Chinese Movies Need Not Fear End of Quota System, Report Says

Chinese movies will be able to thrive even after the quota on Hollywood movies is lifted in coming years, but there needs to be a greater focus on producing better movies, a report by the research group Entgroup said.

The Hollywood blockbusters that make it into China are the biggest and best of the bunch, Entgroup said, and that any additional movies coming in should the quota be lifted would be only “second and third class products.”

In 2012, China’s President Xi Jinping expanded the quota of overseas movies from around 20 to 34 per year on a revenue-share basis, including enhanced format movies.

The system restricting foreign imports to 34 movies a year on a revenue-share basis is expected to open up in 2017-2018 as China is required to meet the terms of an agreement on quotas with the World Trade Organization signed in 2012, valid for five years.

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“What domestic filmmakers need to do is to improve their own quality, particularly making more ‘high-concept’ movies,” the report said, cited on the Xinhua news agency.

The most successful foreign movie in China this year was Transfomers 4: Age of Extinction, with $319.58 million in receipts, while the lowest sales for a revenue-sharing movie were $110,000 for Mandela.

Domestic movies put in a strong performance however, with domestic movies such as Ning Hao‘s Break-up Buddies taking $190 million and The Monkey King earning $170 million.

China’s box office receipts were up 36 percent at $4.76 billion last year, while North America registered a six percent drop.

Of the box office figure, 54.5 percent was generated by domestic products, despite the success of Transformers: Age of Extinction.

There are “blackout” periods where Hollywood movies are not shown, and censorship rules out some movies altogether, but generally foreign movies are having an easier time of getting access to the world’s second biggest film market.

Entgroup estimates that China’s film industry generated more than 50,000 jobs both directly and indirectly in 2014, for an output of $11 billion, and the fact that all six majors now had significant presence in China was a sign of the country’s growing influence.

When it comes to financing, European directors are also turning to China rather than to Hollywood, said the report, citing French director Jean-Jacques Annaud‘s Wolf Totem, a co-production between China and France, as an example.

And by the end of last year, ten countries have co-production agreements with China.

Twitter: @cliffordcoonan