We've Got Hollywood Covered

US Congressional Leaders Bound for China to Challenge Hollywood Movie Quota

Group of U.S. congressmen will head to China in August to review the country’s growing film industry

With a five-year deal on the amount of Hollywood films allowed into China up for review, a convoy of U.S. congressmen will head east in August to review the country’s growing movie market.

The Washington, D.C.-based U.S.-Asia Institute will lead about a dozen senators and representatives on the trip, which comes at an important time in the crossover between show business and a country with more than 1.3 billion potential customers.

The most recent quota — negotiated between Vice President Joe Biden and Chinese Vice President Xi Jinping in 2012 — allows 34 American films to be distributed in China each year, with 14 of those films designated for 3-D or IMAX. This deal expired in February, but the guidelines have remained in place until a new agreement is set.

And despite a one percent drop in revenue (to $6.5 billion) for American movies in 2016, China is still increasingly dependent on Hollywood to fill its theaters. Disney’s “Zootopia” was the top international draw at the Chinese box office last year, and second-biggest movie overall, raking in more than $225 million, according to Box Office Mojo.

In a phone interview with TheWrap, Chris Fenton — a trustee of the U.S.-Asia Institute and president of Los Angeles and Beijing-based DMG Entertainment — said the August trip is aiming to “create the best backdrop possible” for negotiations between the entertainment industry and China.

“This is much bigger than the quota negotiations, this about sort of setting the tone for the relationship [between Hollywood and China] moving forward,” said Fenton. He added the group will be visiting Shanghai, Beijing, and the headquarters of e-commerce giant Alibaba.

With the link between China and Hollywood growing tighter, the quota is likely to expand for several reasons. First, China is increasingly important to Hollywood, evident in the joint investment agreements Paramount has with Shanghai Film Group and Huahua Media — which played a key role in the financing of films like “Jack Reacher: Never Go Back” and “XXX: Return of Xander Cage.”

Also, China is building new theaters at a rapid rate, and can’t fill them with just local content. To that end, China has an unofficial goal of having about half its box office coming from homegrown films. But due to a weak local slate last year, China softened its quota restrictions and allowed in 38 Hollywood films to bolster its revenue.

The Chinese Government understands allowing more imported films is better than the alternative of a much smaller box office. This seems to give Hollywood more leverage, as China’s appetite for movies grows and theaters keep being built — Chinese consumers tend to prefer Hollywood content.

Members of Congress have raised alarm about the Chinese market’s importance –and its investments in companies like AMC — making it so Hollywood movies won’t cast Chinese villains and won’t address its human rights issues and other concerns. On the other hand, movie studios have plenty of challenges and need the Chinese market, so it’s a delicate spot for politicians.