Hollywood Not Making Nearly As Much Money From China As You Think

By Katey Rich 2013-07-30 11:56:21discussion comments
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So many major Hollywood films are made these days specifically to cater to China, whether casting Chinese actors, shooting scenes exclusively for Chinese audiences or recreating Chinese architecture in the middle of American locations. Chinese moviegoing audiences are growing exponentially, and given strict quotas on how many non-Chinese features can be shown in the country, American studios are encouraged to bend over backwards to appease Chinese censors, to the point that audiences elsewhere in the world-- including here in the States-- can be basically an afterthought.

You would assume that all these Chinese influences would result in major cash for the studios-- why else do they do anything?-- but a report at The Hollywood Reporter says that's not actually working out so well. The China Film Group, a state-run organization that is the only importer of foreign films in the country, has reportedly stopped paying Hollywood studios their share of the profits from films released since late 2012, which includes major hits like Man of Steel and the heavily China-targeted Iron Man 3.

The reason for the dispute is a lot less shady, and a lot more common, than you might think. They're basically fighting over a 2% tax, which the Chinese government has levied and the China Film Group insists the studios ought to pay; the studios, naturally, think they shouldn't, and are citing a World Trade Organization agreement between Vice President Joe Biden and Chinese Preident Xi Jinping to back them up. Chris Dodd, the President of the MPAA and former Senator, is reportedly working on a solution-- gotta love those politicians-- but in the meantime the studios are owed a significant chunk of money. Studios receive about 25% of the box office from China, which THR estimates would mean more than $31 million for Man of Steel, The Hobbit: An Unexpected Journey and Jack the Giant Slayer-- all Warner Bros. films. Disney would be owed more than $30 million for Iron Man 3 alone, since it was a massive hit there. All of these movies made far more than that in the United States alone, but think about what it means for something like Pacific Rim, which is opening in China soon and lingers right on the edge of being a flop or a hit.

Ultimately these kinds of disputes don't affect moviegoers at all, either in China or anywhere else-- the governments and studios will work things out amongst themselves eventually, and if they do pass the cost down to moviegoers, it will all be masked in some fuzzy math that we grudgingly accept as the cost of going to the movies. But as Hollywood continues to focus so much on China, disputes like this may become more common and trickier to resolve, and may determine just how much major studios are willing to court Chinese audiences in the future. I'm not saying Robert Downey Jr. should go ahead and start learning Mandarin… but he might want to write a "Rosetta Stone fee" into his next big contract, just in case.
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