China Blocks Banks From Financing Dalian Wanda's Foreign Acquisitions


The order appears to retroactively apply to six of Wanda’s largest overseas deals, including the buyout of Legendary Entertainment and AMC Entertainment.

Chinese billionaire Wang Jianlin’s cash-flow woes could be on the rise. 

The Chinese government’s top banking regulators have ordered the country’s largest financial institutions to stop lending to the tycoon to finance his overseas entertainment acquisitions, according to a document seen by The Wall Street Journal. 

Beijing officials are understood to have convened a meeting with the executives of China’s largest financial institutions on June 20, where the bankers were informed that six of Wanda’s largest overseas acquisitions — including the buyout of AMC Entertainment in 2012 and Thomas Tull’s Legendary Entertainment for $3.5 billion last year — were subject to the government’s restrictions on capital outflows last year.

More to come… 



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Jim Gianopulos in Talks to Build Wanda's Legendary Into Full-Fledged Studio (Exclusive)


The former Fox chief is being asked to oversee a dramatic expansion of the existing production company.

With the studio business going through maximum instability, former Fox film-studio chief Jim Gianopulos appears to be in play, with China’s Dalian Wanda Group said to be courting him to run Legendary Pictures.

Even before Wanda ushered out Legendary founder Thomas Tull on Wednesday, sources say Wanda was in talks with Gianopulos with a promise that Legendary could be poised for a dramatic expansion, turning it into a full-fledged studio with expanded production and, eventually, marketing and distribution. (Initially, its films would be distributed through other studios.)

According to these sources, Mary Parent would remain in place as the creative head of the studio. She previously worked in association with Gianopulos when she produced The Revenant, which Fox distributed. An industry source with knowledge of the landscape in China said such an expansion would not be easy for Wanda to execute. And Gianopulos, who departed as chairman and CEO of Fox Filmed Entertainment last year, has been mentioned for other top posts in Hollywood, including at Sony Pictures Entertainment and Time Warner.

Gianopulos could not be reached for comment. A representative for Wanda said, “We don’t comment on rumors.”

Wang Jianlin, chairman of Dalian Wanda, has made it clear he wants his company to take a bigger role in the American film business. It bought up the AMC Entertainment theater chain in 2012, had been in talks to buy a 49 percent state in Paramount and last year acquired Legendary Entertainment for $3.5 billion. While Wang has talked of acquiring an existing studio, he has said if that proves impossible, he would simply increase Wanda’s investment in other film production.

Jack Gao, Wanda’s CEO and senior vp international investments and operations, was put in charge of Legendary on an interim basis while Wanda seeks a full-time CEO. Gao said in a recent statement, “As we move forward, Wanda aims to transform Legendary into a next-generation studio of the future with a far-reaching creative and global platform. We look forward to working with the creative team to manage our already viable film slate with more to come in the near future.” Gao previously hired Adam Aron as CEO of AMC to turn the theater chain around.

Legendary, which began as a financing vehicle for investing in big-budget films, such as Warner Bros.’ The Dark Knight and the Hangover franchise, became an independent studio in 2013 based at Universal before selling to Wanda. Legendary’s past major tentpoles include Godzilla, Pacific Rim, Jurassic World and Warcraft.



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Wanda's Wang Jianlin Warns Against U.S. Protectionism in Entertainment Sector


“If China were to retaliate it would be bad for both parties — I do not wish to see that scenario materializing,” China’s richest man said during a Q&A session in Davos.

Addressing the global elite in Davos, Switzerland, China’s richest man urged the U.S. not to erect barriers against Chinese investment into Hollywood.

“That would be a step back,” Wang Jianlin, chairman of property and entertainment conglomerate Dalian Wanda Group, said during a Q&A session at the World Economic Forum on Wednesday. “That will be about protectionism emerging in the U.S.,” he added.

Wanda’s ongoing buying spree in Hollywood, including last year’s acquisitions of Legendary Entertainment and Dick Clark Productions, has raised alarm among some U.S. politicians. Bipartisan lawmakers, including the incoming Senate minority leader Chuck Schumer, have called for closer scrutiny of such deals to see whether they are being directed by Chinese government interests.

Wang argued that his investments in the U.S. have been “a good thing,” however. “We don’t interfere with the content — I just want the profit,” he said.

“I’ve proven that with the purchase of U.S. cinemas,” he continued, referencing his 2012 takeover of American exhibitor AMC Entertainment. “They’re still showing U.S. films; there is no change.”

As he has on numerous occasions in the past, Wang also noted that he’d like to buy one of the six major Hollywood studios if any were to come up for sale. “I’d be a happy buyer,” he said with a smile.

Much like Chinese President Xi Jinping did during a speech in Davos on Wednesday, Wang also suggested that any escalation in trade tensions between the U.S. and China would only hurt both sides.

“The main growth market for English-language films is actually China, not anywhere else,” he said. “So, if China were to retaliate, it would be bad for both parties. I do not wish to see that scenario materializing.”

Wang said he has asked MPAA Chairman Christopher Dodd to carry a message to President-elect Donald Trump — “‘Let’s leave the entertainment industry alone, no war please.'” 

Of course, many will note the irony of China’s president and richest man arguing, in back-to-back appearances, for a drawdown in protectionist trade practices. China’s media and entertainment sector is one of the world’s most highly restricted. The country allows just 34 foreign films across its borders each year on revenue-sharing terms. And Beijing outright forbids foreign companies from buying and controlling local media firms — precisely what Wang has done in the United States.

Highlighting this fact, Senator Schumer recently argued in a letter to the U.S. Treasury Secretary for greater reciprocity around trade with China. According to the Wall Street Journal, the Trump transition team, meanwhile, has circulated a document proposing additional review of any foreign transaction that couldn’t be replicated by a U.S. company going the opposite way— terms that would entail any Chinese acquisition of a U.S. media firm, given that China blocks all such deals on its turf.

Experts say China is very unlikely to allow any foreign ownership of media, which is considered a sector of the utmost sensitivity by the ruling communist party. But many observers do expect the country to begin allowing more U.S. films into its market this year.

“More Hollywood films coming into the market is also good for China, because it benefits local theater owners and it helps the overall box office expand, which feeds into the narrative of a rising China becoming the biggest market in the world,” says Stan Rosen, a professor of political science at the University of Southern California. “But opening up local media to foreign control is not beneficial to China’s leaders, so I don’t think anyone sees that happening.”

The U.S. and China are scheduled to begin negotiating a new trade agreement on film imports in February.

 



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'The Great Wall': Why the Stakes Are Sky-High for Matt Damon's $150M Chinese Epic


From white-washing allegations to bridging cultural barriers, the biggest Hollywood-China co-production ever presents risks — and huge potential upside — to everyone involved.

Legendary Entertainment’s much-anticipated period monster epic The Great Wall opens across China on Friday — and the whole industry will be watching to see how the unprecedented fusion project pans out.

With an estimated budget north of $150 million, the film is the biggest Hollywood-China co-production ever, designed to bridge the world’s two largest box office territories. 

The Great Wall is directed by Chinese maestro Zhang Yimou (Red SorghumHero, House of Flying Daggers) — his first picture in English — and stars Matt Damon, Willem Defoe and Pablo Pascal, along with a phalanx of A-list Chinese talent, including Hong Kong’s Andy Lau, local heartthrobs Lu Han and Lin Gengxin, and half a dozen others.

The film tells an inventive origin story about the world-famous cultural artifact of its title — that China’s Great Wall was built to defend against a far greater threat than warring nomads from the North. Damon plays a British mercenary who joins the Chinese to fight for humanity against an army of Taotie — monsters symbolizing greed from ancient Chinese mythology — who wage an attack every 60 years.

Co-produced by Legendary, Le Vision Pictures, China Film Group and Universal Pictures, the film opens in North America on Feb. 17.

From potential casting scandals to box office slowdowns to high-stakes corporate buyouts, here are five reasons why the The Great Wall offers both big risk and major potential upside to all involved.

A Monumental Test Case

The Great Wall fits into a potentially lucrative mold that few big films have actually managed to make successful. The film was developed as a U.S.-China co-production — and it has received that difficult-to-land designation from Chinese regulators.

Official co-pros are entitled to better revenue sharing terms than imported films usually receive in China — 43 percent of after-tax ticket sales, instead of the usual 25 percent. In exchange, they must feature large numbers of Chinese cast, employ high-level Chinese production crew, shoot in the country and tell a story involving Chinese cultural elements.

Given that North America and China are the largest movie distribution territories in the world, jumping through these hoops makes a lot of sense on paper, but studios have found it daunting to meet the model’s demands, while telling a story that straddles disparate cultures and still works well enough to succeed on a global basis. Tentpoles like Iron Man 3 and Transformers 4 entertained the idea of pursuing co-production status before scrapping the idea because of the depth of Chinese culture the movies would need to include to qualify. The Forbidden Kingdom — from 2008 — was one of the last big U.S. films to get China co-production status.

All of which is to say, the whole industry is watching to see if Legendary and Le Vision can make it work. If the film does big business in both middle America and the Middle Kingdom, expect more such fusions to be greenlit — if it bombs in either market, while doing tepid business in other territories overseas, big budget co-pros will continue to inspire trepidation. 

A Potential Race Scandal

It’s safe to assume The Great Wall‘s first trailer didn’t ellicit the response Legendary was hoping for. Shortly after it dropped in July, some critics suggested that Damon’s casting in the lead amounted to another case of “whitewashing,” whereby white actors are chosen for roles that should have gone to actors from other ethnicities. In a widely shared tweet, Taiwanese-American actress Constance Wu, star of ABC’s Fresh Off the Boat, wrote, “We have to stop perpetuating the racist myth that [only a] white man can save the world.”

Damon has argued otherwise, saying that his character “was always intended to be European,” and emphasizing the collaborative nature of the project, which intends to meld Hollywood and Chinese star power. “That whole idea of whitewashing, I take that very seriously,” he said during a press conference in Beijing.

Of course, no one has seen the full film yet. If Damon’s character and performance go down well with Chinese fans, his star could burn even brighter in the world’s most populous nation, where he’s already a favorite thanks to The Martian and the Bourne franchise — both local hits. If it turns out there is some merit to the white-washing characterization, he could find himself the target of more uncomfortable media attention. It’s hard to remember a riskier role for the amiable actor.

A Symbolic Release for China’s Richest Man

The Great Wall is the largest important release to date for Legendary East, the China subsidiary of Burbank-based Legendary Entertainment, which Chinese billionaire Wang Jianlin’s Dalian Wanda Group bought earlier this year for $3.5 billion. Wanda, which also owns the world’s largest collection of cinema chains, including North America’s AMC Entertainment, is understood to have bought Legendary in the interest of acquiring Hollywood-level production prowess — and also to get a piece of the international box office, where Chinese films have typically foundered, no matter how big their success in the home market (Stephen Chow’s The Mermaid made $526 million in China and about $25 million everywhere else).

Legendary’s first tentpole release after the buyout was Warcraft, which earned a huge $223 million in China, while flopping in North America ($47 million) and making minimal impact internationally — a performance, ironically, rather similar to the typical Chinese blockbuster.

Wanda and Legendary are leaving little to chance in China for Great Wall, having mounted a massive local marketing campaign involving dozens of promotional partners. But should the movie again disappoint overseas, it stands to question whether Legendary is really helping Wanda achieve its international goals. Some also have argued that Legendary has been more successful as a financier of other people’s movies, such as Warner Bros.’ The Dark Knight or Universal’s Jurassic World, than it has been as a developer and producer of its own (notable flops from the studio include 2015’s Blackhat, Seventh Son and Crimson Peak). Again, The Great Wall could be perceived as a test case.

The Master Needs a Hit

Zhang Yimou is a pillar of the Chinese film industry. Considered a key member of China’s Fifth Generation of filmmakers, his early work — Red Sorghum (1987), To Live (1994) and Hero (2002) — won him a Berlinale Golden Bear, Cannes Grand Jury Prize and Oscar nomination, respectively. He also directed the unforgettably grand opening ceremony for the 2008 Beijing Olympics.

But he’s now in need of another win. His last big international success, House of Flying Daggers, came out in 2004; and his most recent release, Coming Home (2014), was critically lauded but did middling business in China. And the last time he attempted to direct an A-list Hollywood star — Christian Bale in the WWII drama Flowers of War, opposite Chinese actress Ni Ni — the results were critically and commercially execrable. The outcome of The Great Wall could determine whether he’s handed another $100 million-plus international budget anytime soon.

Bright Spot Amidst a Slowdown?

Even more so than Zhang, the Chinese box office is hungry for a blockbuster. In the first half of 2016, box office growth slowed to 21 percent in China. That number would be considered miraculous in North America (box office grew 6.3 percent in 2015, in what was considered a huge, Star Wars-boosted year), but in China it represented an alarming deceleration from the astonishing 48 percent growth rate of 2015. In the second half of the year, things have gotten worse: the box office shrunk in September, October and November, and the industry is now flirting with he possibility of its first full-year decline in almost a decade. Industry watchers blame myriad factors — a crackdown on box office fraud, a decline in subsidies from hugely popular mobile ticketing services, changing demographics, and much else. But the most immediate cause has been a lack of high-quality local tentpoles worthy of becoming event movies. True to its title, The Great Wall represents 2016’s last hope of warding off a dire outcome.



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Wanda Chairman Warns Donald Trump About Blocking Chinese Investment in U.S.


Facing calls for greater scrutiny of his acquisitions, Wang Jianlin said actions to curb Chinese investment could jeopardize the jobs of 20,000 Americans.

China’s richest man has asked Chirs Dodd, chairman of the Motion Picture Associate of America, to deliver a message to President-elect Trump.

Wang Jianlin, the billionaire chairman of Chinese real estate and entertainment conglomerate Dalian Wanda Group, says he told the MPAA chief on Friday that any move by Trump to curb Chinese investment in the U.S. could jeopardize the jobs of Wanda’s 20,000 American employees.

“I met the president of the MPAA yesterday and he said he would like to meet Mr. Trump and asked me what I wanted to tell him,” Wang said during a forum in Beijing on Saturday. “I told him that I’ve invested over $10 billion in the U.S., employing over 20,000 people. If something goes wrong, these 20,000-plus people might be out of jobs.”

He also noted how Hollywood companies have begun to depend on China — the world’s no. 2 film market — as a key revenue driver. 

“Other things aside, in the film and entertainment industry, you have to understand that English-language films are relying on the Chinese market for growth,” Wang said. 

Over the past few years, Wang’s Wanda, which got its start in real estate development, has emerged as China’s most aggressive investor in the U.S. media sector. The company bought U.S. theater chain AMC entertainment for $2.6 billion in 2012, and it has a pending deal to merge AMC with Carmike Cinemas Inc., creating North American’s largest cinema circuit. In January, the conglomerate paid a reported $3.5 billion to acquire Legendary Entertainment, the Burbank-Calif.-based studio behind Pacific Rim and the upcoming The Great Wall, starring Matt Damon. Following a major partnership with Sony Pictures, Wang told THR in November that he planned to invest in all six of the big U.S. studios. Wanda also has a pending $1 billion deal to buy Dick Clark Productions, owner of the Golden Globes and other glitzy Hollywood awards shows.

This acquisitive blitz has begun to unnerve some U.S. lawmakers. In September, 16 members of the House of Representatives wrote a joint letter asking the U.S. Government Accountability Office to consider creating more scrutiny of Chinese acquisitions of domestic entertainment companies. Incoming Senate Minority Leader Chuck Schumer lent Democratic support to the issue earlier this month, penning his own letter to the U.S. Treasury Secretary and President-elect Trump, arguing that such buyouts should be examined more closely. He also lamented the fact that China bars U.S. firms from making equivalent media buys within its own borders. Both letters mentioned Wanda by name. 

Wang was asked about the backlash on Saturday, during a Q&A session following his speech in Beijing.

“This proves two things,” he said, according to a transcript. “First, it shows that we have some influence in the United States, otherwise [the lawmakers] would not have named us.”

Second, Wang said the U.S. Congress is a place of free speech, where lawmakers often make suggestions that don’t reflect the whole of U.S. policy intent.

“So, we will wait and watch for Mr. Trump’s attitude toward Chinese entertainment companies once he takes office,” he added.

 



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China's Wanda to Receive Further Scrutiny for U.S. Entertainment Takeovers (Report)


Senate Chuck Schumer says he’s concerned that the Chinese government is orchestrating the acquisition of U.S. media companies — an issue often raised by President-elect Trump.

Incoming Senate Minority Leader Chuck Schumer is calling for greater scrutiny of China’s aggressive dealmaking in Hollywood, lending Democratic support to an issue raised by President-elect Donald Trump and his allies.

In a letter sent Wednesday — and reviewed by the Wall Street Journal early Thursday — Schumer said Chinese acquisitions of U.S. media companies should be examined to determined whether they are being orchestrated by the Chinese government. The letter reportedly highlighted Dalian Wanda Group by name.

Headed by China’s richest man, Wanda has been on a Hollywood buying blitz throughout 2016. In January, the conglomerate paid a reported $3.5 billion to acquire Legendary Entertainment, the Burbank-Calif.-based studio behind Pacific Rim, Warcraft and the upcoming The Great Wall, starring Matt Damon. Wanda, which began as a real estate development company in China, already owns the AMC Entertainment theater chain in the U.S. and other chains around the world. In addition to inking a major partnership with Sony Pictures, Wang told THR in November that he planned to invest in all six of the big U.S. studios. Wanda has a pending $1 billion deal to buy Dick Clark Productions, owner of the Golden Globes and other glitzy Hollywood awards shows.

“I am concerned that these acquisitions reflect the strategic goals of China’s government,” Schumer said in his letter, which was addressed to Treasury Secretary Jack Lew, U.S. Trade Representative Michael Froman and President-elect Trump. 

“You can be certain that the new Congress in 2017 will work on legislation to further expand CFIUS oversight authority,” Schumer, a regular hardliner on China, went on. The Treasury Department’s Committee on Foreign Investment in the U.S., known as CFIUS, reviews foreign acquisitions of U.S. companies whose business is of national security interest. Traditionally, areas such as national infrastructure or aerospace have been the subject of CFIUS reviews, but a group of U.S. congressmen have argued for the organization’s purview to be expanded to include media and entertainment assets. 

THR has reached out to Wanda for comment. 

During the presidential campaign, Trump often said he intended to take a harder line on Chinese takeovers of U.S. companies — among other hawkish stances towards the world’s no. 2 economy. With Schumer offering bipartisan support for such scrutiny, a change to the regulatory landscape looks increasingly likely.

“While China’s government has aggressively pursued policies that encourage strategic acquisition in the U.S., U.S. companies continue to face steep barriers to market access in China,” Schumer reportedly added.

According to the WSJ, a document circulated by Trump’s transition team said that his administration would ask CFIUS to review any foreign transactions that couldn’t be replicated by a U.S. entity. Such terms would presumably entail all Chinese buyouts of U.S. media entities, given that China forbids U.S. companies from taking full control of Chinese media and entertainment interests, even though the U.S. allows China to do so. 

U.S. companies that want to access China’s growing markets, home to the world’s second-biggest movie box office, are required to establish joint ventures with local operators, the terms of which typically entail handing over operational control and intellectual property. The Walt Disney Co., Warner Bros and DreamWorks Animation each have set up a Chinese joint venture in order to operate a theme park or engage in film production in the country. Schumer characterized China’s requirements as an unfair “pay to play system.”

 



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China's Wanda Pledges $30B for Theme Parks and Related Developments


The Chinese conglomerate, headed by the country’s richest man, plans to build 15 major resorts to take on Shanghai Disneyland, Universal Studios Beijing and other competition.

Dalian Wanda Group’s multi-billion-dollar investment blitz continues.

On Thursday, the Chinese conglomerate unveiled its second $15 billion development project in one week, pledging to build a major theme park in China’s historic Xi’an Province for 50 billion yuan (about $7.3 billion). The rest of the investment will go into various developments across the region, including 19 commercial plazas.

It’s the latest front in Wanda chairman Wang Jianlin‘s campaign to unseat the Walt Disney Co. as the world’s largest tourism company by 2020.

Last week, Wanda announced a similar $15 billion development scheme in China’s Hunan Province, where it will construct another $7.3 billion theme park, plus a water park, luxury hotels, restaurants, cinemas, live performance venues and more. 

In light of their enormity, Wanda calls these developments “Wanda Cities.” Altogether, Wang has pledged tens of billions to build 15 Wanda City projects across China by the end of the decade.

China’s richest man and one of the country’s most influential business leaders, Wang said earlier this year that he intended to corner his country’s booming tourism and theme park sectors via a strategy of pure speed and scale. When asked about Disney’s $5.5 billion Shanghai Disney Resort in May, Wang said, “One tiger is no match for a pack of wolves — Shanghai has one Disney, while Wanda, across the nation, will open 15 to 20.”

 


Last week, Disney revealed that its Shanghai park has gotten off to a healthy start. The facility had taken in 4 million guests since its launch in June and it is now expected to break even in its first full-year of operation — a much faster pace towards profitability than past Disney resorts achieved.

Wang has since softened his public stance towards the foreign competition — if not his intention to eventually smother it out of China. In recent interviews he has emphasized that Wanda and Disney are friendly partners in some areas and fierce rivals in others. Wang paid a visit to Shanghai Disneyland late last month, calling the excursion “both an observation and study.”

Given the size of its investments and the complexity of the theme parks business, Wanda certainly will need to learn fast. In August, the company closed its first indoor movie theme park in the city of Wuhan for upgrades — just 19 months after its opening. Local sources said attendance had been far below expectations. 

Meanwhile, Universal Studios is building a major theme park in Beijing, and Six Flags Entertainment is at work on six branded amusement parks in China.

Wanda launched two Wanda City projects earlier this year in Hefei and Nanchang. Wanda says Wanda City Nanchang has been faring better than the one in Wuhan. In July, the company said the theme park took in 300,000 guests in June, while the overall Wanda City development had attracted two million visitors in its first six weeks.

One of the largest Wanda development projects is the group’s Wanda Movie Metropolis in Qingdao, which features the world’s largest film studio as its central attraction. Some 30 percent of the film studio is now operational — Legendary Entertainment’s Pacific Rim 2 began shooting earlier in the month — and a series of amusement parks and hospitality facilities are scheduled to open next door in 2018. During a landmark visit to Hollywood in October, Wang unveiled a generous 40 percent production incentive to try to lure U.S. productions to his studio.

Dalian Wanda Group began with — and its core business remains — real estate development. Wang is currently attempting to orchestrate a bold diversification into international entertainment, tourism and sports, as he believes the high-growth era of China’s real estate sector is now entering its twilight. Overseas, Wanda plans to build five Wanda City projects, including a $3.4 billion project in France.

But the company’s most eye-catching overseas moves have been in the film exhibition and production business. A $2.6 billion buyout of American movie theater circuit AMC Entertainment put the company on the map in 2012. On Tuesday, Wanda-controlled AMC was granted shareholder approval for a $1.2 billion takeover of Carmike Cinemas. Once combined — a review of the deal by the U.S. Department of Justice is expected to conclude this year — the company will be the biggest movie theater group in the world by far.

Its movie exhibition position secured, Wanda has been snapping up entities on the production end of the movie value chain with equal aggression. The company bought Legendary Entertainment for $3.5 billion in cash in January. A $1 billion deal for Dick Clark Productions, owner of the Golden Globes awards show and a TV production business, was announced two weeks ago. In October, Wang told The Hollywood Reporter that he planned to set up a major fund to invest billions into films produced by all of the big six Hollywood studios.

 



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Vancouver Film Industry Unveils China Focus With New Commissioner


UK transplant David Shepheard eyes more business ties and co-productions with Asia for a city already bursting with Hollywood shoots.

Incentive-friendly Vancouver, while enjoying a Hollywood production boom, is setting its sights east, to China.

“We are very focused on what’s happening in Asia,” newly-installed Vancouver film commissioner David Shepheard, the former London Film Commission head named last month as Vancouver’s first-ever film commissioner, told The Hollywood Reporter.

Tax credits, cheaper production costs and a close proximity to Los Angeles has U.S. series like Arrow, D.C. Legends of Tomorrow and Supergirl, and movies like the Ryan Reynolds-starrer Deadpool and Star Trek Beyond produced locally. And the west coast city has also seen California VFX houses like Sony Pictures Imageworks, Industrial Light + Magic and Digital Domain move to Vancouver as that city attracts Hollywood productions.

But as China is set to become the world’s biggest exhibition market in 2017 backed by cash-rich equity funds, Vancouver has hired its first film commissioner and is starting to shift its focus from Los Angeles to make inroads in Beijing and Shanghai. “The amount of (Chinese) investment being made in media companies and studios, in Los Angeles also, is changing the game. So we are very focused on what are the opportunities for a trading relationship with China,” Shepheard explained.

The new commissioner is working with the Vancouver Economic Commission’s Asia-Pacific Center as it targets new business opportunities in Japan, China and Korea. That includes local producers and post houses seeking access to China’s growing market and the financing available there.

And local players are keen to reach out to Chinese film producers hungry for foreign talent and story ideas. “We’re looking at how can we have a better relationship and do business with new players in the industry, specifically with Asian money and Asian backers,” Shepheard added.

Vancouver also wants to raise the red curtain because footloose Hollywood studios, while busy in Canada now, could just as easily turn on their heels to go elsewhere. “We all know it’s a transient business, and it moves around the world quite easily and freely,” Shepheard cautioned.

And while Hollywood execs and talent can shoot their projects in Vancouver without jet lag, the lure of China’s lucrative market could have them booking long-haul flights to the Dalian Wanda Group’s $8 Billion Qingdao Studio and other Chinese production destinations further offshore.

“There’s going to be projects wanting to come to Vancouver, as well as those seeking production relationships with China. I don’t see it as a huge competition, at the moment,” Shepheard argued. That’s because Vancouver’s Hollywood production boom shows no signs of losing steam.

As 2016 gets set to close, provisional data from the City of Vancouver’s Film Office, which oversees permitting, points to another record-breaking year. And around 1.5 million square feet of new studio space, much of its converted warehouse space outside of Vancouver, has opened its doors in the last year as Vancouver races to keep up with growing demand for soundstages.

Skydance Media, the producer behind Star Trek Beyond and Mission: Impossible, recently opened a studio complex in Surrey, B.C., inside an former newspaper plant. The facility’s five soundstages are already filled with productions like Netflix’s Altered Carbon.

Shepheard said he aims to keep North America’s third-largest production hub, after Los Angeles and New York City, busy, where possible. “We want to ensure Vancouver is promoted well and strongly to both studios and broadcasters around the world to keep this level of business going,” he said.

That effort is reflects a Canadian industry that, despite calling itself Hollywood North for its ability to consistently attract major studio shoots, has battling locales like Vancouver, Toronto and Montreal ever wary that any reduction or end to local tax credits will effectively send work elsewhere.



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UCFTI Expo: Four Surprising Lessons About Making and Marketing Hollywood Movies in China


Targeted marketing, training more native professionals, and understanding the Chinese audience were among the insights shared by experienced Chinese film industry insiders.

After Hollywood’s decades of exploration in the culturally and politically complicated Chinese market, the third annual U.S.-China Film & TV Industry (UCFTI) Expo took place in downtown Los Angeles on Nov. 2-4. Business insiders shared their key insights into this sophisticated market from a variety of angles: Why are some film markets growing fast in China, but Hollywood just does not make money there? Will an expensive wide release China recoup Hollywood?

Instead of having a wide release in China, Hollywood should strategically target specific cities

Chinese executives at the Expo repeatedly noted that domestic films as a whole still perform better than foreign imports, particularly in third- and fourth-tier cities, which have received the greatest increase in new screens and are the fastest-growing film markets in China. Audiences in these cities tend to be less interested in Hollywood films than those in tier 1 cities like Beijing and Shanghai. Hollywood, therefore should allocate more resources to those cities. “

People in tier 1 cities are willing to accept American cultures. But people in small cities don’t know much American cultures, so they don’t understand Hollywood stories,” said Jiang Defu, general manager of Wanda Pictures. “Before having a wide release in China, Hollywood needs to conduct comprehensive and detailed data analysis about Chinese audience’s preference and spend more money and energy nurturing the audience in specific cities.”

What China needs most is qualified film professionals

More than financial capital, Jiang said that what the Chinese entertainment industry lacks most is professional human resources. Although American companies employ English-speaking Chinese nationals to work in their China offices, “they actually don’t know the Chinese market at all,” Jiang said. “The Chinese market has been growing very fast without qualified professionals. Not anyone with a film dream is capable of doing this business. [The lack of qualified manpower] is a big pity for the Chinese film industry.”

Chinese audiences have developed highly discriminating film taste – thanks to piracy 

China’s rampant piracy problem has borne an unexpected benefit: By having virtually unrestricted access to a variety of films around the world, Chinese audiences have become highly experienced film watchers. “Chinese audiences are the most sophisticated, discriminating, and creative audience in the world,” said Village Roadshow Asia president and CEO Ellen Eliasoph. “They have a great appetite for every kind of film [genre] and know how to judge what is good.”

Chinese films save a lot on marketing because of the power of social media

Compared to Hollywood movies, which spend a huge proportion of their budgets on P&A costs, the marketing spend on Chinese films is a relative fraction of the whole. It’s even been possible for Chinese movies to become massive hits on virtually no marketing budget. This is because of the country’s high level of social media engagement (514 million social network users in 2016), which allows a well-liked film to go viral more easily.

This was the case of the 2014 animated film The Monkey King, whose producer ran out of funds to run an adequate advertising campaign, according to Cao Jing, counsel at O’Melveny & Myers. “But people who saw this film complimented it on WeChat. They promoted this movie voluntarily,” she said, and Monkey King went on to gross $167 million in the country. “It’s fascinating to see how much promotion came from the fan base.”

Eliasoph recommends that U.S. studios learn to save money on marketing their movies in China. “There are much smarter cost-effective ways of marketing movies than Hollywood has done in the past,“ she said. “There’s so much we can learn if we pay attention to the audiences there.”



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The Silver Lining Behind China’s Box Office Slowdown


Execs at the U.S.-China Film & TV Industry Expo optimistically see a more stable pace characterized by a focus on quality over quantity.

Chinese film executives are putting a positive spin on the country’s bearish 2016 box office.

“We’re still very optimistic [about the Chinese market],” said Wanda Cultural Industry Group head Jack Gao, speaking at the 3rd annual U.S.-China Film & TV Industry Expo on Wednesday. Noting that “there’s no way you can explode 50 percent year to year,” as the Chinese market had done through the first quarter of this year, Gao predicted a more “steady and sustainable” rate of 15 percent growth over the next decade.

William Feng, who oversees Greater China for the Motion Picture Association, explained that a big reason for the box office slowdown stems from the elimination of ticket pricing irregularities and the government cracking down on fraudulent box-office reporting. “With that big portion of fake box office being wiped out, there’s been a big drop,” he said.

Both Hollywood and Chinese executives admitted that the record-setting growth in recent years created a glut of product that wasn’t always up to standard. “If you look at the movies we were making here and sending overseas, a lot were sequels to franchises that we grew up with, but not [Chinese audiences],” said LeVision Entertainment president Adam Goodman. “We can’t just treat China’s mad growth like, ‘It doesn’t matter what we do, if we put it there, it will find an audience.’ The consumers want something that is theatrical-worthy.”

Multiple experts declared that despite the depressed box office numbers, the Chinese audience’s demand for content still outweighs supply. China’s status as the world’s second-biggest movie market comes despite the fact that its per-capita number of screens is still less than a quarter of that in the top-ranked U.S. And the country is building more and more screens (led by the Wanda Cinema Line, which expects to grow its market share by 2 to 3 percent annually), expanding access to audiences in third- and fourth-tier cities.

Driven by this growth, Gao ambitiously predicted that by the end of the next decade, China’s box office would be 2.5 times that of the United States: “The market is still growing, so it’s our job to get good content and work with Hollywood filmmakers to fill the need of that market.”

 



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