Lure of China pacts them in

Four nations eye co-prod'n treaties; U.K. deal in flux

China hopes to sign four new co-production treaties by year's end as filmmakers from Australia, Britain, France and India try to compete with Hollywood in the world's fastest-growing movie market.

On the sidelines of the Festival de Cannes, Miao Xiaotian, vp at China Film Co-Production Corp., said China, which now has co-production treaties with Canada and Italy, also hopes soon to discuss treaties with Japan and South Korea.

"When foreign filmmakers come to China under treaty, their governments give them tax breaks, they save money on cheap production and they build good relations," Miao said. "This is the only way to compete with Hollywood in Asia."

A typical co-production treaty of about five pages spells out such things as the number of nationals from each country who must be employed by a co-produced film and what percentage of the film's budget each country must cover.

China awaits the return of a signed treaty from Australia and is hopeful the British one will come soon, Miao said.

This week, U.K. Culture Minister Tessa Jowell was here to talk up the British co-production treaty with South Africa, which gives tax breaks in both countries. Asked about the China treaty, Jowell said it was ready to go but then recanted, saying it was still being negotiated.

China won't offer tax breaks, Miao said, offering cheap skilled labor and unique locations instead, and British producers say that the Chinese side has been intractable.

But a lack of subsidies from China has not thinned global interest in tapping the country's boxoffice growth, up 25% in 2006 to $328 million.

China has added 300 screens during the past five years, and growth is expected to continue as the economy boils in the run-up to the 2008 Beijing Olympics, said Yang Buting, chairman of China Film Promotion International.

It's little surprise, then, that the Chinese forum at Cannes on moviemaking in China was well-attended.

"China is very important, and I'm here because I know nothing about it," said Argentine producer Ricardo Preve, whose film "Mondovino" was an official selection at Cannes in 2004.

China has strong pent-up demand for entertainment because of decades of strict media control and a limit of 20 imported films a year. Co-productions, however, skirt the quota in exchange for ceding their final cut to censors in Beijing.

Still, Preve said he'd like to expand on his body of work about the last nights of the lives of famous people by making a film about China's last emperor.

For newcomers to China, the process could be improved through simplification, said Gordon Platt, director of international policy at Canada's culture ministry, which signed its treaty with China in 1987.

"It's still very complicated for Western producers to navigate all China's regulations and simply to find out who does what," said Platt, who will visit the Shanghai International Film Festival next month.

Despite its difficult reputation, the State Administration of Radio Film and Television increasingly is seen as less of an obstacle, so much so that some Chinese producers are ambivalent about it and co-production treaties.

"Governments don't see the markets the way we do," said Hou Li, GM at Beijing-based Cheerland Films, the sole financier of Hong Kong director Ann Hui's "The Postmodern Life of My Aunt." "If a treaty helps my films make money in the future, I won't block it." (Hou also was the Beijing-based partner for Roger Spottiswoode's "The Children of Huang Shi,'' a $20 million picture shot in China and now being edited in Australia.)

Meanwhile, a Los Angeles independent heavy is getting into the China co-production game. Backing John Woo's "The Battle of Red Cliff" — in a complex $70 million deal with the China Film Group, Japan's Apex and Taiwan's CMC — Summit Entertainment co-chairman Patrick Wachsberger said: "This is not about making movies in Asia. Making movies all over the world is one of our goals, and we'd be open to doing it again."

Gregg Goldstein and Stuart Kemp contributed to this report.