With Breakthrough Deal, Hollywood Company Wins Coveted Access To China Movie Market

Legendary Entertainment’s China Arm Inks 3-Year Co-Production Agreement With Mainland’s Largest Film Producer

A scene from The Painted Veil, the product of Warner Brothers' previous short-lived joint venture with China Film Group.

A scene from The Painted Veil featuring Catherine An and Edward Norton, the product of Warner Brothers’ previous short-lived joint venture with China Film Group. (Warner China Film)

In a groundbreaking deal that makes major headway in Hollywood’s push for a more prominent place at China’s box office, Legendary Entertainment’s China-based company, Legendary East, has signed a three-year co-production plan with China Film Co.–an agreement that is the first of its kind in China’s evolving film business landscape.

“There can be no doubt that this is one of the most important collaborations for CFGC in the coming years,” said Han Sanping, China Film Co.’s chairman, in the press release announcing the deal. “We believe that through strong collaboration between CFGC and Legendary East, we will be able to make films that are more appealing to filmgoers, creating new genres that, through the magic of film, bring greater variety to audiences around the world.”

The advantages of signing with the powerful state-run China Film Co. are numerous. It is owned by China Film Group, the largest film producer and distributor in China. The company deals with almost all aspects of the country’s movie industry, including production, distribution, imports and showings. Because China Film Group actually holds a monopoly on all foreign film imports, its new connection with Legendary East may help Legendary’s U.S. projects–which have in the past included the first two Hangover films, the Dark Knight franchise, and Inception–make it past China’s film quota for non-co-productions.

“The CFG-Legendary deal is the latest example of Hollywood doing what it does best–follow the money and the market to keep its dream alive. The question with deals in China is what creative compromises will have to be made to appease the censors’ sense of what’s right and whether films made under such conditions will sell,” said Jonathan Landreth, managing editor of ChinaFile.com, and a former long-time Beijing resident and media industry business reporter.

A scene from Looper, which received "assisted co-production" status from China.

Joseph Gordon-Levitt in a scene from Looper, which received “assisted co-production” status from China.

Gaining official co-production status has to date been a highly coveted, yet elusive goal for foreign film companies. The financial benefits which accompany the title in China’s film market are so significant that many companies have been jumping through hoops to ink such deals despite the industry’s complicated environment. Several films such as Iron Man 3 and Looper have experienced false starts when it comes to aiming for the designation–the former had reportedly considered applying before deciding not to, while the latter went through the approval process only to receive “assisted co-production status.”

This is China Film Group’s first multi-year co-production deal with a foreign company, but it previously entered into a joint venture with Warner Brothers called Warner China Film (best-known for The Painted Veil), which Landreth calls “a short-lived cooperation that dissolved after just a few years with little to show for it.” China Film Group has also recently partnered with DreamWorks’ China outpost to make a co-production of the upcoming movie Tibet Code, which is likely to appeal mainly to Chinese audiences.

Hollywood has been wary of complying with the multiple requirements needed to make a film deemed worthy to be a co-production for fear of losing international marketing value. Chinese regulators do not necessarily agree amongst themselves over how demanding China should be with foreign films in order to give them co-production status. Paramount Pictures is most likely experiencing this issue at the moment with its “Cooperation Agreement” with China Movie Channel, a company owned by the State Administration of Radio, Film, and Television (SARFT). While SARFT Chairman Yan Xiaoming is known for being open to the idea of more foreign films on the mainland, other officials believe requirements should be more strict, including regulations on a film’s content, number of Chinese stars, and percentage of funding provided by a Chinese company.

Legendary East previously partnered with Chinese production company Huayi Brothers Media, but the pair split in 2012. “Legendary’s attempts to break into China suffered a false start a few years ago and this deal reminds us now of the power, influence, and vision of the state-controlled China Film Group,” says Landreth. Variety cites an unnamed source who stated that investors had reportedly been opposed to Huayi’s 10 percent stake in the deal, wishing it would be lower. The partnership also included Hong Kong’s Paul Y. Engineering Group, which had a 50 percent stake in the agreement, leaving Legendary with 40 percent. A proposed fantasy historical drama about the Great Wall never received the green light from officials, and it is unclear if it will now be pursued under the new agreement.

Although Legendary and China Film Co. intend to market the films internationally, it is yet to be seen how much of the content will actually be geared toward an audience outside China. With Chinese director Jia Zhangke’s recent award for Best Screenplay at Cannes, it is clear that Chinese films complying with government censors can still be perceived abroad as artistically credibile, but it is not usual for government-produced films to gain the interest of a mass audience outside the country. “What remains to be seen about the Legendary-CFG partnership–and the DreamWorks cooperation with CFG, too–is whether Hollywood creatives will be able to transcend the level of creativity achieved in Warner Brothers’ previous joint venture with CFG,” says Landreth.

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