How Hollywood’s Obsession With China May Change Movies Forever

    China is now the second biggest box office market in the world, and is on pace to take the top slot by 2020. But filmmakers who want a piece of the pie are learning that they have to do things a little differently.

    Since its international release on April 25, Disney/Marvel's Iron Man 3 has been shattering box office records. Among the nations that have swooned for its blend of pyrotechnics and droll Robert Downey, Jr. quips is China, where the film set the country's record for biggest opening weekend by a foreign production, raking in over $65 million. It's a significant accomplishment, but also one that merits an asterisk: Iron Man 3 may be technically a "foreign" movie, but it was carefully engineered to maximize its appeal to the country's mega-sized audience of over 1.3 billion people.

    One of Disney's producing and financing partners on the film was China's DMG Entertainment, a 20-year-old company that has become a leading partner for American studios looking to do business in the country, a sort of tour guide that helps producers navigate the intricate channels of the hybrid government-capitalist economy. Director Shane Black filmed scenes in Beijing, utilized famous Chinese actors and signed a product placement deal with TCL Electronics, the company that just bought the famous Chinese Theater in Hollywood. The theater also plays a significant part in the movie's story. For various reasons, Iron Man's legendary nemesis, The Mandarin, was changed from a China-born villain to a man of indeterminate ethnicity (played by Sir Ben Kingsley) who is actually hardly evil at all (and called Man Daren in China).

    Welcome to the future of Hollywood — now based in Beijing.

    Rob Cain, a veteran producer who works with studios on business in China and runs the blog, says that if studios want to stay in business, making these adjustments for China is going to become part of the production process. "It's becoming such a huge part of an equation in the global business and this is really just the beginning," says Cain. "More and more the money is going to be coming from there, not just the market and revenue but the capital for financing films. And I'm not sure that the studios yet fully recognize the import of all this."

    Hollywood has long been eager to access China's growing consumer class, and in the last few years, it has finally made some headway. Last year, foreign films made up the majority of box office sales in the country, $1.41 billion out of $2.74 billion; American movies represented seven of the top ten. That number will likely only increase since the MPAA helped facilitate an agreement last year that will increase the number of American-made movies that can be imported for distribution in China — from 20 to 34. But if you happen to be in China and decide to catch an American flick, there's a good chance it's going to look different than what you'd see back home.

    First and foremost, Chinese audiences are getting some extra homegrown love. Disney released a special cut of Iron Man 3 for the country, with extra Chinese actors and scenes in Beijing (though after many of these scenes were cut, the subsequent outcry led to their reinstatement in the form of a short film of cut footage). All that, of course, came in addition to the product placement — the electronics and Chinese theater — that were in the American cut of the film.

    Last year's Looper, the futuristic noir film that added prosthetics to Joseph Gordon-Levitt's face to make him look vaguely suggestive of a young Bruce Willis, was also released in China with DMG's backing. That movie imagined a futuristic China in a major sequence, shooting on location in Shanghai.

    Originally, the segment was supposed to take place in Paris, but due to budgetary constrictions, director Rian Johnson was going to do his best to substitute New Orleans for the City of Light. Then, DMG — already the film's Chinese distributor — offered him an alternative: switch it from the French capital to Shanghai, and they'd come aboard as a financier and facilitate the shoot.

    "It was funny, it was one of those things where it was first suggested as a logistic thing, and my first, knee-jerk reaction to it was no," Johnson says. "If I had felt it just wasn't right at all, we wouldn't have done it. But the more I thought about it, the more I thought, you know what, in some weird way, it actually makes sense if it takes place in China. So it was something I was really cool with."

    The switch didn't simply enable some cool and novel scenery; it also increased the movie's profile, and its box office, in the country. It was a fiscal boon — Looper ultimately took in over $20 million there — but also exposed Johnson and his film to potential difficulties that come with doing business in China.

    While the U.S. has a technically voluntary organization in the MPAA to issue ratings and police standards in movies, in China, the government controls the comings-and-goings of the film industry. The state-run State Administration of Radio, Film and Television (SARFT) is responsible for not only overseeing production in that country, but also the importation of foreign films, setting strict standards on what its billion-plus population can and cannot see.

    In 2009, the SARFT released a list of 31 guidelines to which films must adhere, banning offenses such as nudity, excess violence, superstition, the supernatural, religion, drinking, drugs, gambling, depictions of China's past in a negative light and political speech that disparages the Communist government in any way.

    "It's so easy to fall afoul of censorship that you need to pre-clear everything and there are some very clear no-go areas," says Mark Schipper, COO of Exclusive Media, which has partnered on several films in China, including an upcoming Jackie Chan movie and the John Woo miniseries Flying Tigers. "But even if you know that, it's much easier to have the right partner who can help you navigate through that."

    Working with DMG, Johnson says that he never felt any undue pressure to change or cut anything from his script, though there was a scare.

    "I remember when we shot it, there was this one weird thing that flashed up in the news where that suddenly, there was a story that the Chinese government had forbidden time travel stories," Johnson says. "We were over there shooting and this story popped up on the internet, and I think it had to do with a specific TV show that was using a time travel story to poke fun at the government or history. So that popped up, but it never really touched us, they never hassled us about it."

    On the other hand, while Quentin Tarantino vehemently defended the stylized carnage in Django Unchained as appropriate for American audiences, he agreed to cut some of the most extreme action out for the Chinese market. And yet, just as Django Unchained began to project its bloody, revenge-seeking mayhem across Chinese movie screens on April 11, the government decided to pull the plug — though theaters in Beijing cited "technical problems" as the reason.

    Tarantino's cuts, it turns out, weren't deep enough. It took weeks of secret negotiations and even more concessions from Tarantino and distributor Sony for the SARFT to allow Django a second chance; it returned to theaters on May 12 (with less nudity, violence and to small box office numbers thanks in part to competition and piracy). Whether it was an oversight that initially put Django in cinemas for that brief moment before it was pulled, or the yanking was a show of national swagger, the message was clear.

    "China is the second largest film market world and in a few years it'll be the biggest in terms of revenue," says Stan Rosen, a USC professor of political science whose focus includes Chinese culture and film. "They can call the shots."

    China is a country with its own incredibly rich cultural history, but after decades of its culture consumption being controlled by an autocratic, message-controlling government, its people are only just now catching up on rest of the world's entertainment production. As the Chinese market grows, studios are going to gear more of their films towards that audience in ways that will have a significant impact on the entire industry — and even on what American audiences see in their own theaters.

    First, there will be a new diversity in film, with new Asian-American and native-born Chinese stars finally getting a chance to break through what has been a stubborn color barrier in Hollywood. New themes and locations will also spring up in movies. For example: Keanu Reeves spent years writing what will soon be his directorial debut, the English-Mandarin martial arts movie Man of Tai Chi. It has hardly been promoted in the United States, but he was greeted like a rockstar when he presented a first look at it in China last month.

    Fan Bingbing, the superstar Chinese actress/model who had a brief role in an added Iron Man 3 scene, will next star in another Marvel movie, Fox's X-Men: Days of Future Past, playing the part of the mutant Blink. Then, she'll team up with Jackie Chan in the English-language action-comedy Skiptrace, which is set in China and is being backed in part by Exclusive Media as a co-production, a new breed of deal that puts the foreign and Chinese producers of a certain project on equal footing. As a result, the movie born of the partnership is technically considered a domestic Chinese picture, meaning that it is not subject to the 34-film limit, and foreign producers get a bigger piece of the box office spoils: 43% instead of the standard 25% to foreign films.

    Yet there is a potentially more complicated shift in the offing as well, given the politics of the nation Hollywood is trying to please.

    For one, producers and studios, leery of angering the SARFT and eager to scoop cash from the huge pool of Chinese capital available to fund film productions, may design their movies in a conscious attempt to comply with the country's stringent requirements.

    "Wherever you're getting money, you have to be sensitive to their views and they start dictating the content of your movie," says the actor Aaron Eckhart, who has twice visited China and met with the head of the China Film Group, a subdivision of the SARFT, as he explores producing his own movies. "You wouldn't be able to make a movie in Beijing about anything that was subversive to China."

    He's not pessimistic, though, about what films made in this system will look like: "You do have to consider where your money is from, but there's ways to get around that. Everyone just wants to make movies."

    It's instructive to remember the classic case of the Red Dawn remake, which initially featured a pre-Thor Chris Hemsworth and Josh Hutcherson taking on an invading army from China. After a Chinese newspaper voiced concern that the film would demonize the country, and potential distributors got jittery, the entire movie was digitally changed to make the enemy North Korean so that the film could be put out in China.

    The idea of reconceiving — or spiking — entire geopolitical features is a big precedent to set — at least as far as re-working films to make other governments happy. The U.S. military has a long history of ordering propaganda films, and to this day lends great material assistance — planes, weapons, real estate — for films it reads and pre-approves.

    Of all the movies that sell overseas, it's the mass-appeal, big studio tentpoles that do best. With explosions and chase scenes serving as a universal language, they're most easily able to translate into foreign markets, and thus are likely to only be peddled out even more frequently by studios. American rom-coms and love stories, however, tend to tank.

    "There are remakes of Western stories that have done pretty well there, but with Chinese leads — and that's a different way of doing it," says Schipper. "It seems that when you have a romantic comedy it doesn't seem to translate, and I think that's just because the culture is slightly different."

    As Schipper notes, plenty of smaller Chinese films prosper with smart, dialogue-driven plots, but finding the same sort of success with inexact translations of American films is dicey; it's the same situation as most other non-English speaking foreign countries, but the sheer size of the population amplifies the dissonance. An example: opening huge alongside Iron Man 3 was the small, nostalgic and Chinese-made romance So Young, which put up nearly the same numbers as the big Marvel epic.

    "We're just starting to see now, but it has to have an impact on what movies get made," Cain predicts. "Even if you leave aside all the censorship questions and approval questions, the Chinese audience has its own taste and the money is going to go to the movies that will make a profit there."

    Studios are realizing that it is no longer enough just to put out a big, action-packed American film with fancy big American names in Chinese theaters anymore, either — the right promotion strategy is just as important. Just as Downey attended a special premiere for Iron Man 3 in Beijing, Tom Cruise made an emergency, last-minute trip there last week to promote his new sci-fi flick Oblivion, which came out in China last Friday.

    Paramount's Transformers 4 could permanently change the game. The third film in the saga netted $145 million in China, and the fourth installment, with heavy marketing and more Chinese elements, should far surpass that when it's released in 2014. In fact, four roles in the film will be the prize for winners of a new reality show in the country that is expected to field 80,000 entrants.

    Filling movies with local faces isn't a strategy unique to China. Ron Howard's upcoming racing film Rush, on which Exclusive is a partner, stars Chris Hemsworth, but Schipper says they're going for a global appeal.

    "It's got Daniel Brühl in it because he's a big German actor and he's a great actor," he says. "And we have a whole bunch of Japanese actors in it because the final race is set in Japan because the final race is set in Japan, but that helps [selling] in Japan."

    But the influence cuts both ways. Chinese standards for censorship have become more lax in recent years, which is why some American films can play there at all. While violence is technically banned, superhero and action films are the most popular and lucrative, and 21 & Over was filled with underage drinking and nudity.

    "Things have eased up over the years — they used to be much stricter," says USC's Rosen. "Some things passing now would not pass in previous years. Superhero violence is not taken seriously as it would be in, let's say, a film about a family, with a husband beating up his wife all the time."

    As he points out, movies that feature "superstition" and ghosts are on the naughty list, but the Harry Potter franchise was a massive hit in China, with the final installment pulling in over $60 million two years ago, a time that might as well be ancient history in the market.

    What helped 21 & Over was that it had two distinctly different lead characters depending on the country: in the American version, Jeff Chang was the son of an immigrant, while in China, he was a transfer student spending time abroad. In the American version, he was a young and blissful party machine; in the version Chinese audiences saw, Chang learned firsthand the dangers posed by the careless, pleasure-seeking and hedonistic western youth. The scenes were he returns home were shot and seen only in China.

    The new deal governing foreign films allowed into China specifically calls for 14 IMAX/3-D productions. As multiplexes become more and more dominated by franchise fare, that is in some ways actually just a side effect of studios focusing on international markets. Transformers 4 will likely make a bundle of money in America, and continue to prove its worthiness as an established franchise, yet even big movies that failed domestically — see Hansel and Gretel: Witch Hunters — often do well enough abroad to earn a sequel. There are already 17 sequels alone set for release this summer, and it's unlikely that 2013 will represent a highwater mark — especially if co-productions begin to blossom.

    And yet at same time, the movies involved in co-productions will also require more custom tailoring in order to qualify for the sizable benefits.

    "The distinction between co-productions and other motion pictures is important because co-productions were originally encouraged as a way of propagating Chinese values abroad while helping Chinese filmmakers to learn from their Hollywood counterparts," says Mathew Alderson, a leading entertainment lawyer operating in Beijing. "Co-productions were definitely not intended as de facto quota busters, which is how they are often regarded in Hollywood. The authorities are now more vigilant about what they call 'stick-on' productions in which the Chinese elements are contrived and insubstantial."

    While American audiences won't be seeing special cuts of these movies made specifically for the Chinese audience, there's a chance that the influence of censors will impact the initial plans for films. In a complex global environment, that could impact any number of genres and story lines.

    "I think five years from now, the big expensive tentpole movies are going to be more and more shaped by the needs of the Chinese market," Chinafilmbiz's Cain predicts. They could range from toned down violence, he says, to the conscious avoidance of even incidentally including something Chinese in a bad light; recent examples include the alien hiding in a Chinese restaurant in Men in Black III to the birth of the zombie outbreak in World War Z.

    "There's no reason the zombie disease had to have started in China," Schipper says.

    As Eckhart points out, there is also a cross-current flow of money from Chinese investors into American production budgets; that's the method through which DMG became a global power. It's likely that investors will want to bet on movies that will play well back home, meaning that more and more American films will be tailored to an unseen audience. That isn't necessarily a bad thing — see Johnson and Looper — but it's a new factor nonetheless.

    But local filmmakers aren't taken the foreign invasion lightly.

    "A big question at present is whether the huge success of purely Chinese films such as Lost In Thailand and Journey to the West presage a new era in which Hollywood films are marginalized in China," Alderson speculates, noting two of the smash domestic hits that flipped small budgets into major ticket sales gold.

    There is turmoil even in that arena, however, with the government and its local filmmakers pushing and pulling in a complicated struggle to build an industry. Domestic Chinese filmmakers have been struggling with censorship for decades, and some of the most important directors in the country have been banned from making movies for years after disputes over even the slightest politically charged statements in their works.

    Iconic filmmaker Feng Xiaogang, considered China's answer to Steven Spielberg, dared to release a film last year called Back to 1942, which portrayed the brutal Henan Famine of 1942 in such a way that it read as a critique of Communist government policies that led to a similar famine in the late 1950's and early 60's. Think of it as a Chinese version of M.A.S.H., which used the Korean War as a platform to satirize the disaster in Vietnam.

    In the most ironic, "Is this The Onion?" example of this activist monitoring, Xiaogang boldly spoke out against the censors at the country's Directors Guild Awards show, where he was being honored. He decried the government's scythe-like approach to film editing and the muzzle it puts on artists, calling the message monitoring a "great torment."

    "A lot of times when you receive the order, it's so ridiculous that you don't know whether to laugh or cry, especially when you know something is good and you are forced to change it into something bad," he said in his speech. "Are Hollywood directors tormented the same way? … To get approval, I have to cut my films in a way that makes them bad. How did we all persist through it all? I think there is only one reason — that this bunch of fools like us love filmmaking — are entranced by filmmaking — too much."

    The SARFT, which also controls the TV airwaves, bleeped out when Xiaogang later uttered the word "censorship."

    And yet, the domestic industry in China is receiving a number of financial assists from its government, frustrating to Hollywood but certainly not anything unique. The United States and Beijing are currently locked in a dispute over a sudden increase in taxes that foreign studios have to pay on their Chinese box office receipts, and last summer, China angered Warner Bros. and Sony by forcing their two big summer movies, The Dark Knight Rises and The Amazing Spider-Man, to open on the same weekend, creating a competitive glut that seriously hurt their returns.

    "I don't see the red line because Hollywood studios are interested in making money and China is the place to do it," Rosen says bluntly when asked whether there is any protectionist maneuver, censorship or complication that would sour and reverse the American industry's advance on the new frontier.

    "Another great example of that is the recent announcement that the theater owners were told, you get a tax rebate if over 50% of the films you show are domestic films in terms of box office," Rosen continues. "They're encouraging theater managers, their owners, to basically cheat in a way, because even if it's not 50%, you have a financial incentive to make it seem that domestic films are doing better than Hollywood films."

    The intertwining of the American entertainment business and the Chinese market is really only in its infancy. In 2014, Disney will open a Disneyland in Shanghai, while Village Roadshow — technically, an Australian company, but with its biggest presence in L.A. — and Fox have already started producing Chinese-language films. Ancillary products like action figures, DVD/Blu-Ray and other merchandise are also items on which studios can cash in, further entrenching their presence and raising the financial stakes.

    "A lot of studios have their own local offices, Beijing or Shanghai offices," Schipper reports. "That's how they start, staffed by local people. You've got to be careful, you've got to find the right partner. There are great partners and they were introduced to us by our shareholders here who do quite a lot of business in China."

    The film industry always changes with the times, and China's emergence into the marketplace certainly marks a new era. As Johnson's experience shows, the cash and opportunities created by the country's blossoming can help in ways both financial and creative — but there are times that China's promises can also serve as a freezing agent on speech and exploration. And how Hollywood navigates the obstacles, challenges and vast possibilities just may play out in a theater near you.