The Shanghai International Film Festival pulled off the impressive feat of assembling leading executives from seven of China’s top film studios. Their discussion focused on the problems that have recently beset the production sector and the industry’s relationship with Hollywood.
“The film industry achieved great things in 2018, but it was also the year that the industry received most criticism from society,” said Yu Dong, founder, chairman and CEO of Bona Film Group. “Our directors, actors and company were all criticized. The tax examination at the end of the year shook up the industry. We all had so many grievances, we all felt wronged.”
Chinese tax authorities last year intervened in the film sector, following accusations made at movie star Fan Bingbing. They ordered companies and individuals to fully declare their earnings, and to cease some previously permitted tax avoidance structures. The move – which netted some $1.7 billion of back taxes – caused an abrupt disruption of film production, changed relations between producers and talent, and caused investors to take fright.
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“It was the year that the supply of capital went into winter hibernation. Half of the publicly-listed film companies saw their market valuations fall. Eight film companies had their market values cut in half,” said Yu. “We had to adapt to new market conditions, adapt to new film topics, and change our ways with casting as well. The market is cold and we’re losing our audience.”
“Morale is very low now. There is an acute drop in production numbers as everyone is sitting on the fence, watching. We need to rebuild morale and faith. Audience needs to rediscover its faith in Chinese film. We need capital support,” said Wang Changtian, chairman of Enlight Media.
Huddling for warmth was a recurring theme of the seminar. “Nowadays, movies aren’t made by one or two film companies, but by seven or eight. We’re all neighbors and brothers. To throw a good punch you need to bunch all your fingers together and make a fist,” said Jiang Ping, GM of China Film group. “The Rescue,” an upcoming action film with seven companies listed as producers proved his point, Jiang said.
While the speakers carefully avoided the specific term “trade war,” U.S.-China rivalry was another recurring theme.
“It is only a matter of time before we outdo the U.S., but that is not an objective,” said Fan Luyuan, chairman of Alibaba Pictures.
Bona’s Yu argued that Chinese studios should push harder into international markets. “China has had the biggest February box office in the world for the past five years, because of the Chinese New Year holidays. We should have the determination to play our movies in that at every Chinatown movie theater all over the world,” Yu said.