China's the go-go place for film
World's biggest market calls for investors
"All I can say is, come here and invest," Han told a seminar at the Shanghai Film Festival on Tuesday.
B.O. revenues in China were up 45% in the first quarter of this year to more than 1 billion yuan ($140 million). Some 32 million of the country's 1.3 billion people went to the movies in the period, up 35%.
So the biz was undoubtedly eager to hear Han's welcoming words after years in which anticipation has grown about what's potentially the world's biggest film market.
"We have tens of thousands of TV stations; we need tens of thousands of cinemas now. We have 70 times the population of Taiwan, 20 times the population of South Korea. Multiply their revenues by that and our box office would be 20 billion yuan ($2.85 billion)."
It was a typically bullish remark from the supremo of China Film, which dominates the biz here, controlling production, distribution and pretty much all other areas of activity.
And it was echoed at another seminar by Jiang Ping, a senior official from China's all-powerful Film Bureau of the State Administration of Radio, Film and Television, who rolled out the red carpet for foreign co-productions.
He said co-productions were entitled to all the benefits of domestically produced films, adding, "Co-productions are important for bringing Chinese culture to the world."
He added, "Our policies are becoming much more open. There were reports that there would be some tightening in 2008, but that's a misunderstanding."
Attracting filmmakers to the country are lower production costs, great infrastructure and locations and access to the fastest-growing major movie market in the world. Co-productions are a good way for Hollywood to dodge the film quota of 20 foreign pics per year that China distributes.
However, the country remains a difficult place to work. Censorship is a problem, the changing regulatory environment for foreign investment causes uncertainty, and there are still regular blackouts of foreign movies in addition to the quotas on foreign pics.
Dealing with the authorities can be tricky, especially at times of heightened political sensitivity, such as during the international outcry following Beijing's crackdown on anti-Chinese protests in Tibet in March.
In February, Mikael Hafstrom's "Shanghai," produced by the Weinstein Co. and Phoenix Pictures, was refused a permit to shoot in China, even though the pic was three months into development and $3 million had already been spent.
Despite these major irritants, Hollywood is transfixed by the sheer scale of China, and Han's argument is focused on this enormous potential.
"It takes time for a market to mature. We need to inspire filmgoers' love with good films, and we need more good films. If there were only Hollywood in the world, it would be very boring. So we need Chinese films and we need good distribution," Han said.
Part of the potential lies in untapped revenue in China. Because of a lack of theaters, few people go to the movies, opting to watch pirated pics at home.
Tracy Cui of CSM Media Research pointed out that most revenues in China still come from B.O. receipts and that other streams, such as cinema advertising, remain underexplored.
Also, research shows that price sensitivity is strong in China. "If they cut ticket prices, more people will go," Cui said.
Veteran film producer Bill Kong, who has done a lot to popularize Chinese cinema internationally, said he's pleased that the funding model for Chinese movies is changing.
"People have to use their houses as collateral, but that is changing as Chinese movies become more popular around the world, especially on DVD. The rate of return will only increase," Kong said.
Hong Kong helmer Peter Chan said that blockbusters are taking all the funding, as they are better equipped to get through the censorship process, but he feels there is still space for smaller movies in China.
"Costume films are more popular abroad -- our domestic market, however, cannot cover the production costs, and that has a direct impact on the films that get made," said Chan.
"Businesspeople don't care if a film's reputation is good or bad as long as people come to see it. The future of Chinese film is going to involve lower production costs. We have to find a way to cut costs."
Shanghai Film Group president Ren Zhonglun said investing in film was like investing in oil exploration -- heavy investment but big returns with huge risks. For him, the big investment these days is in theaters. Han underlined his bullish message with a couple of requests -- China is a seriously political place after all, and this is about negotiation.
"We need more preferential treatment in the film business here -- for example, we want tax refunds. We need feedback from the industry. But the returns will be amazing," said Han.
Meanwhile, Jiang painted an upbeat picture of the industry in China.
For the past five years, the Chinese film industry has grown by 20% a year. Its 300 film producers made 402 features last year plus 122 digital films, 22% up on the previous year.
Sarft approved 180 co-productions over five years, including 39 last year.
Producer Terrence Chang, longtime collaborator with John Woo and currently working on Asia's biggest-ever movie, "Red Cliff," said there are still some key areas where development is needed.
"China lacks deputy directors, good producers and special effects people. The CGI potential in China needs to be better developed -- we have 1,500 special effects in this film," Chang said.
