The Rise and Fall of Hollywood’s Love Affair with China

The Great Wall banner (cropped)

For many years now, the overseas box office has been the life-raft for many a major Hollywood production. The safety net of foreign investments, international cash flow and an expanding marketplace has ensured that studios have the potential to see their profit margins rise into the billions. Once upon a time, cracking the billion dollar threshold was a fantasy; now, it's the expected endgame. A large part of that strategy comes from a burgeoning relationship with audiences and investors in China, where the country has seen its own box office averages skyrocket over the past five years.

A country that was once largely shut off from the rest of the world is now a crucial player in global politics and economics; in the film world alone, it's already the second largest movie market. That's garnered incredible profits for studios like Disney and Warner Bros., who have seen films like Zootopia and The Fast and the Furious franchise become record breaking hits in part because of Chinese audiences' enthusiasm. This year, The Fate of the Furious became the third highest grossing film of all time in the country, soaring past 2.669bn yuan. In 2015, gross revenues in the country reached a staggering $7bn, close to double that of 2013. Eight months into 2017, box office returns in North America are down 3%, thanks to a middling Summer and under-performing mega-movies like Transformers: The Last Knight. That makes the need for China's money all the more crucial.

The country offers a passionate viewer-base that has led to the nation becoming a necessary part of business in Hollywood. This is something most non-Chinese audiences probably won’t notice unless they’re looking for it, but the influence appears in small ways: A drop of Chinese product placement here and there (most notably in the later Transformers movies, as the 4th film in the franchise, Age of Extinction, is the 6th highest grossing film of all time in the country); a few setting changes to prominent Chinese locations like Macau (as seen in Now You See Me 2), and a number of recognizable Chinese stars joining the ensembles of blockbusters, from Jing Tian in Kong: Skull Island to Donnie Yen and Jiang Wen in Rogue One.

China’s influence has been helpful to Hollywood in other ways, including much-needed cash flows to increasingly costly productions. Transformers: Age of Extinction, was co-produced by the China Movie Channel. The Wanda Group, China's biggest private property developer and owner, not only own a majority share of AMC Theatres but also acquired Legendary Entertainment in 2016 before announcing a partnership with Sony Pictures Entertainment. Alibaba, of internet search engine fame, now has a minority stake in Amblin Entertainment and was a key investor in films like Star Trek Beyond and Mission: Impossible - Rogue Nation. Even Disney is making good deals, a marked contrast from the late 1990s when the studio was banned from the country after releasing the Dalai Lama biopic Kundun. :Now, they’ve opened up Shanghai Disneyland and rebuilt a formerly frosty relationship (and conveniently kept Kundun out of the spotlight just in case).

None of this is especially new or shocking in terms of how Hollywood works or makes money. Investments have always come from unusual sources and the international market always played its part, although it used to be more European focused. What makes the China connection so different is the speed with which it has evolved, the sheer amount invested into it, and how much the industry, always so American focused, has shifted to cater to the country.

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