Inside the 'Soft Power' Smackdown

2012-04 BIZ China Illustration H IPAD

The dominance of western brands in China has long been a sore spot for the country's leaders. Chinese authorities have begun to take greater notice -- and umbrage.

Why the president of China's apparent call for a diminishment of Western entertainment very likely won't matter.

The dominance of western brands in China has long been a sore spot for the country's leaders. You can't walk through a Chinese commercial district without bumping into an Apple or Prada store occupying the city's finest prime real estate. The Internet is awash with American movies and TV series, offered via legitimate and illegal means on China's wildly popular streaming video sites. But the reverse surely can't be said for Chinese culture industries in Paris, London, New York or L.A. To wit: Can you think of a single global Chinese brand?

Chinese authorities have begun to take greater notice -- and umbrage.

Writing in an influential Communist Party journal Jan. 1, President Hu Jintao lamented how his country's "soft power" footprint isn't nearly commensurate with its newly minted economic might. He went on to advocate an escalation of cultural production at home and abroad.

Taking Hu's rhetoric at face value, how is the U.S. entertainment industry likely to fare in the looming "soft power" smackdown with China? As things stand, Hollywood has a commanding lead, competing strongly within China and dominating on the global stage.

With more than 1,400 screens being added each year, the Chinese box office again made remarkable gains in 2011, growing 29 percent from the 2010 tally to hit $2.09 billion. But Chinese-made films took only 54 percent of that total, and six of the top 10 pictures were Hollywood blockbusters, with Transformers: Dark of the Moon ($172.9 million), Kung Fu Panda 2 ($96.8 million) and Pirates of the Caribbean: On Stranger Tides ($73.8 million) finishing first, second and fourth, respectively (this even with tough restrictions on Hollywood imports).

Meanwhile, the Chinese film sector's efforts to expand its reach have so far floundered. In October, the nation's two largest private film concerns, Huayi Brothers and Bona Film Group, each acquired a 20 percent stake in Los Angeles-based China Lion Film Distribution. Thus far, China Lion's performance has been less than extraordinary. Director Feng Xiaogang's disaster drama Aftershock grossed $96 million at home in 2010 but managed only $63,000 in a limited U.S. release. The company's best U.S. showing is $420,000 for the romantic comedy If You Are the One 2 in 2010.

And even though Zhang Yimou's The Flowers of War has grossed $89 million in China, it has generated meager awards buzz in Hollywood, where it failed to make the Academy's shortlist in the foreign-language category (the extent to which Flowers owes its success to the presence of A-lister Christian Bale in the lead is yet another point in Hollywood's favor).

Nevertheless, it appears China's Hollywood ambitions are still alive, thanks to recent reports that a consortium led by Chinese entrepreneur Bruno Wu is in preliminary talks to acquire both Summit Entertainment and Miramax owner Colony Capital.

A move like that would surely bolster president Hu's soft power campaign, but in a typical contradiction, state regulators have been moving in the exact opposite direction, tightening their grip on creative freedom. On Jan. 1, a new rule restricting the number of popular "entertainment programs" allowed to air during primetime took effect, cutting weekly reality TV programming from 126 shows to 38. In statements accompanying the ruling, regulators deemed a number of variety shows, talent contests, game shows and dating competitions "excessively entertaining" and "vulgar." This was followed by a government mandate that all users of the Twitter-like microblog Weibo must register accounts under their real names in an effort to quell "improper" discussions.

Then there's the troubling fact that many of China's most vibrant artists also are political dissidents. "China has been talking about enhancing its soft-power project for quite some time, but its attitude toward its most internationally respected artists [like embattled art-world provocateur Ai Weiwei] has been detrimental to that very goal," says David Bandurski, a researcher at Hong Kong University's China Media Project.

So while China handicaps its own creativity through rigid censorship guidelines, Hollywood continues to carve into the swelling Chinese domestic market. Eager to get in on the ground floor, several Hollywood studios have partnered with Chinese companies. The key for shingles such as Endgame Entertainment and Relativity Media -- both of which have signed innovative co-production deals with Chinese counterparts to work around the nation's import quota -- is that projects granted co-production status are categorized as domestic films, meaning they aren't subject to the quota and can take home as much as 40 percent of grosses (foreign films accepted under the quota typically are allocated 13 percent to 15 percent).

What does China get out of the co-production model? Not much. While Hollywood taps an established filmmaking infrastructure, talent and financing -- and gets an inside guide to the nettlesome censorship approval process -- China's upside is more ephemeral. From a technical perspective, China doesn't need help; the country has been making movies for more than 100 years. It's original content that China needs, and given censorship restrictions, "borrowing" from the West seems the only future route for Chinese entertainment.