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China may have Hollywood dreams

BEIJING – As China continues to flex its economic muscles, there are rumblings that it could begin to encroach on an all-American commodity: the Hollywood blockbuster.

China’s ability to exert control over major industries has raised alarm bells recently. China allegedly banned the export of rare earth minerals to Japan over a recent diplomatic spate, raising fears in Washington that their dominance of the industry could affect America’s ability to build computers and weapons. And a group of state-back Chinese companies’ effort to take over a major fertilizer producer, which could affect world food supplies, has also gotten American lawmakers talking.

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A couple walks pass a poster for the Hollywood disaster movie "2012" at a theater in Beijing in Dec. 2009.

Could American movies be next?

Raymond Zhou, an editorialist for China Daily, China’s English language newspaper, predicted in an August editorial that it may be sooner rather than later that China’s movie box office sales surpass those of the U.S. He also suggested that it’s conceivable we may see a major Hollywood studio owned and controlled by Chinese investors soon.

It is easy to see why the always image-conscious Chinese government would support a Chinese company taking over a U.S. studio. China has long admired the power of Hollywood to project American soft power and shape international perceptions of the United States.

A major Hollywood studio could help China burnish its standing internationally and combat what it views as the West’s framing of the global dialogue with Western principles and morals.

Growing numbers
In fact, many believe that China holds the keys to Hollywood’s long term prosperity. A quick glance at the numbers explains why.

In 2009, the U.S. recorded $10 billion in total receipts and China reported $900 million. China’s sales are still modest when stacked against those of the U.S., but compared to just a few years ago, they’ve grown considerably. In 2004, China’s sales represented just about $200 million.

That’s a big jump – especially considering that China currently only has an estimated 5,000 screens for its population of over 1.3 billion. Compare that to the 40,000 screens for the U.S. population of 300 million.

The Chinese government has done its part to grow movie audiences in China by heavily investing in its domestic television and media industries.

They have promoted the local film industry through easy loans and the rapid expansion of movie theaters throughout China’s cities. Reportedly two new movie theaters open up in China every day, with an estimated 35,000 theaters planned to open in the next five years. The Chinese government has also stepping up its effort to combat widespread film piracy – at least for domestically made movies. The government announced last week that they will begin charging Internet cafes, long-distance buses and other distributors for showing Chinese movies, beginning next year.

Seeing ticket stubs beyond U.S. shores
China and other foreign markets are already increasingly responsible for a larger part of a movie’s profit pie – foreign tickets add up to nearly 68 percent of all box office sales. Knowing that, it should come as no surprise that Hollywood studios are increasingly commissioning films that cater to a more international audience and have potential to score high box office sales abroad.

This summer’s “The Karate Kid,” starring Jaden Smith and Jackie Chan might be the best example of a film that was clearly made to entertain audiences of different nationality – and it worked. International ticket sales actually surpassed U.S. sales. The film grossed $176 million domestically – but grossed $181 in international ticket sales, according to data on Boxofficemojo.com.

And product placement in movies has increasingly shown Chinese sensibilities. In “Iron Man II” actress Scarlett Johansson was clothed head to toe in a popular Chinese clothing brand in one scene. The man responsible for that costume selection, Ben Ji of Angel Wings Entertainment, dreams that one day a James Bond film will feature a Chinese made car.

A Chinese studio in Hollywood?
With China growing as a bigger stakeholder in the moviemaking industry, men like Zhou have speculated that it is an eventuality that China will one day own or invest in a Hollywood studio.

But given the current anti-Chinese business mood in the west, it would seem unlikely that such a sale would happen in the near future and not without significant blowback from major Hollywood players.

However, such a sale would not be unprecedented. The 1989 sale of Columbia Pictures for $3.4 billion to Sony shows that American businesses are willing to entertain foreign offers for traditional Hollywood institutions.

We’ll have to see how this story ends…