Archives: film industry

The Hollywood Reporter recently did a story, entitled, “China’s Looming Entertainment Problem: Not Enough Lawyers,” discussing, among other things, intellectual property in China. Our own Beijing-based China entertainment lawyer, Mathew Alderson, was interviewed for that story and The Hollywood Reporter has kindly agreed to allow us to run a post based on the original interview.

 

Hollywood Reporter:  We’d like to first give a general overview of the state of entertainment and IP law in China.

Alderson:  There is no separate body of entertainment law as such, but it helps to understand how China generally views foreign investment. China limits the industries in which it accepts foreign investment or foreign business operations.  Foreign involvement in Chinese industries is categorized as “encouraged,” “permitted,” “restricted” or “prohibited”. Industries move between, or appear within, the various categories from time to time depending on the changing requirements of the Chinese authorities and the economy they oversee. An awareness of these categories not only assists foreigners to avoid illegal or unwise investments, it allows us also to understand the level of regulation to be expected in a particular industry as well as the business entity prescribed for that industry. Foreign involvement in the entertainment business in general, and the business of operating cinemas in particular, is “restricted” in China. It follows that there are substantial barriers to entry into the cinema business and the China film production business. These businesses are heavily regulated. Foreigners cannot operate in these areas independently of Chinese partners, so a co-production is required to make a film and a joint venture is required to set up a movie theatre.

As far as intellectual property is concerned, at first glance China’s legislative framework is world-class. This is largely because such a framework is a requirement of China’s WTO membership. The trouble is that this framework has been grafted onto a society with little frame of reference for its underlying concepts and the level of protection of intellectual property rights in China is often less than satisfactory despite the generally good quality of the laws themselves. I give some examples of current problems below.

In China, authority to adjudicate infringement and damages is vested in the courts and administrative agencies. So you have a situation in which the Chinese Patent Office, for instance, can make its own infringement determinations, award damages and issue injunctions without the need for a complaint filed in court.

One of the big issues at present is that foreign technology transfer is sometimes a pre-condition for market access. Trademark piracy remains a persistent and serious problem. Local businesses routinely register enterprise names that use famous US trademarks in misleading ways, often in conjunction with goods or services for which the US brand is famous. What we Westerners would see as Bad faith filings and trademark “squatting” are commonplace. And, as everyone is aware, DVD and online piracy are rampant. The Chinese government itself reckons that 15-20% of all products made in China are counterfeits accounting for around 8% of gross domestic product.

 

Hollywood Reporter:  Is this field developing fast enough to serve the booming Chinese film industry (expected to eclipse North America as the world’s largest film market in 5-10 years, as I’m sure you’re aware — the impressive growth numbers abound)?

Alderson:  I think it is developing steadily, but whether it serves any particular industry is another question.

 

Hollywood Reporter:  Is it reasonable to assume that more legal disputes will arise in the film and entertainment sector as the stakes rise and the value of the business grows?

Alderson:  Yes. That is a straightforward outcome of the sort of growth we are seeing. More business means more disputes in any market.

 

Hollywood Reporter:  This piece covering the “Lost in Thailand” suit quotes a consultant who suggests many studios are ill-equipped to handle IP protection issues (“Practitioners in the film industry have relatively weak awareness of intellectual property rights protection and very few companies would equip themselves with a complete team of lawyers in a film project or seek professional legal advice in advance.”) Do you agree with that assessment?

Alderson:  That may be the case with certain purely Chinese studios but I do not think it applies to everyone else.

 

Hollywood Reporter:  What kind of legal issues/problems/complaints do you think Hollywood parties are most likely to encounter/make in China?

Alderson:  It is generally assumed that China’s quota on foreign films is the biggest challenge but the quota has no application to domestic Chinese films or to official co-productions because these are regarded as domestic films. The biggest challenges are getting films approved by the Chinese censors and then getting paid a full share of box office. Foreign films must be cleared by the censors before they can be considered for the quota. Censorship comes first. China’s lack of any age rating system provides it with a useful and additional justification for censorship decisions. Censorship is a key issue because during the first 30 years or so of the PRC, foreign films were entirely banned and the film medium was seen mostly as a means of achieving “social enlightenment”. The government remains determined to subordinate the growth of the film industry to outcomes such as social stability and morality.

 

Hollywood Reporter:  What legal and other protections could and should a Hollywood studio seek when doing business in China?

Alderson:  There is a tendency to assume that US law and jurisdiction should apply to all contracts in all circumstances.  US law and jurisdiction are of little value unless the Chinese party has assets in the US. Just getting this jurisdiction piece right can be a critical form of protection.

 

Hollywood Reporter:   Are legal protections likely to be weaker for foreign parties than local counterparts in Chinese courts?

Alderson:   These days, foreign companies seeking to enforce contracts can often obtain good results in Chinese courts if the contract was written with the Chinese courts in mind and if the other party is a private company of a similar size. Having said that, it certainly is more difficult when you are suing a State Owned Enterprise (SOE) or a Government Agency.

 

Hollywood Reporter: Given that foreign (Hollywood) investment into China’s film industry, and partnership with local players, is continually increasing in scale, is it realistic to hope that new IP protection regulations might soon be passed and enforced in China?

Alderson:  Yes. Improvements are occurring all the time.  But at this point, the problem is not so much the laws and regulations, but rather, their enforcement.

 

This is Part II of a series of posts I will be doing on China’s film industry, to help our readers kick off the Beijing International Film Festival, which I will be attending again this year.  Yesterday I was email interviewed by Fox News regarding China’s film industry.  The below is that interview:

 

Reporter:  Last week Robert Downey Jr. made a trip to China to promote “Iron Man 3,” which was filmed partly there, gushing about the culture and exciting his many fans. Is it, or will it be, simply a given that the big stars go there to promote their films?

Alderson:  It will be a given for films that are expected to attract a large Chinese audience, particularly films with Chinese co-stars, substantial Chinese locations or other significant Chinese production elements. Of course, “Iron Man 3” reportedly opted out of official co-production status (and the larger share of box office that goes with it) and many of us are wondering whether this should be taken as an indication that US-Sino co-productions are just too hard.

 

Reporter:  Chinese box office is the second largest in world, but how large is it really and how much does it impact the movie industry as a whole?

Alderson:  According to the Motion Picture Association, global box office totaled $34.7 billion in 2012. China weighed in at $2.7 billion, with Japan in second place at $2.4 billion. Though total North American box office still dominated at $10.8 billion, the impact is caused by the sheer rate of Chinese growth. China’s box office grew by 36% in 2012 but North America managed only 6% growth. So, China is where the growth is and, if that growth continues, China will eclipse North America as the largest box office market in the world. That is where both the opportunity and the threat lie.

 

Reporter:  How much impact does China already have on which movies are made, and what they say (i.e. are they censored of any anti-China sentiment, themes, etc.)

Alderson:  China, and China’s movie-goers, are now well and truly the buyers. So, the expectations of the Chinese authorities, and the tastes of the Chinese consumer, are having a tremendous impact on what is being produced and what is being exhibited. Though there are many examples of foreign films that are edited or even pulled to comply with Chinese requirements there is now in China an emerging preference for purely Chinese films. The looming question is whether films such as Lost In Thailand and Journey to the West, which really popped in China, presage a new era in which Hollywood films are marginalized here. Hollywood is understandably anxious about this.

 

Reporter:  Are films now being written in advance, specifically tailored to suit the Chinese movie market or do you anticipate this will soon happen?

Alderson:  Yes. It is happening now and it will continue to happen.

 

Reporter:   Would the Hollywood studio movie industry be suffering much more if it weren’t for the Chinese box office, and does it have the potential to overtake America as the number one box office in the world?

Alderson:  Yes, I think Hollywood would be suffering more without China and, as I say above, China certainly has that potential.

 

China Business Review, the magazine of the US-China Business Council, just did a feature story, entitled, “Hollywood’s Script in China: Three experts discuss China’s rapidly evolving film industry and opportunities for US entertainment companies.”  Our own Mathew Alderson was one of the three experts interviewed for this story, which covered China film issues ranging from the benefits of co-productions to the recent FCPA investigations of a few leading studios to how to structure a China film deal.

Rob Cain, who has been involved in the production side of the China film business since 1987 and Brent Reynolds, who through his company, Q Global Entertainment, licenses and distributes films in China to television stations and web portals, also were interviewed.

We secured permission from China Business Review to publish the full portion of the interview with Mathew (normally you would need to be a member of the US-China Business Council to see it) and so we do so here:

 

Q:  Why are so many studios co-producing films in China?

Alderson:  China now has the largest foreign box office market in the world but in China there are effectively no sources of ancillary income, such as income from internet downloads and home rental. So, Hollywood studios want a piece of the box office action. There is a quota for foreign films that can share in box office revenue. The reason for the interest in co-productions is that they are regarded by the Chinese as domestic films and are therefore not subject to the quota. The share of box office payable on co-productions is higher: a co-production can command around 38% of box office as opposed to 13% – 25% available for imported films. The Chinese authorities also require that around 55% of total box office is taken by domestic films so a certain return on domestic films is guaranteed.

 Q:  What are some of the challenges studios face in co-producing films in China?

Alderson:  It is generally assumed that the quota is the biggest challenge but the quota has no application to co-productions. The biggest challenges for studios and producers are getting films approved by the Chinese censors and then getting paid their full share of box office. Censorship is an issue because the Chinese authorities view Sino-foreign co-productions as vehicles to promote Chinese soft power and to educate foreign audiences about China and the Chinese. Getting paid is an issue because of under reporting and other practices engaged in by the movie theaters here.

Q:  What is the most common legal mistake you see companies make when it comes to producing and distributing films in China?

Alderson:  There are several common mistakes. First, companies often fail to undertake proper due diligence on their Chinese co-producers and other Chinese counter-parties. As a result, fundamental matters such as the existence, identity and domicile of a Chinese person or a Chinese company are not established and the permits or licenses these parties require under Chinese law are not verified. Second, there is a tendency to assume that US law and jurisdiction should apply to all contracts in all circumstances.  US law and jurisdiction are of little value unless the Chinese party has assets in the US. Anyway, these days good results can often be obtained by foreigners seeking to enforce contracts in the Chinese courts, particularly in the top-tier cities. Finally, there is a tendency to sign brief memoranda of understanding or other short-form documents without taking independent advice. Normally prepared by the Chinese party, such documents tend to lock the foreigners into a particular type of entity or a particular deal structure when these may be inappropriate or even unlawful. Foreigners are often reluctant to subject these types of documents to close scrutiny for fear of insulting their partner and losing some advantage or opportunity which is usually illusory anyway.

 Q:  What can they do to avoid these mistakes?

 Alderson:  Take advice early on from someone on the ground in China.

Q: Are there lessons from China’s film industry that can be applied to foreign companies in other industries?

Alderson:  The mistakes made by foreigners in the film industry in China are essentially the same as those made in other industries so the lessons are universal. I would add that the perception that China will soon “open up” to the US seems to persist more in the film industry than in other industries. It is important to remember that foreign investment in the film business is restricted and there is little reason to believe that the film business will re-classified as ‘encouraged’ or ‘permitted’ for foreign investment purposes.

Q:  We hear a lot about American films that do well in China, like the Avengers, but how much money are these studios making from China?

Alderson:  Precisely what the major studios actually make in China is a well-kept secret. Box office takings are not independently audited in China and there are no trusted intermediaries or collection account managers. Accounting and financial arrangements tend to be opaque, to say the least. Only high-end cinemas in top-tier cities account electronically and even then the accounts are unreliable.

Q:  Are there still issues that affect a foreign studio’s ability to make a profit in China?

Alderson:  The issues vary depending on whether the studio is merely engaged in discrete co-productions or whether it has committed to an ongoing business operation on the ground in China. Profits from co-productions are affected by the accounting and auditing issues mentioned above. Profits from ongoing operations are affected by the regulatory environment, which includes things like the newly-introduced ‘social insurance tax’ that effectively adds 50% to the payroll for foreign employees. Moreover, given that foreign investment in the film industry is restricted, an ongoing business operation will usually be required to take the form of a joint venture. To establish and operate a joint venture properly is very expensive.

Q:  The US Securities and Exchange Commission recently announced an investigation into whether Hollywood studios were bribing PRC government officials to film and distribute movies in China. What can you tell us about this case?

Alderson:  The investigation was announced during the 2nd Beijing International Film Festival. The timing was instructive. Clearly, the S.E.C. is sending Hollywood a message here. The message is that the entertainment business in China is no longer the Wild West.

Q:  What are a few best practices the movie studios – and companies in general – can implement to avoid violating the Foreign Corrupt Practices Act?

Alderson:  At least put FCPA compliance provisions in all contracts made in or in connection with China. The US Association of Corporate Counsel recommends that contracts should specifically mention the importance of FCPA compliance and require partners to represent that they know the elements of the law and will comply with it.  You should have a clearly worded audit clause that requires the partner to provide documents and assistance in an investigation.  You should also ensure that you are able to terminate a contract if your partner is in violation of the FCPA. Other than that, you should be aware that the SEC tends to regard representatives of SOE’s to be representatives of the Chinese government and as such financial dealings with those representatives are in the cross hairs. So, any US corporation that has formed a joint venture with an SOE needs to be very careful about the payments made to representatives of that SOE.

Q:  What are the implications of China’s recent decision to increase the quota of films it allows in the country?

Alderson:  Have the Chinese really made such a decision? I am not yet convinced. During Xijingping’s recent visit to Hollywood, the U.S. announced the signing of a new film-related agreement with China. The agreement was said to improve the terms on which the US may import films into China for theatrical release. This all took place in the context of the WTO dispute between the two countries over the importation and exhibition of ‘audiovisual entertainment products’ in China. If the film agreement exists at all, it has not been published at the time of this interview. So far, all we have seen is a draft Joint Communication from the US and China delegations to the WTO’s dispute settlement body. The Communication reports that ‘progress’ has been made in resolving the dispute and that a ‘Memorandum of Understanding’ sets out some ‘preliminary arrangements’ made by the two countries. The Memorandum of Understanding has not been published but the Joint Communication says that it includes certain ‘key elements’. Three of these elements in particular are worth mentioning. First, enhanced format films (e.g. IMAX) are not subject to the 20-flim quota. Second, the distributor of a film imported on a revenue-share basis is entitled to 25% of gross box office takings. Third, Chinese entities other than China Film Group will be entitled to import and distribute films. Clearly, it is impossible to form a view on the situation without reading the Memorandum of Understanding. The Memorandum is likely to state the key elements with greater precision and to attach various conditions and limitations to their implementation. Moreover, it must be appreciated that the deal has apparently been put forward in an effort to resolve part of an ongoing WTO dispute. The key elements of the deal are preliminary. They should be regarded as general statements of current Chinese intentions as opposed to terms of ongoing contractual force.

Q:  Will this change the market for foreign companies producing and/or distributing films in China?

Alderson:  If these elements are implemented continuously they are unlikely to change the market for co-productions but obviously they would tend to improve the position of the studios whose films are selected for inclusion in the quota.

UPDATE: Rob Cain, one of the other interviewees, posted his full interview on his ChinaFilmBiz Blog.  Rob’s interview focused on the business side of China co-productions and it (and his blog itself) make for great reading.

Our lead China entertainment lawyer (and regular CLB contributor), Mathew Alderson, was just named by Variety Magazine as one of 50 “Game-Changing Attorneys” who “rock the [entertainment law] biz.”  And, hey, we couldn’t be prouder.  The list consists of those “attorneys whose recent deals and court battles have changed the shape of entertainment.” Mathew and Yu Rong, from the Hylands Law Firm, are the only China-based attorneys to have made the list.

Variety had this to say about Mathew:

Mathew Alderson
Partner
Harris & Moure, Beijing
University of Queensland, Australia, 1989
Over the past 18 months Alderson has advised on various ventures between Chinese and foreign partners, including feature co-productions, theatrical joint ventures and post-production alliances. The latter have included a number of 3D initiatives — a hot area in China. This work has put him at the point of convergence between China’s production, post and exhibition businesses. “Here in China there are no ancillaries, there’s very little legitimate income stream other than box office, so people are very focused on box office,” Alderson says. “The only way to fully access box office is to co-produce, because co-productions are entitled to a higher box office share than foreign imports.”

We like it.

If you are interested in China movie law, check out the following posts Mathew has written for us:

 

 

 

The following is a guest post by Robert Cain, who I met a few months ago at the US-China Film Co-Production Summit. Rob has worked for more than 20 years in Hollywood and in the global entertainment industry, primarily as a production, finance, strategy and creative development expert. He has been doing business in China since 1987, where his producing and entertainment management experience includes:

  • Production of the TV broadcast Three Tenors in the Forbidden City
  • Development and production executive on the 2008 Academy Award nominated film Mongol
  • Consulting Producer on the film Shanghai Kiss starring Kelly Hu and Hayden Panettiere
  • Consultant to Shanghai Media Group, CCTV, China Lion Films, and others

For more on Rob’s extensive film background, you can check out his full bio here. I also strongly urge anyone with an interest in China’s film industry to check out Rob’s Blog, ChinaFilmBiz.

CLB has written frequently, as per the following posts, regarding China film co-productions and the benefits that foreign companies can secure from them, if done correctly:

So when I saw Rob’s post extolling the virtues of co-productions in China, from a business/operations (as opposed to legal) perspective, I requested that we be able to run his post here as a guest post. Rob graciously consented and so here it is:

By: Robert Cain

If you’re not making films in China already, it’s time to take a serious look at doing so.  Just as China has become a dominant international player in many other industries, it has also captured a steadily increasing share of the global theatrical revenue pie, mainly through the brisk growth of its domestic box office.

Assuming current trends continue, and chances are very good that they will, China will soon overtake the U.S. and become an increasingly influential force in the global film business.

Because China’s stringent import quotas and its rules regarding box office splits limit the share of the domestic pie that goes to foreign-made films, it is growing more and more economically attractive to work with Chinese partners and make films that can meaningfully participate in that market’s domestic revenues. The best way for a non-Chinese producer to do so is produce movies that qualify as official co-productions. Co-productions are the only type of film foreign producers can participate in that are not subject to import quotas and that return to the foreigner a “fair” share—that is, around 40 percent—of the box office receipts.

Co-productions are also the primary vehicle in which most Chinese investors wish to participate with foreign partners. Whereas there are few Chinese financiers who will even consider funding a wholly foreign production, many will gladly invest as much as 50 percent of the budget of a co-production.

There exists a common misperception in America that because so few U.S.-China co-production films have been made, that it must be difficult to make them.  Many in Hollywood seem to think that The Mummy 3The Karate Kid, and The Forbidden Kingdom are the only co-pros to have been completed. But in fact Japanese, German, Korean and Hong Kong producers are investing heavily in co-productions in China. In 2010, 95 films applied for co-production licenses and 63 were approved, and in 2011 at least 30 co-pros were released in Chinese theaters.

No, making co-production films isn’t necessarily difficult–I’ve done it myself–but there are quite a few steps involved so it’s important to be knowledgeable and well prepared. A good place to start is the State Administration of Radio Film and Television’s (SARFT’s) 2004 document, ”Administration of Sino-foreign Cooperation in the Production of Films Provisions.” To save you the trouble of wading through all 23 articles of that document, I’ve abstracted the key provisions below.

The first few articles state that a co-production is defined as one between a Chinese production company that has obtained a lawful Co-Production Permit and a foreign production company; that the provisions govern all films made between Chinese and foreign producers, whether those films are made inside or outside China; and that SARFT is the governing body that oversees co-productions (many of the duties of administering co-productions are actually handled by a SARFT division called China Film Co-Production Corporation).

The document goes on to define three types of co-productions: 1) “Joint” productions, in which both the Chinese and foreign partners invest capital, labor and other resources and “share the interests and bear the risks jointly”; 2) ”Coordinated” or “assisted” productions, whereby the foreign party contributes capital and carries out filming in China, and the Chinese Party assists by providing equipment, labor, etc. in exchange for compensation; and 3) ”Production by appointment,” whereby the foreign party appoints the Chinese party to carry out production in China on its behalf.

Since only the first type, joint productions, is exempted from import quotas and allowed to share meaningfully in theatrical revenues, we’ll only concern ourselves with that type here.

Co-productions must also conform to all the applicable laws and censorship rules that govern domestic Chinese films, and the producers must all be in good standing without any banned films to their names.

Now, the nitty-gritty of the application process.  Articles 9 and 10, which are reproduced below, delineate the required submission materials and procedures:

If and when a permit is issued, it is valid for two years.

Another key provision deals with hiring: “Where it is necessary to employ overseas major crew personnel for a joint production, it shall be approved by SARFT, and the proportion of the major actors of the Foreign Party shall not exceed two-thirds of the total number of the major actors.”

This hiring provision is extremely vague—the term “major actors” is often interpreted to mean all personnel of any kind. There are no strict requirements regarding who must be employed on a co-production, nor whether Chinese talent or themes must be featured in the film. Likewise, there are no strict requirements regarding the percentage of the film that must be shot in China; SARFT has the authority to allow co-productions to shoot partly or even entirely outside China. Suffice it to say that the more Chinese cultural elements, featured actors, crew, facilities and locations are involved, the better the odds of obtaining approval.

After the film is completed it must be submitted to SARFT, either in Chinese language or with Chinese subtitles, for review to determine whether it will be approved for domestic exhibition in China and for export.

Given the complexity of the process and the subjectivity of many of the key rules, foreign producers ought to be careful to choose a local Chinese partner who is well connected with the relevant government authorities and who has the fortitude to help take a project all the way through to completion. The difference between an approved co-production versus  an imported quota film or one that receives no Chinese distribution at all can often be measured in millions of dollars of profits captured or lost.

One of the things we have learned in representing companies involved in China’s film industry is that it is the theater owners who seem to make the most money from films shown in China.

But Just last week China’s government film agency mandated that the share of film ticket sales be lowered for theater owners. In a post entitled, Beijing’s (Bloodless) Boxoffice Battle, Rob Cain (whom I had the pleasure to meet last month at the 2011 US-China Film Co-Production Summit), writes of this change and how it came about.

Producer Zhang Weiping had demanded that China’s theater owners raise their minimum ticket price from 35 y to 40 yuan and lower their after-tax share of ticket sales from 57 percent to 55. Cain described Zhang’s reasoning as follows:

Zhang was looking to protect the nearly $100 million that’s been invested in The Flowers of War, his latest collaboration with his mega-director partner Zhang Yimou. The film, which stars Christian Bale, is the costliest in Chinese history, and is set to open wide next week. Under the existing structure distributors receive only 39 percent of each dollar, or yuan, of ticket sales, and after the distributors’ cut producers get substantially less than that.

As Zhang Weiping put it, “For producers in China, the only way to get a return on investment is through ticket sales. Ancillary products do not sell well. Raising ticket rates could help keep movies from being fast food and junk food.”

China’s State Administration of Radio Film and Television (SARFT) quickly stepped in and issued a document “On Promoting the Coordinated Development of Movie Making, Publishing and Releasing,” mandating that “cinemas can get no more than 50% of the box-office revenues from a first run movie. Cain rightly describes this new mandate as “a major victory for film producers and distributors” and sees this “7 point bump in their share” as having the potential to “spell the difference between profit and loss for many Chinese films.”

If you are interested in China’s film industry, I strongly recommend you check out Chinafilmbiz.

Now that I have your attention with my Global Times-ish headline on protectionism in China, I am going to backtrack.

The protectionism that people attribute to China is wrong. I have become convinced that the protectionism that people tend to attribute to China does not really exist, or at least barely so. The Chinese government does not care nearly as much about its domestic companies as widely believed, at least those that are not State Owned Entities (SOEs). Instead, the Chinese government cares almost exclusively about the Chinese government. Once you understand this, you will be better able to know where you, as a foreigner, stand.

I just read a China Hearsay post noting how China’s Ministry of Commerce’s recent approval of Yum! Brand’s purchase of Little Sheep Restaurant should put everyone’s fears to rest about China using its M&A review for protectionist purposes. China Hearsay was not the least bit surprised by this approval, nor was I. I figured the approval would come because the buy-out was not going to impact much (if at all) the things China’s government really cares about.

The Chinese Government is still uncomfortable with private business and it rarely, if ever, steps in to assist them just to assist them. Therefore, if you as a foreign business are going to be competing with private businesses, you likely will do okay. If you are going to be doing business in an arena dominated by SOEs there is a much better chance of your facing problems.

If you are going to be doing business in areas critical to the government, such as internet, publishing, movies, mining, defense, automobiles, then you really need to be very careful about what you are doing, both in terms of its legalities and in terms of how you will be viewed by the government. Each of these industries can be very different in terms of how you will be viewed by the government. By way of example, foreigners are not treated terribly well in the movie business and many have cried “protectionism” because of this.  The Chinese government’s policy towards foreign films does seem like protectionism, but because foreign films are limited for informational reasons and not to protect China’s domestic film industry, calling it protectionism may not be appropriate, especially since there does not appear to be all that much love lost between Beijing and China’s own film industry. Mathew Alderson, who represents a number of media companies in China, wrote on this in a post, entitled, Protecting Hollywood Films in China Makes Sense For China:

It is not the local Chinese film industry that wants to stop foreign films. Far from it. Barriers to entry such as China’s twenty foreign film quota, and the requirement that foreigners shoot their films in China as Chinese co-productions, are there to stem the invasion of Hollywood’s “corrupting” influences, which the  Chinese government sees as US propaganda or soft power. These barriers really have more to do with the government’s desire to preserve what it deems important than in protecting the local Chinese film industry.

The same is generally true with respect to publishing.

But if your business is something like retail, or electronics manufacturing, then you probably have nothing to worry about from Beijing by way of protectionism . That is not to say you do not have other issues you need to worry about, including local governments that may not appreciate your being there, but odds are good you do not have an enemy in Beijing.

What do you think?