Hong Kong International Film Festival and Market Preview

9:43 AM PST 03/19/2011 by Jonathan Landreth
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Martin Haake

On the eve of Filmart, here’s everything you need to know about business in the east and who’s changing the industry (starting with Dreamworks' "Kung Ku Panda 2").

If the first Kung Fu Panda was Jeffrey Katzenberg’s love letter to China, then the megahit’s much-anticipated sequel is DreamWorks’ bear hug to the world’s fastest-growing film market.

Kung Fu Panda 2, which adds the voice of Pan-Asian superstar Michelle Yeoh to a cast that brings back Jackie Chan and Lucy Liu, is all but certain to be released in China on May 26, simultaneous with its North American debut.

The first Kung Fu Panda, released in China in June 2008 in the run-up to the Beijing Olympics, became the first animated film to gross more than 100 million yuan ($15 million) at the local box office. That might not seem like much by Hollywood standards, but it’s quite an accomplishment in a market where animated fare is largely ignored by adults.

Changing China’s moviegoing habits isn’t going to be easy, but Hollywood is hoping projects like KFP2 will at least make inroads.

The timing couldn’t be better. Thanks to a World Trade Organization ruling that goes into effect March 19, China is supposed to address how its historically closed state-run film distribution monopoly will open to “greater foreign participation.” Before the ruling, the government only allowed 20 imported films a year to share in their own box-office gross.

Nevertheless, at press time, even local insiders couldn’t say for sure what China’s one-party government might change in the distribution landscape as of March 20. Rumors range from a possible raising of the import cap to 30 titles to a relaxation in distribution that could see the Hollywood studios dealing directly with smaller Chinese companies instead of the state-run monolith, the China Film Group.

Another possibility some Hollywood executives hope for is an increase in the gross box-office share, which is now limited to a tight range of 13-17 percent.

If any of these things actually happens, Hollywood will surely benefit. But not everyone in the Asian film sector is thrilled with that prospect.

“Honestly, though it’s hard to say what China will tell the WTO, most Chinese producers will view Hollywood studios as insurmountable competition,” says Hong Kong-based producer Albert Lee, CEO of Emperor Motion Pictures, whose 2010 co-production Let the Bullets Fly became the highest-grossing film to date in China. “My feeling is that the film market opening will happen sooner or later. I can’t say if that means it’s going to mean 30 or 40 imports right now, but I do think it’s inevitable.”

Recent box office suggests it’s not just Hollywood that stands to benefit from new access to Chinese moviegoers. Since the bumbling panda Po, voiced by Jack Black, first shouted “Hai-ya!” in theaters here, China’s box-office take has soared, climbing 64 percent in 2010 to $1.5 billion. Cinemas are mushrooming to meet growing middle-class demand, and local moviegoers feel more comfortable paying the premium charges for 3D and Imax tickets.

Additionally, on the heels of the first Kung Fu Panda, several Hollywood imports have made more money in China than in any other territory outside the U.S. With the shimmering China box-office success of recent Hollywood releases like 2012, Transformers: Revenge of the Fallen, Avatar and Prince of Persia, which collected a combined $376 million in China, DreamWorks is back for more, this time setting Po and his kung fu master idols the Furious Five off on an adventure that pits them against Lord Shen, a peacock voiced by Gary Oldman.

What’s certain at the moment is that thanks to increased communication between Hollywood and China, executives on both sides of the Pacific are working together in unprecedented ways to tailor KFP2 to the Chinese market, meaning the film will likely become a model for future cooperation. Given the potential returns from the massive — and rapidly expanding — Chinese film sector, the stakes couldn’t be higher.

The first film kicked off a heated round of debate and shined a harsh light on the state of China’s animation industry, which has never successfully made a big-budget feature, let alone exported one around the world.

“I see [the original] Kung Fu Panda as a milestone in East-West cross-pollination,” says leading film critic and industry observer Raymond Zhou Liming. “It shows Chinese filmmakers that outsiders could tell a Chinese story just as well as, if not better than, the Chinese. The thematic subversion is so well handled as to introduce new themes without jolting traditional Chinese sensibility. That was a major coup — culturally, at least.”

So far, the cultural synergy the first film tapped appears to be continuing in the buzz about the sequel. “This film has an even higher level of authenticity than the first one,” says Eugene Yang, Greater China chief representative for distributor Paramount, who will work closely with the China Film Group on the nationwide Imax 3D release. “The DreamWorks team spent a lot of time observing actual Chinese locations and incorporated lots of little surprises into the film that will be best appreciated by the Chinese audience. Katzenberg said the first film was his love letter to China, but this one will bring the countries closer.”

To make the most of a challenging promotional and distribution situation, DreamWorks and Paramount are working with major global sponsors and local Chinese outlets to help the film’s China launch. McDonald’s is said to be planning a KFP2 Happy Meal in China, Nestle has a breakfast cereal tie-in in the works, and domestic casual-clothing giant Metersbonwe will do a whole line of T-shirts and accessories.

The sponsorship planning this time is a huge improvement on the release of the first Kung Fu Panda, when the short advance notice of the confirmed release date only allowed enough time to sign four relatively unknown Chinese sponsors, including a manufacturer of rubber balls.

From a marketing standpoint alone, KFP2 looks to be a game-changer. 

“From what we’ve seen so far, the new movie has exceeded all expectations and will really raise the bar,” Yang says.   

Next page: Will the Crisis in Japan Affect Hong Kong’s Filmart?

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