-By Keping Qiu

Taking advantage of activity surrounding the Chinese American Film Festival (Oct. 25-Nov. 30) and American Film Market (Oct. 31-Nov. 7), Asia Society Southern California staged its third U.S.-China Film Summit at UCLA Covel Commons on Oct. 30, with three panels of U.S. and Chinese film entrepreneurs in co-production, globalization of talent and investments. The reportedly sold-out event offered a unique opportunity to sense what is going on in the China film market.

The Sticking Point
The first panel, “Year in Review: Key Players in U.S.-China Co-production,” was moderated by Jonathan S. Landreth, managing editor of ChinaFile, Center on U.S.-China Relations, The Asia Society, with panelists William Feng, general manager and chief representative, MPA-China, and Leon Gao, president, EntGroup, "one of a handful organizations dedicated to measuring the growth of the market.” The absent Zhang Xun, president of China Film Co-production, attended via her video greeting.

Before moving back to the U.S. one mouth ago, Landreth lived in Beijing for eight years as " a lucky business reporter" writing about "China discovering Hollywood—and Hollywood discovering that it can't live without China. Seven of those years for The Hollywood Reporter, then sThe Wall Street Journal, The New York Times and The Los Angeles Times as editors woke up to how important China was becoming to Hollywood. Each January, annual box-office grosses grew more than 25%.”

The moderator's narrative highlighted the milestones in U.S.-China relations pertaining to film. Landreth rewound to a moment in 2001 when China was about join the WTO: The greatest sticking point between Beijing and Washington wasn't the terms relating to grain or heavy machinery or high-tech components, but how many Hollywood movies would be allowed into China each year, as confirmed by two lead trade negotiators, one from the U.S. and one from China. "Why? Because movies sell an image of the way we live, who we are and how we do business. Movies are America's greatest selling tool. For the next 11 years, only 20 imported films were allowed to recoup a significant share of their ticket sales. Most were from Hollywood.”

Fast forward to February of this year, when "the unthinkable happened," Landreth observed. Xi Jinping, China's next president, was in Hollywood to break the news, along with DreamWorks Animation’s Jeffrey Katzenberg, the man behind the Kung Fu Panda movies, and U.S. Vice President Joseph Biden. They announced three major developments:

1) China would raise the number of imported films allowed to share a piece of their sales to 34 each year, up from the previous limit of 20 films.

2) China would raise the percentage of sales that would flow back to copyright holders to 25%, up from the previous average of 15%.

3) China would welcome DreamWorks to Shanghai to build a studio with three state-run media investment funds, so that Katzenberg and his new Chinese friends could work together to co-produce Kung Fu Panda 3 in China and begin to transfer some of the time-tested expertise that has made Hollywood executives the greatest salesmen of the American dream for the last 100 years.

Han Sanping, chairman of China Film Group (China's film monopoly importer), would receive the 2012 China Visionary of the Year Award, and Lewis Coleman, president and CFO of DreamWorks Animation, would accept the 2012 U.S. Visionary of the Year Award later in the day at the U.S.-China Film Summit gala dinner. Landreth credited Han, "without whom none of these developments would be possible," and called him “the 21st-century incarnation of Louis B. Meyer, Darryl Zanuck and Harvey Weinstein combined...with Chinese characteristics."

Landreth then asked: Who will be the next independent distributors, other than China Film Group? "This will be especially important for those studios which were served a letter of inquiry this spring by the U.S. Securities and Exchange Commission asking that they make transparent their business dealings in China and dealings with China Film Group." This is a question even Han's colleagues thought he might be facing before the press in the U.S. Fortunately, Han did not have to face tough questions that night, since the press was not invited to the gala dinner.

Landreth went on to emphasize the positive. "China wants movies of its own that will tell the world about the Chinese and the Chinese dream, whatever that may turn out to be. I, for one, encourage the pursuit. Chinese movies that suffered effects of strong censorship just plain bored me and almost everybody I know, both Chinese and expat. Chinese movies that reflect independent voices helped make my life in China exciting.”

Landreth posed more questions for his panel and audience, most not expected to be answered by the end of the Summit: Do co-productions make sense? Will Hollywood filmmakers submit their work to China's censors? Will China manage to make films that can attract overseas audiences?

After viewing a video of the gala dinner at Asia Society, we can report that the message from Han was upbeat. Han said that the rapid growth of the Chinese film market is even exceeding his own expectations, with box-office gross up 40% from the same period last year. He predicted that China would be a large film production county, and also a large film consuming country. Things after the highly anticipated 18th National Congress of the Party can only be better, and can only be more open.

Unfiltered Advice
"Globalization of Talent" was the second panel, moderated by Stephen Saltzman, partner at Loeb & Loeb, and Janet Yang, film producer and cultural ambassador.

The most candid and colorful panelist was Pang Hong of Kylin Network (Beijing) Movie & Culture Media Co. and producer for Ning Xia Film Studio, best known for his Painted Skin movies.

Pang shocked the audience by declaring that Gong Li (star of Raise of Red Lantern) is “outdated” because of her age, adding Americans’ most admired and iconic Asian names like Chow Yun-fat, Jackie Chan, even Jet Li, to that list. The Chinese market is a youth market, he explained. "When Painted Skin released in 2008, I went out and did my own investigation. By then, the average age of the Chinese film audience was 23.6; when my Painted Skin 2 was in theatres this year, the Chinese audience's average age already lowered to 21.3. They love young actors and actresses. I used Zhou Xun, Chen Kun and Donnie Yen for Painted Skin 1, but for Painted Skin 2 I no longer used Donnie Yen. Instead, I added new elements, I added Yang Min, Feng Shaofeng. It was my judgment according to the market.”

Both Yang and Pang echoed, "The market is very cruel." Pang continued, “Of course, Chinese-American cooperation is quite different, but we want to honestly inform our American friends about the Chinese market."

Having earned the title "King of Box Office for July" for his movie, Pang has indeed something to say about the market. The producer told the audience that he started humble and worked all the way up. Coming from the state-owned film studio Ningxia, he understands film censorship and policy. “My Painted Skin 2 broke 15 Chinese box-office records and became the highest box-office film of all time. I only serve two people: my investors and my audience.” The audience applauded.

According to data from EntGroup and China Film News, action fantasy Painted Skin 2 earned over 720 million yuan (roughly $115 million) in the first month after its June 28 opening in China. However, like an elephant in the room, it's hardly a secret that in China July and August are designated as "domestic film protection months.” That means that foreign movies are not allowed to be programmed and screened in theatres during that period. This is not a business decision made by theatre owners, but by a state agency. The reality in China is that a movie theatre owner or a cinema chain is able to program any domestic films on their own schedule, but for foreign films, programming is subject to approval and ultimately controlled by the State Administration of Radio, Film and Television. Although the practice was relaxed after Sept. 1, films like The Dark Knight Rises, The Amazing Spider-Man and Prometheus were dumped in the same post-summer slot, forcing these Hollywood blockbusters to cannibalize one another at the box office. The Chinese audience was not necessarily going to see the protected movies during the summer months, fed up with watching similar action movies. Ultimately they chose one, but not two or three to watch. It is not hard to surmise that had Hollywood movies been allowed to screen in the month of July, the box office of Pang's movie would have been lower, though still decent.

Here again, the sticking point. As the number of imported movies entering into China nearly doubles, having them disappear from the screen during the two most profitable months makes things a wash.

As Tom McLain, chairman of Asia Society Southern California, declared in his opening remarks, "Hollywood and China are a perfect match, but not an easy marriage."

Pang declared that his next step is cooperation with Americans. Although the China market is getting bigger and bigger, Chinese film production quality is still in its beginning stages, "a very, very low level" compared to Hollywood productions which represents the peak of world quality. Pang said he was eager to learn American technology and standardized industry procedures, as well to understand American laws, co-production procedures, international marketing and production management. Step by step, then we can begin to have real cooperation, he declared.

Pang also touted his next small China-U.S. co-production with a budget of "only $6 million." 60% in English and 40% in Chinese, offering Chinese gourmet food and beautiful women.
Pang alarmed the audience and the moderators' American sensibilities by attributing the fast-developing Chinese film market mainly to piracy of American movies. "The youth watched a lot of pirated Hollywood DVDs, and saw even more movies after China joined the WTO. Therefore, they are very familiar with American stars…. I always tell people in China that the Chinese audience is growing up watching Hollywood movies, nurtured by Hollywood sound and light, action and special effects. You can choose to call it 'nurturing' (the nice word), or 'polluting’ (the bad word). He or she is already used to such production quality and value, special effects, an epic sense, and suddenly you make a Chinese movie—how possible is it to have good box office? No matter how he looks at it, he would still feel it is a country movie, a provincial movie."

Pang believes there are ways to merge Chinese A-list talent with American talent by choosing the right roles and the right stories for them. While Chinese A-listers are willing to take smaller parts to work with Hollywood, he encourages American film professionals to go to China, but earning Chinese yuan rather than American dollars. "Together, we collaborate and make money everywhere in the world. "

Also on the panel were Larry Galper of Creative Artists Agency; Andrew Ooi, president, Echelon Talent Management, and David Unger, VP, International Creative Management.

New Faces of Investors
The third panel, “Investments in U.S.-China Co-productions: Meet the Chinese Investors," was moderated by Bennett Pozil, executive VP, East West Bank, and Peter Shiao, CEO of Orb Media Group. The panel included six Chinese investors—three women, Liu Yuan, co-chairman, China Mainstream Media NFC; Zhao Yifang, president, Huace Media, and Ivy Zhong, vice chairman, Galloping Horse, and three men, Jeff Lin, managing director, Strategic Bang Group; Zhang Zhao, CEO, LeVision Pictures, and Wang Lifeng, partner, Wuxi Jinyu Investment Management Corp. Most of them are bilingual. Each investor had only three minutes to tell about who they are and what they do. The panel agreed to let the ladies speak first.

Zhong told the audience that Galloping Horse is a very big film company in China, with many Hollywood collaborations. "We read more Hollywood co-production scripts than Chinese local scripts. We are good at finance. That is why we were able to buy Digital Domain [the visual-effects company co-founded by James Cameron] within such a short period of time. We believe Chinese special effects are the weakest link. With increasing demand for special effects in film production—for instance, Ang Lee's Life of Pi was 70% special effects—15 of the 20 highest box-office grossers [utilized] Digital Domain. Now we are able to use Digital Domain to invest in co-production.”

As a contrast, Huace's model is different, as a publicly traded company in China. It produces 600 hours of TV drama series a year. In terms of quantity and quality, Zhao Yifang said, "We are considered number one in China.” The company is looking for international co-productions of TV drama series, such as Chinese stories, and productions with multi-language versions. They are also interested in getting into film production, even developing their own cinema chain. Added Zhao, with Zejiang provincial government support and SARFT's policy support, the first International Film and TV Culture Industrial Park has been approved.

Zhang Zhao of LeVision Pictures was one of the producers of the hit The Expendables 2. Educated in New York, he was the only producer/investor among the panel expressing interest in producing independent films.

Closing words
"When bees are in the process of seeking honey, what happens? Pollination happens," Peter Shiao declared, explaining the inspiration for the U.S.-China Film Summit. "When people seek to make films, they make culture, and culture influences people. In order to succeed in Hollywood and China, the hottest place on Earth, they have to cross many borders, overcome language barriers, political barriers, logistic barriers, regulatory barriers, a lot of time zones, a lot of sleepless nights...”

Keping Qiu may be reached at kepingqiu@gmail.com.