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What’s Going On With China’s Box Office?

By Kayleigh Donaldson | Film | October 20, 2017 |

By Kayleigh Donaldson | Film | October 20, 2017 |

Head over to the Wikipedia list on the 10 highest grossing films of 2017 and you’ll see a familiar series of movies. The biggest Hollywood blockbusters of the year are all there. Beauty and the Beast sits in the top spot while the expected superhero fare such as Wonder Woman, Spider-Man: Homecoming, and Guardians of the Galxy Vol. 2 make appearances. There are a couple of pleasant surprises, like Logan and It, the latter of which knocked a Transformers film off the list, much to the delight of many. The chances are you’ve seen, if not every film there, then at least the majority of them. Even in a bleak year for the North American box office, there were some guarantees.

And then you look at the number 5 spot, taken by a film named Wolf Warrior 2, and you get confused. The sequel to a popular Chinese action film, the movie took in a staggering $879m, breaking numerous Chinese box office records and becoming the 2nd highest-grossing film of all-time in a single market, behind only Star Wars: The Force Awakens. To make that kind of cash almost entirely from one country is close to unprecedented. The film has been such a phenomenon in its home nation that China have submitted it as their entry for the Best Foreign Language Film category at the Oscars. The closest equivalent for that would be if Crank suddenly became an awards season front-runner.

China’s box office has become the ultimate goldmine for Hollywood, now more so that international grosses have overtaken domestic ones in terms of importance and potential profit. Pirates of the Caribbean: Dead Men Tell No Tales flopped by US standards in its home nation but excitement from the Chinese market helped propel its worldwide gross to close to $800m (making it the 8th biggest film of the year). For many years, this was a market shut off from the world, and one places like Disney were even briefly banned from for a while. The studio faced great opposition from the country’s leadership after releasing Martin Scorsese’s Dalai Lama film Kundun, and were only allowed to return to releasing films in China after a period of grovelling (just in time for the premiere of Mulan). Now, as the country continues to play a dominant role in world politics and economics, its power is reflected in its cinematic structure.

This model of cross-cultural money making as shown itself in various ways. The chances are, if you saw the two most recent Transformers films, you wondered why the action suddenly moved to China, or why it was that country’s leadership who became the heroes, or why on earth Texas was suddenly chock full of Chinese product placement. Perhaps you saw Now You See Me 2 and questioned why the action suddenly took place in Macau. Maybe you’ve seen a major studio release with Chinese actors in minor roles, like Fan Bingbing in X-Men: Days of Future Past. Most of this stuff won’t impact the general viewer beyond a brief query, but these are concerted moves to appeal to the Asian market. Many of these films are now made as co-productions with Chinese companies, such as the involvement of the China Movie Channel’s work on Transformers: Age of Extinction, or Alibaba, of internet search engine fame, being investors in Star Trek Beyond. International co-productions are hardly new in this business - in an industry that runs up massive bills and where Summer blockbusters now regularly run into budgets close to $200m, you take your money where you can get it - but it’s still been a surprise to see how quickly Hollywood barged into deals with a market that’s big but relatively untested, not to mention shady in its practices.

This June, it was reported that the Motion Picture Association of America (MPAA) had hired PricewaterhouseCoopers the accountants to audit the books on a select number of films in the country. This was major news, albeit quietly reported, because it was Hollywood’s first step towards deciphering a notoriously murky area of business. Box office fraud had been common in the country, with reports of locally made productions receiving a helping hand from the government. Early in 2015, a Chinese distributor was caught giving away over $6m worth of tickets to the film Monster Hunt, under the pretence of ‘public welfare screenings’ (that film officially stands as the 4th highest grossing film in China). According to a 2016 report from Xinhua, numbers show that ‘at least 10% of all box office takings have been “stolen” in recent years.’ The results of the PricewaterhouseCoopers audit revealed that number to be around 9%, in part due to ‘irregularities such as revenue listed as concession rather than ticket sales, non-reported screenings and incorrect audience sizes.’ That means lost money for Hollywood, and calls into question if China’s box office power is as mighty as they claimed, not to mention whether homegrown movies breaking bank are as successful as billed.

Cracking the Chinese box office could be tough enough without the possibility that the market has moved the goalposts in order to satisfy propaganda needs. Even supposed guaranteed hits like the 5th Transformers movie failed to excite the audience it was made for. Assuming that the numbers are true, Chinese audiences are proving to be more excited by homegrown movies rather than the cheap pandering Hollywood has offered them. 7 of the 10 highest grossing films in China are Chinese productions with no American involvement whatsoever, and they’re inimitably Chinese movies in terms of their culture, politics and humour. One of the most popular films in recent years there is a Jackie Chan film named Kung Fu Yoga, and Stephen Chow’s success in the country has made him one of Hollywood’s most successful directors without having to ever set foot in L.A.

There’s also the tangerine elephant in the room complicating matters further. Donald Trump, in case you hadn’t heard, is fond of bashing the country for reasons I’m not sure he understands beyond it being easy and racist for him to do so. There have also been calls from across the aisle for America to regular major Chinese investment to the country to pressure the government into acting further on North Korea’s nuclear program. If blocks are put in place, there’s no way Hollywood won’t be hit, and they’re struggling enough with questionable deals as it is. Paramount, who have suffered greatly over the past few years from major financial losses, have a financing agreement with Huahua Media, but this year Huahua missed out on their annual payment to the studio. If that continues, along with under-performing blockbusters like their previously reliable Transformers franchise, then one of the icons of Hollywood could crumble.

China’s government have promised to further regulate their national box office to prevent future cooking of the books, which will be a relief to Hollywood, who receive 25% of the box office on its films in the country and are hoping that number will go up. After a disastrous Summer, the industry needs all the help it can get. The problem is that China’s profits have plateaued over the past couple of years and it’s still a Wild West of a market with no long-term history or guarantees to put investors’ minds at ease. This is a bubble that could burst at any time, yet one that Hollywood continues to heavily invest in. Perhaps the industry that sees Rotten Tomatoes as the ultimate evil would care to look further afield for the root of their problems.

Kayleigh is a features writer and editor for Pajiba. You can follow her on Twitter or listen to her podcast, The Hollywood Read.

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