free to negotiate with local distributors nationwide on profit-sharing terms. They thus made their way into the market.

In the past， the moment a studio delivered a finished movie would receive a RMB one million advance. Today， capital can be recovered only after regional copyrights or copies have been bought out. Deprived of their monopoly， state-owned film studios must compete in an equalized environment with regards to capital. No matter whether it comes from the government， or from private or even overseas investors， each expects a finger in the pie.

Give the Market What It Wants

The comedy movie Lost in Thailand， produced by Enlight Media subsidiary Beijing Enlight Pictures， grossed RMB 1.26 billion at the box office last year. It was the bestselling Chinese-language film.

Cineastes believe that its and other Chinese films success is due to their relevance to real life， so striking a chord with audiences. They touch on social issues of wide appeal and are irresistibly funny， abiding by the rules of commerce. “Having always wanted to make a comedy film， I followed the rules of this genre to the letter，” director and one of the leading actors of Lost in Thailand Xu Zheng said. “I made sure potential audiences knew exactly what kind of film it was. If they wanted to be cheered up， they would go to see it.”

“Blockbuster movies over the past decade have drawn people back to cinema as there is no longer any thrill in sitting at home watching TV. But even blockbusters become predictable after a while， which implies that people are back in the habit of going to the movies，” is the opinion of Hong Kong director Peter Chan. He believes that if the public has indeed been wooed back to the cinema， there are many types of films besides blockbusters to be explored and made. One example is his new film American Dreams in China， which was an instant hit upon its première in May.

Enlight Media has participated in all three recent hits， Lost in Thailand， So Young and American Dreams in China. The day So Young premiered， Enlight Medias stock prices rose 7.61 percent –48.17 percent higher than only two weeks earlier.

President of Enlight Media Wang Changtian believes that directors today have a better under- standing of commercial films. Rather than individual expressions， their works are commercial products that give the audience what it wants， or at least target a specific audience segment.

New Forms Needed

Enlight Media participated in these three movies through the three most prevalent forms of investment and profit-sharing in the Chinese film industry.

First， as investor. Ninety percent of investment in Lost in Thailand came from Enlight Media， making it both the largest investor and profit-earner. Of the RMB 1.2 billion the movie made in box office revenue， after deducting tax， fees and cinema profits more than RMB 500 million went to Enlight.

Second， as investor and distributor. Enlight Media contributed just 20 percent of the total investment in So Young， but as distributor it was entitled to 10 to 15 percent of box office earnings. Profits stemming from distribution and releasing could well compete with those from investment.

Third， as sole distributor， as in American Dreams in China. Having developed from a TV program producer， Enlight Media has a distribution system that encompasses agents in 70 major cities. This immense network ensures the best release dates and maximum screens – a combination that potentially expands box office receipts by 30 percent. This was the case with American Dreams in China， which was seen on 36 percent of all screens the day of its première – more than both So Young and Lost in Thailand.

The top 10 Chinese distributors accounted for 89.2 percent of the total market last year， higher than the previous years 85 percent， according to the 2012-2013 Chinese Film Industry Report released by EntGroup， Chinas first entertainment industry research institution. This signifies a more concentrated market.

Insufficient investment and bad distribution used to be the two main obstacles facing the Chinese film industry. Today， production and releasing are developing at a rate of knots. Screens have increased from 1，845 in 2002 to 13，118. An average 10.5 screens were installed daily in 2012. This has created room for market growth. At the same time， however， a bigger market and increased production pose a huge challenge to distribution. Many films now compete for a fixed number of screens over similar release periods. It is the distributors task to find innovative ways of exploring new markets and satisfying different tastes.