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Wanda’s Wang Jianlin On U.S. “Protectionism”: “If China Were To Retaliate, It Would Be Bad For Both” – Davos

Deadline logo Deadline 1/18/2017 Nancy Tartaglione
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Much as China’s President Xi Jinping did yesterday, Dalian Wanda Group Chairman Wang Jianlin today sounded concern and a warning over potentially increased U.S. government controls on Chinese investment. Calling the concept “protectionism,” Wang said, “The main growth market of English-language films is China. It is a major source of income… So, if China were to retaliate, it’s bad for both parties. I do not wish to see that materialize.”

Chinese investment into the U.S. “is a good thing,” Wang said, again noting he had asked MPAA Chairman Christopher Dodd to send a message to President-elect Donald Trump, “Let’s leave the entertainment industry alone. No war, please.”

Wang’s comments at the World Economic Forum in Davos come one day after the surprise announcement that Thomas Tull is exitingLegendary Entertainment, the company Wanda acquired for $3.5B in 2016. Topics covered during the Swiss Alps Q&A on Wednesday morning included Legendary (but not Tull), Wanda’s continuing Hollywood acquisitions drive — “I would be a happy buyer” of a studio, Wang said — and the calls from Washington to further scrutinize such deals.

On the point of retaliation, it wasn’t immediately clear if Wang was referring to the fact that the United States Trade Representative will begin negotiations with China on behalf of the film industry in February. Whether such a warning has any teeth is another matter.

While film is a very small part of trade, it’s also the most public. But for history’s sake, let’s recall that back in 2011, Indonesia raised an import tax on movies which resulted in a standoff as the Hollywood studios boycotted the territory by pulling their programming. The government expected its own movies to do well enough, but the business took a massive hit and rules were revised. As one industry exec has told me, were China to try and retaliate against the movies, “they’re going to screw themselves because the cinemas in China can’t survive with just local films.”

It’s perhaps notable that Wang today spoke of what he sees as a shift. Chinese audiences “prefer to see domestically produced films. It’s going to be a trend… Chinese movies focus on the emotional aspect. Hollywood is all about big scale, the U.S. saving the world. In China we don’t see films of China saving the world. Chinese films tend to talk about emotions and relationships between people… If Hollywood wants to take a larger market share, they need to learn how to cater to Chinese tastes — not just superheroes.”

The USTR talks are likely to involve the current quota on the number of foreign films allowed into China per annum. Wang was asked about the quota, and in response touted the concept of U.S.-China co-productions. “The new model of joint production has no limit for companies working with China to produce films as long as the Chinese investment is more than 30% and there are at least one or two Chinese actors in the cast. These films will not be on the control list.”

He then turned to Legendary and spoke of the recent release of The Great Wall. The film has made about $160M in China and is crossing $200M internationally. Wang called the Zhang Yimou-helmed pic “an experiment” towards a Chinese film working outside the Middle Kingdom. “Legendary invested $150M, that’s a big scale first attempt of a Chinese movie going to the world stage… It’s hitting $200M. If it can hit $400M or $500M around the world, it will be a success and means that a Chinese story can be a box office hit.”

The film’s box office thus far is lower than hoped for, and it’s unlikely it gets to the heights that Wang mentioned, although there are several more markets still to roll out, including North America. (Wanda recently posted its first sales decline in 11 years, while income from its global film operations was up 31.4% in 2016.)

Talking about his very public desire to own one of the big six U.S. studios, Wang said he believes that because Wanda owns the world’s No. 1 movie theater chain, “We would be able to recover significant costs from China… We started with circuits in America and Europe and China and are already number one. Therefore, distribution would be easier. It is my estimate that if we were to buy something in Hollywood we would stand a better chance to be more successful than others.”

While he’s had a tough time finding a seller, he promised, “It would still be a company run by Americans. We don’t interfere with content. I just want profit.”

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