Hollywood lusts for China film sales,with caution

Chinese box office sales rose 64 per cent last year to USD 1.5 billion,as economic woes sent the 2010 US box office down 5.72 per cent to a 13-year low of USD 10.57 billion.

In recent weeks,two of Hollywood8217;s biggest names,Relativity Media 8212; producer of 8220;The Social Network8221; and Legendary Pictures,maker of 8220;Inception8221;,have announced deals to make films for the Chinese market.

Both hope to produce movies that will appeal to both Chinese and wider international audiences 8212; a potentially lucrative plan but one that industry insiders said should nonetheless be approached with caution.

State-run companies still control the importing and distribution of foreign films in China,despite a 2009 World Trade Organisation ruling that overseas firms should be allowed greater participation.

China also protects its domestic industry by only allowing around 20 foreign movies to be screened a year,making it difficult for overseas studios to capitalise on growing demand from the country8217;s emerging middle class.

8220;China lost the WTO case and is supposed to let foreign companies into distribution,8221; said commercial lawyer Steve Dickinson,who has practised in China since 1991 and whose firm has clients in the industry.

8220;But the law hasn8217;t changed 8212; it8217;s just in flux and the bottom line is that everything is still subject to Beijing8217;s approval,8221; he told AFP.

Hollywood films are on average twice as profitable as China8217;s local productions,but co-productions that bring foreign film-making expertise to bear are increasingly lucrative.

Working with a Chinese partner to make movies with local investment and talent allows foreign filmmakers to get around the import cap.

Foreign partners can also negotiate a larger share of the takings from co-productions,which in the first half of 2011 accounted for 32 per cent of the box office for Chinese-language films in the country,than they can for imports.