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Pisano calls for 'open and free' industry in China

Says China should be careful which lessons it learns

SHANGHAI -- In his second visit since taking up what he called “the China beat,” Robert Pisano, president and COO of the Motion Picture Assn. said Wednesday that the Shanghai International Film Festival brought him “hope” for a long-term strategy that could gain Hollywood studios greater access to a now-booming movie market plagued by piracy and protectionism.

The SIFF, now in its 13th year, is bigger than ever and has drawn an increased international presence at a time when China’s economy and its boxoffice are expanding, despite government limits on the number of film imports allowed.
 
“I hope that the Chinese government will soon realize that their economic interests are someday going to align with that of the country’s own film industry and that the industry will only continue to grow if it is open and free,” said Pisano, who took the helm at the MPA in April after Dan Glickman’s departure after six years.
 
Since China joined the World Trade Organization in 2001, Hollywood has been at the center of a push for open access to China’s markets. In the case of film, the market is growing, with boxoffice up 43% in 2009 to $909 million as nearly two new screens per day are built to meet pent-up demand from a swelling middle class.
 
“Avatar” grossed more in China ($194 million) than any other territory in the world outside the U.S. -- and that was after only being allowed to earn the 17.5% share allotted by the import and distribution structure controlled by the state-run China Film Group.
 
That structure, which limits revenue-sharing imports to 20 films per year, was challenged by a ruling in the WTO in late 2009 that essentially called for the dissolution of CFG’s virtual monopoly on imports and distribution.
 
China has until late Dec. to show what it is doing to right what the WTO ruled is wrong.
 
Pisano allows that while Hollywood has much to teach this growing market, it’s important to take away the right lessons.
 
“The agent system is responsible for driving the cost structure of Hollywood movies to the point where it almost becomes uneconomic, and that’s something China should be very cautious about,” Pisano cautioned guests of SIFFORUM event gathered to discuss Sino-Hollywood cooperation on Monday.
 
Rumors are flying that the State Administration of Radio Film and Television could either get stricter in reaction to “Avatar,” deeming the Hollywood competition to be growing enough to warrant a shrinking of the 20 annual revenue-sharing imports allowed, or, alternatively, could raise the cap to 30 films.
 
“Pick your rumor,” said Pisano, who plans to return to China in the fall to continue regular talks with Chinese government and industry leaders.