China Daily Hong Kong Edition: The Big Picture

The Big Picture
Somewhere on the Chinese mainland, four new movie screens are being put up every day as investors seek to capitalize on a rapidly growing film industry.
Box-office receipts in 2012 jumped 30 percent to 17 billion yuan ($2.7 billion). The mainland film market is now the second-largest in the world after the US. Foreign films account for more than half of this revenue while the domestic industry, which generates more content every year, tries to find its footing.
It is not just the mainland that has seen significant growth. Japan and South Korea are large movie markets. Hong Kong has evolved into a regional hub with global reach. Great films are being made in Thailand, Taiwan, the Philippines and Indonesia.
The growth of the Hong Kong International Film & TV Market (Filmart), now the largest film market in Asia, is a testament to the growth of the industry. Filmart is being held in Hong Kong this week and has attracted more than 700 exhibitors.
The growth and development of the film industry was the focus of a China Daily Asia Leadership Roundtable, co-organized with the Hong Kong Trade Development Council, on the “Challenges, Opportunities and Partnership for Asia’s Film Industry” held as part of Filmart. Industry leaders gathered to discuss the evolution of the business.
“As Asia continues to enjoy sustained economic growth, more and more people, especially the young, choose to go to the cinema as part of their lifestyle,” said Zhou Li, publisher and editor-in-chief of China Daily Asia-Pacific.
For the time being, Hollywood is the dominant force in the global film industry. In 2012, the US market generated $10.8 billion in box-office receipts, four times as much as the Chinese mainland.
More significantly, Hollywood remains almost the single reliable generator of films with international reach.
“We are all witnessing the rise of Asia’s film industry,” said Jenny Koo, director of service promotion at the Hong Kong Trade Development Council (HKTDC), the organizer of Filmart. “The success of Hong Kong-mainland co-productions is a good example of how we can work together.”
In fact, co-productions accounted for a majority of the top 10 box office hits on the Chinese mainland. Asia as a whole is a large market and much of that moves, at one point or another, through Hong Kong. Hong Kong’s film industry is growing rapidly, said Wilfred Wong Ying-wai, chairman of The Hong Kong International Film Festival Society.
“The world’s focus is on Asia today. It is not just Hong Kong. It is Asia. Hong Kong is too small (but) it is a hub for Asia,” said Wong. “The trend is unlikely to change. Asia’s box office accounts for about a third of the world’s box office.”
One of the most influential film festivals in the region, for example, is the Hong Kong International Film Festival. It has been held annually for 37 years and nurtured some of the most famous filmmakers in Hong Kong, the Chinese mainland and other parts of Asia.
Cultural boundaries
The biggest challenge for filmmakers in the region is how to reach beyond their cultural boundaries.
“The challenge is really the diverse culture and tastes within Asia,” said Wong. “When you talk about Asia, you are not talking about one country, or one culture.”
The question is whether the movie industry can cater to all these diverse tastes. The answer, said Wong, is a resounding “yes”. If Hollywood can do it, so can Asian film industries.
“China ranks number two around the world,” said Song Dai, chairman and general manager of Sil-Metropole Organization Ltd. “But today, facing the momentum of the Hollywood film industry, the industry on the Chinese mainland and in Asia are facing (great) pressure.”
Recent agreements have opened the door to more foreign films on the Chinese mainland, partly due to the country’s participation in the World Trade Organization, and that puts further pressure on domestic film makers. But it is not just the mainland. Industries elsewhere – like Taiwan, South Korea, India and Hong Kong – are also under pressure.
On the other hand, a number of famous Chinese directors and stars have hit the sweet spot in the global film industry.
“There is still room for us to improve,” said Song, “especially when we are facing Hollywood, which is such a mature film industry.”
The challenges have more to do with the products themselves rather than with infrastructure. Sometimes the products are not good enough to compete at international standard. Often it is because the quality of storytelling is weak. At other times, budgets are hard to match. Western audiences often find storylines in Asian films too complicated. This makes such films less attractive.
“The (solution) will exist in the problem itself,” said Song. “We have to tell a story to meet the requirements of the market but also meet international standards.”
Increasing revenues and budgets will help. More money in the system translates into higher production values, more respectable writing fees, and greater opportunities across the industrial spectrum, said William Pfeiffer, CEO of Dragongate Entertainment.
“I would not have guessed that Chinese films would have crossed the $200 million revenue mark so quickly,” said Pfeiffer. “In fact, two films have crossed it.” Avatar, the Hollywood blockbuster, was the first film to cross that mark when it earned $220 million at the mainland box office.
Global audience
However, warned Pfeiffer, while the industry is rapidly growing on the mainland and box-office receipts are rising, Chinese movies have not done as well overseas. There was a short spurt powered by the success of such hits as Crouching Tiger, Hidden Dragon but, by and large, Chinese films have floundered abroad.
The problem is developing content that is appealing to audiences across borders.
Co-productions might help as would the emergence of opportunities in new media.
“A key solution is partnerships,” Pfeiffer said. “What is required for a good partnership is trust.”
There are plenty of opportunities in this area, from taking Asian ideas and projects to the English-speaking world and vice-versa. Conversely, Asian countries are looking for projects that can be adapted to their markets. Remakes, which are increasingly popular, are a case in point.
“You are taking the best of all these cultures and doing something that works internationally,” Pfeiffer said.
The creative use of new media could also help the industry grow, particularly given the different revenue models.
“People talk about the box office but in new media we don’t have that (issue),” said Gong Yu, founder and CEO of iQIYI.com. Around a third of revenue in new media comes from the Internet. Advertising revenue is rising but it accounted for about a tenth of television advertising on the mainland.
Movies with small audiences that would never be profitable through cinema distribution may be released online, which is relatively low-cost, said Gong.
The overarching message is that the film industry on the Chinese mainland, and in other parts of Asia, needs to be stabilized, said Crucindo Hung Cho-sing, managing director at Delon International Film. The strategic target for box-office revenues on the mainland is still low. Raising that can help make the industry into a bigger success
“Why can America earn a lot of money but China cannot?” asked Hung.
The income of Hong Kong films, for example, is often not enough to cover costs. Often, the same is the case on the mainland. Making a “big” movie on the mainland requires cooperation with industries elsewhere like in Hong Kong and, ideally, Hollywood.
“And we have to produce very large movies to compete with American movies,” said Hung. “There is still a very large discrepancy between Chinese films and American films … We have to occupy a position by ourselves in the world.”
“It is very hard for us to compete in the international market,” said Hung. “When the box office is stable we can make improvements and compete with US movies.”
Zhang Yuan, a Chinese director with 10 films to his name, most recently Beijing Flickers, said both regulators and audiences should start looking at movies as entertainment.
The outlook for the industry is generally positive, said Fred Wang Cheung-yue, chairman of Salon Films Group, as long as the industry finds ways to step-up its game.
China has shown in myriad industries that it has the potential to expand. There are dozens of examples, from aviation to telecoms. These are industries that have powered forward domestically but also internationally, in no small part thanks to existing international systems.
“Aviation and telecom have good organizations worldwide,” said Wang. “Why not film?”
“All we need is the courage of the people who make decisions and Asia is the best, because the economy is based in Asia,” Wang said. “All we need is to open the market, set rules and share.”
“We need to make a total change. Forget the other places and start with Hong Kong. Hong Kong has all the ingredients if you have the courage,” he said.
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