Hollywood and China, a Relationship Doomed to Fail

Courtesy of Legendary and Universal Pictures
'The Great Wall'

The industry is pushing forward with a policy of engagement, but as shown by the recently scrapped megadeals and the Trump administration's hostility, Chinese money is hardly the savior some envision.

In 1989, I took my first trip to China. Getting there was anything but straightforward, especially for a young man with no money. It involved flying from Los Angeles to Tokyo and from Tokyo to Hong Kong, then taking the train to Guangzhou, the southern city better known at the time as Canton.

In those days, you shoved your way through the packed Kowloon station, squeezed into a narrow train seat, said goodbye to the city of neon nights, and emerged three hours later in absolute darkness, in a town choked with smog. Thousands of cyclists (many still wearing Mao uniforms) would swoosh past like a volley of arrows, all the more perilous for being almost invisible in the unlit streets.

China was a different world, as fascinating to me as I must have been to it in those “foreign devil”-starved days. Leaving Guangzhou, it took 24 hours on local transport to travel a few hundred miles to my destination, Jingdezhen, the center of China’s celebrated porcelain trade, where my then-girlfriend taught English and where we roamed around in buses that would break down almost as often as they set forth, leaving us to push them alongside the other passengers, or risk being stranded in a biting Chinese winter.

Black smoke belched from the factory chimneys, so black you could see it against the night sky, an early warning of the over-industrialization that would make pollution one of the greatest threats to China’s people, and the world.

But I loved it. I loved seeing a young woman’s eyes pop open when she read our copy of Cosmopolitan. I loved being invited to dinner by an old professor who proudly screened his one foreign VHS tape, the Miss USA pageant. I even loved being bellowed at by a local man, who assured me, in these days not so long after the Cultural Revolution, when China was reeling from its one-child policy and widespread poverty, that this was the greatest nation on earth. Perhaps he was right.

***

That three-week trip sealed in me a deep love of China that I’ve never lost, which I mention as a backdrop to my central point: that Hollywood has made a mistake in courting China, a country and regime whose interests are diametrically opposed to its own.

That became evident last week when not one but two major Sino-American entertainment deals collapsed, or at least teetered on the brink of so doing — first, an investment in Paramount; second, a buy-out of Dick Clark Productions.

“With China blocking money from leaving the country, Paramount Pictures has yet to receive the first payment it had expected from a billion-dollar financing deal with partners Shanghai Film Group and Huahua Media,” my colleague Kim Masters reported March 9.

A day later, the owner of Dick Clark Productions, producer of the Golden Globes and other awards telecasts, announced it had called off the proposed $1 billion buyout by the Chinese conglomerate Dalian Wanda Group and sued to recover a $25 million breakup fee connected to the deal. (Dick Clark's owner, Eldridge Industries, also is the owner of The Hollywood Reporter.)

That news followed rumblings that Wanda’s purchase of Legendary Entertainment for a reported $3.5 billion early last year may have been exaggerated, and came as Legendary’s $150 million Chinese-American co-production, Matt Damon starrer The Great Wall, directed by Zhang Yimou, tanked at the U.S. box office, after doing OK but underperforming lofty expectations in China (Zhang’s earlier East-West hybrid, 2011's The Flowers of War with Christian Bale, grossed a mere $300,000 in the U.S.).

It also follows a deal that fell apart amid the new currency issues in December, when the Chinese manufacturing firm Anhui Xinke New Materials called off a $350 million deal to acquire Voltage Pictures, producer of Kathryn Bigelow's Oscar-winning The Hurt Locker.

Put these stories together and you have a problem.

What they reveal is that any hope of China becoming a meaningful partner (and in some cases a financial savior) is not only wrong but absurd. With currency fluctuations and two governments going at each other on the precipice of a trade war, the last thing the entertainment business needs is to be caught in the middle.

Two factors have contributed to this mess.

In November, news spread that China was restricting big-time investments in foreign companies, the sort entertainment executives (and many others) have pursued for years. Since then, there’s been a virtual freeze on any large-scale capital outflow, with no clear picture of when — if ever — it will resume.

“While such capital controls may be intended to be temporary,” Fred Hu, the chairman of a Beijing-Hong Kong investment firm, told The New York Times, “they will introduce mounting uncertainties for Chinese outbound investments.”

Nor is the uncertainty coming from China alone. Late last year, the blog Lawfare pointed to recommendations by the U.S.-China Economic and Security Review Commission that will likely make China as leery of investing in America as America is leery of China, if they go through.

“On November 16, the USCC released its mammoth, 553-page annual report to Congress,” the blog noted. “One recommendation caught the attention of some: that ‘Congress amend the statute authorizing the Committee on Foreign Investment in the United States to bar Chinese state-owned enterprises from acquiring or otherwise gaining effective control of U.S. companies.’ ” Added the blog: “Although the recommendation is purely advisory…it would effect an across-the-board ban on any purchases of U.S. companies that resulted in Chinese SOE control.”

In other words, China will block the U.S., or the U.S. will block China. Either way, Hollywood gets hurt.

***

The movie business’ dependence on Chinese investment is part of a larger problem with China.

For some time, studio executives and shareholders have harbored the notion that these two cultures, so separate and distinct, might come together to create a new kind of product, an international form of co-production that will maximize the audiences on both sides of the Pacific, rather than fail to please either.

As if the evident geographic, linguistic and historical differences weren’t obvious enough, The Great Wall’s failure must have scuttled any such fantasy, even for the most die-hard Utopian.

Such films aren’t like Anglo-American or U.S.-Canadian co-productions, which depend on a shared language, shared assumptions, shared experience and shared personnel; they’re based on the yoking together of heterogeneous forces to create a bastard child that no parent could love.

Wall’s failure was more than that of one film; it was a death knell to hopes for the sort of intellectual and artistic mutants that might be credible in superhero films but never in real life. It signaled the collapse of one offshoot of globalization, in an era when globalization itself is collapsing under pressure from Trump and his ilk.

Chinese-American co-productions just don’t work, and it’s about time Hollywood realized it. Whatever the financial benefits, the artistic ones are nonexistent, with the rarest of exceptions (2000’s Crouching Tiger, Hidden Dragon) coming like meteor showers but producing only squibs of light.

All this should lead studio executives back to the drawing board, to concentrate on the one thing that appears certain: China’s appetite for American product. But that’s shaky, too.

For the past few years, the studios have looked to China as a quick fix for its flat revenues (which in fact are shrinking, when you factor in inflation; the mounting cost of the product; and a population whose growth isn’t equaled by its ticket buying). That strategy, at least on the surface, made sense: with its increasingly affluent populace (now more than 1.3 billion), China would seem to proffer a path to real growth.

But no matter how well Hollywood is doing right now, it’s never going to last.

China’s government doesn’t want more American films; it wants more and better films back home. It doesn’t want to encourage U.S. exports; it wants to bolster its own. Wanda is building a massive, $8.2 billion studio complex, housing 30 soundstages, in Qingdao.

That’s been its history for centuries, and it was never clearer to me than in that little town I visited all those years ago.

At its peak, when Jingdezhen was a famous manufacturing hub, it learned not only to make ceramics for the domestic market, but for the international market, too. Chinese Export Porcelain became prized around the world, and no matter how hard rivals such as Limoges tried to displace it, they never could.

China learned to make a great product and sell it overseas. Now it’s applying that lesson to film.

This enormous country has the capital, the population, the talent base and above all the will to build its own movie empire. Why would it want Hollywood films when Chinese films will do just fine?

For more Galloway on Film, please check out the archive. 

 

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