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How China rose to become the world’s biggest film market

LiveMint logoLiveMint 28-08-2017 Lata Jha

New Delhi: Released in Hong Kong last Friday, Aamir Khan’s blockbuster sports drama Dangal notched up Rs2.95 crore at last count, opening across 46 screens, the widest so far for an Indian film in the country. Dubbed in Mandarin as Shuajiao Baba (Let’s wrestle, dad!), the Disney production had made nearly Rs2,000 crore (about five times its India earnings) in Mainland China earlier in the year, proving that Indian films can see a smooth release and substantial success in the Chinese film market.

The success story is not just limited to Bollywood. Earlier this week, China’s own nationalistic action flick Wolf Warrior 2 became the first film in the country to cross the 5 billion yuan mark, adding $83.7 million to its earnings over the week to bring its box office total to $765.6 million. That, as trade experts pointed out, is higher than the domestic total for James Cameron’s science fiction blockbuster Avatar, which had made about $760 million in 2009. Earlier this year, Hollywood’s release, Vin Diesel-starrer Fast and Furious 8 had notched up $192.1 million in its opening weekend in China, nearly double of what its debut made in the US and Canada.

Ten years into its massive screen expansion plan, despite the government mandate that allows only 34 non-Chinese productions to release in the country each year, the Chinese film market is giving all other industries a run for their money. And its 41,000-strong screen count remains primarily responsible for that.

“In case of China, it’s not like something cropped up out of nowhere. We, in India, started taking notice after Dangal. But the market always had potential,” said Utpal Acharya, founder of film production, distribution and marketing company Indian Film Studios. “With 41,000 active screens, Dangal’s equivalent of China would release in at least 25,000-30,000 screens. The smallest release for an art, non-commercial film would be 3,000-4,000 screens. In India, our biggest films release in 4,000 screens,” said Acharya.

Hollywood, which mostly releases subtitled versions of its films, too has realized that China has a huge appetite to consume movies as a form of entertainment, Acharya said. Compared to the US or Europe, where the number of youth is declining, China has a population of more than 300 million under the age of 18 years, according to data from the United Nations Children’s Fund. While ticket price in the country remains $10-12, the same as the US and Europe, what is making a difference is the disposable income available; per capita gross national income in the country as of 2012 is $5,740.

“Also, in China, like south India, movie-watching is a phenomenon, the youth wants to go and watch any good movie over the weekend, be it Chinese or Indian,” Acharya said.

But the picture hasn’t always been this rosy.

“Before 2000, the box office for all of China would be less than $200-400 million annually,” said Ming Chow, chief executive officer at Chinese film production and distribution company More High Film Co., Ltd and also a former employee at Chinese multinational Wanda Group, which owns 80% of the country’s multiplexes. “It was only after Zhang Yimou’s Hero became a big hit in 2002 that the government realized that the movie market was going to be huge and started focusing on this area.”

The period thereafter was followed by tax incentives from the government for private companies to enter film production and exhibition. Today, while the exhibition sector is dominated by the Beijing-headquartered Wanda Group, production has found its heartland in studios like Wuxi. Even an American studio like Universal Pictures has an office in Shanghai today. Most recently, to counter the 34 foreign film quota in their country, companies, including China Film Corp., have started co-producing Hollywood films like Fast and Furious 8, ensuring a smoother release and better returns in the key market. Early this year, China also introduced a new tabulation system that takes online booking fees into account when considering the total box office collection of a film.

“In China, 85% of the movie tickets are sold online. That makes online word-of-mouth more important to the fate of a film than in many other countries especially now because the average moviegoer tends to be younger,” Chow said.

Lessons for India

The lessons from the Chinese film market for India are many. Straddling exorbitant real estate prices and government red-tapism, land procurement for cinema chains in India remains a nightmare.

“In China, cinema is made in one language whereas we are broken into multiple industries (Hindi and regional),” said Shobu Yarlagadda, co-founder and chief executive officer at Arka Mediaworks, the production house behind the Baahubali franchise. While Baahubali: The Beginning had made Rs7 crore in China, Arka is currently planning a release for Baahubali 2: The Conclusion.

“The biggest problem I see with Indian cinema is that apart from the need for greater screen penetration, there is a decline in single cinema screens. It’s got to do with a lot of government regulations which are state-specific and then in the south, there are restrictions on ticket pricing and heavy taxation even now with GST,” said Yarlagadda.

Way forward for China

Even as China leads the way as far as screen expansion goes, it still has much work to do as far as content is concerned, according to experts. Local Chinese films are stuck in the typical mythological or costume drama realm where princes and dynasties dominate. That explains the success of a human tale like Dangal and the ordinary performance of a spectacle like Baahubali.

“As far as film production is concerned, China can really learn a lot from Indian movies,” Chow said. “Bollywood is already very developed in all aspects of production, be it direction or design. The one disadvantage for India is the fragmentation in language. But they are quite open to English-language films so if more people take to those, the potential will be much bigger than it is now.”

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