Hong Kong Filmart Abuzz With Talk of China Market Liberalization

Industry insiders at the annual market discuss a slew of recent developments that seem designed to make China a more open and hospitable market, but some remain cautious.

HONG KONG – The possibility of liberalization of mainland China’s distribution system, news of a simultaneous U.S. and China launch for Johnny Depp’s Transcendence coupled with the sight of Scarlett Johansson and Samuel L. Jackson selling Captain America: The Winter Soldier at a Beijing shopping mall, the buzz at the annual Filmart market is all about how the world’s second-largest film market is becoming a more open and hospitable place.

The destiny of Hong Kong’s film business is inextricably linked to that of Mainland China, and developments north of the border are closely watched in the territory as just about everyone seems to have just come back from Hollywood for talks.

The last few weeks have seen a lot of activity, with Shanghai Media Group, China’s second-biggest media group, inking a multi-year deal with Walt Disney Studios, and Huayi Bros announcing plans to inject up to $150 million into former Warner Bros. top executive Jeff Robinov’s Studio 8.

PHOTOS: Inside Hollywood's Surprise Trip to China's Huading Awards

Meanwhile, the state-backed China National Culture & Art Corporation (CNCAC), which is linked to the Ministry of Culture, believes it is set to be awarded a theatrical distribution license, breaking China Film and Huaxia’’s monopoly on distributing revenue-sharing movies in China. Senior government officials from the Ministry of Propaganda are expected to announce the deal here on Thursday.

Sci-fi thriller Transcendence will open in China at the same time as the United States on Apr. 18, and it will be the only territory where the film will be screened in 3D, Beijing-based studio DMG, co-producer of Transcendence with Alcon Entertainment and Warner Bros., told The Hollywood Reporter.

DMG has been successful in selling its movies in China -- Iron Man 3 made box-office revenue of $125 million last year, and the new movie will unspool in 2D, 3D, Imax and Dmax on an as-yet unspecified number of screens.

China raised the number of foreign films that can imported on a revenue-sharing basis to 34 in 2012, and sources recently said that there are plans to raise the number further.

Contacted by The Hollywood Reporter, a source confirmed that CNCAC had applied for the qualification to import films, but wasn't sure whether it would mean an increase in the 34-films quota or if the number would be split between CFG and CNCAC. CNCAC currently imports and distributes plays, music and dance performances.

PHOTOS: 25 of the Most Anticipated Foreign Films of 2014

At a forum in February, Lu Changyu, head of the CNCAC, said the company's application for a license to import and distribute foreign films “has received full support by the Ministry of Culture of China, CPCCC Publicity Department and SAPPRFT, and the license will be effective at the beginning of the second quarter of 2014.”

Many industryites were urging caution back then. One producer said the details of the deal remained "very murky,” adding: “I will only believe this is true when there is a formal announcement from a government authority."

Another source, speaking on the fringes of the Hong Kong market, said that it wasn't clear how a branch of the government could become a distributor as there were structural issues involved. “And maybe if they get a license, then I want one, too," that person said. "We will all try and get one. We would all like to have a license to import movies on a revenue-sharing basis."