The Chinese market cannot get enough of American action movies. So far in 2014, three of China’s top five of box office films have been: Transformers: Age of Extinction, X-Men: Days of Future Past, and Captain America: The Winter Soldier. Ticket sales for these three films, taken together, have exceeded $533 million, illustrating how important the Chinese market is to Hollywood’s revenues.
China is the second largest film market in the world and is on track to outgrow the US market by 2020. According to a report by Ernst and Young, China’s media and entertainment industry is estimated to grow at 17% each year between 2010 and 2015. Even though China regulates the number of foreign films screened domestically, Hollywood is finding ways to access the Chinese film market.
China has restricted the number of foreign films that can play in its theaters to 34 per year, an increase from the pre-2012 quota of 20. China signed a five year agreement on their current quota system with the World Trade Organization, which will expire in 2017. With the US film market stagnating, these renegotiations will be very important for Hollywood.
China’s hesitation to allow more foreign films comes from a desire to protect the domestic film industry. Lu Hongshi, Vice President of the China Movie Channel, said, “Chinese government and filmmakers would do their best to avoid things opening up too quickly, which could be a disaster for domestic film.”
Several Hollywood films, such as Iron Man 3 and Looper, were partially filmed in China,which allowed them to get around the quota. US movies filmed in China not only have easier access to the Chinese market, but also may gain access to release windows normally reserved for domestic films.
In the US, major films are often announced a year in advance to avoid conflicts wth other film companies’ releases. However, in China the state-owned China Film Group decides when major films are released and they often release two Hollywood films on the same day to limit their respective revenues. Yet when a movie is released in a domestic slot, the China Film Group ensures it receives the full spotlight.
Ethan Kannel is a Research Intern at the East-West Center in Washington and a junior at Cornell University