Last week, an event was held in Hong Kong where, among other things, it was said that a second distribution license to import and release movies in China is being issued to the China National Culture & Art Corporation (CNCAC). Such a license could spell the demise of China Film Group‘s exclusive grip on Mainland revenue-share releasing — and create another potential partner for Hollywood. While there has been talk that a new government-approved distributor could emerge, a number of China-watchers have remained cautious on the timing, and just who the involved parties would be. One told me recently, “Many believe they can in due course obtain a second license.” Now, reported comments from an official at the Chinese state watchdog, and the revision of an announcement by Hong Kong-based China Railsmedia, which held the press conference and has business connections with the CNCAC, seem to confuse things even further.
Chinese media is reporting that influential executive Han Sanping has officially said he has stepped down as chairman of China Film Group. I reported exclusively in early January that there were management shifts at the top ranks of the Chinese film business, notably that a decision had been made around January 1 for Han to leave his post at CFG. Han himself has now told local press that he has stepped aside, saying that at 60 he has reached retirement age. Han is expected to go on to run a large film fund and act as a consultant to CFG. The state-owned group controls distribution in China and is the key to getting foreign movies into the country since it alone has the right to import them. It is also the biggest producer of local films and co-productions. In his role as chairman of CFG, Han has been referred to as the “gatekeeper” between Hollywood and China. His power and influence have been described as that of Jack Valenti, Lew Wasserman, and Steven Spielberg all rolled into one. However, in January, I was told that Han had largely become a figurehead and hadn’t been involved in major policymaking for “more than a year.” He will be succeeded by CFG deputy chairman LA Peikang and vice chairman Jiao Hongfen, both of whom are already known to Hollywood.
China’s State Administration of Press, Publication, Radio, Film and Television is getting tough with cinema operators. The authority outlined new measures this week designed to prevent movie theater managers from manipulating box office figures and defrauding the government and rights holders. According to FilmBizAsia, SAPPRFT’s memo on the matter, aka “A Notification Regarding the Strengthening of Film Ticketing System’s Management Practices,” is the first major revision of regulations in the sector since 2005. It’s widely said that theaters hide income from the government which takes a 3% value-added tax on revenues as well as a 5% film fund tax. Local distributors usually have a 42% revenue share with exhibitors, and U.S. studios are entitled to receive 25% of the share. China’s reported box office in 2013 was $3.6B, but the state-controlled Xinhua news agency says industry experts believe the real figure is at least 10% higher. FBA says that insiders have claimed as much as $826M, or 18.7%, of box office sales was not reported last year.
Is China-Hollywood “Gatekeeper” Han Sanping Segueing Out At China Film Group Amid Big Changes Atop Local Biz?
EXCLUSIVE: As Hollywood continues to learn the ropes in China, I’m hearing that there are a host of big management shifts coming at the upper echelons of the Chinese film business. There have been rumors for some time that China Film Group senior management would change or retire this year, and I’m now told that some moves have been made, while others could be imminent. The biggest involves influential Chinese executive Han Sanping. I’ve heard that a decision for him to step down as chairman of China Film Group was made around New Year’s Day. The state-owned CFG essentially controls distribution in China and is the key to getting foreign movies into the country since it alone has the right to import them. It is also the biggest producer of local films and co-productions. In his role as chairman of CFG, Han has been referred to as the “gatekeeper” between Hollywood and China. (China film industry expert Robert Cain once wrote of him, “If you took Jack Valenti, Lew Wasserman, and Steven Spielberg and rolled them into one, you’d begin to get an idea of Han’s power and influence in China.”) At age 60, it’s understood he’s been eyeing a move. This is not an ousting, I’m told. Rather, I hear Han will go on to run a large film fund …
UPDATE: MPAA Chairman Chris Dodd declared Tuesday evening that Hollywood’s revenue beef with the Chinese government has been settled in favor of the studios: “The MPAA understands that the China Film Group stopped payments owed to MPAA studios in China pending resolution of the application of a new value-added tax (VAT) due to be implemented nationwide as of August 1. We are pleased to hear that the Chinese government has addressed the matter and all money due will be paid in full. It is our understanding that the payment process has recommenced. The U.S. and Chinese film industries enjoy a close and productive relationship and the MPAA is grateful to our counterpart, the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) for their commitment in resolving this matter favorably. We look forward to further strengthening our ties with SAPPRFT as the Chinese screen community continues its path to becoming a global powerhouse in the international entertainment market.”
PREVIOUS: In the battle over box office receipts between the studios and China’s government with hundreds of millions at stake, Hollywood appears to have won. That’s per WSJ, which is reporting that the MPAA has successfully settled an ongoing dispute over a value-added tax China-owned distrib China Film Group wanted to charge on box office returns. The fees would have cost studios including Fox, Paramount, Sony and WB a portion …
A representative of China Film Group today called Keanu Reeves’ upcoming Man Of Tai Chi “the most important co-production” for the company this year. Reeves makes his directorial debut with the kung-fu film that is a co-production from CFG, Wanda Media, Village Roadshow Pictures Asia and Universal Pictures. At a gathering to introduce clips from the film, Reeves said he shot for more than 105 days in Beijing and Hong Kong, where the crew was at one point locked on a set because of a severe typhoon. He chose this movie to make his helming debut because it was “the story I felt I could tell and wanted to tell and didn’t want anybody else to tell.”
Man Of Tai Chi focuses on a young, innocent martial artist who struggles to maintain his values amid the pressures of contemporary society. Tiger Chen plays the man who is lured into the underground boxing world where Reeves plays the man out to manipulate him. Reeves and Chen worked together on the Matrix movies where Chen taught Reeves about “wires and kicks and punches.” The pair became friends and over five years developed the story. Reeves says it was just about “four or five years ago that I started to think about directing. But I always said I would only direct if I had a story to tell.”
Giving himself an extra challenge, the story is told in Mandarin, Cantonese and English. Reeves says, “I had to listen. The process was very collaborative. I had great support in terms of translators, casting or working on a scene… As an actor, you’re part of telling a story and as a director you’re responsible for it, but you can’t do it yourself so the collaboration was the gift.”
The latest tale of thievery to surface here in Cannes after last week’s $1M jewelry heist, involves China Film Group vice-president Zhang Qiang whose luggage was reportedly stolen from his hotel room. The incident caused him to cancel his participation in a press conference scheduled for tomorrow for Keanu Reeves’ directorial effort Man Of Tai Chi. I’m told the Man Of Tai Chi press conference will still be held with Reeves and producer Lemore Syvan in attendance, but that Zhang will not be there. The movie is a co-production between China Film Group, Wanda Media, Village Road Show Pictures, Universal Pictures and Company Films.
Back in February, the U.S. and China agreed to significantly increase the number of imported films allowed to be shown in Chinese movie theaters. The move has “shaken” the local industry, radio-film-TV vice minister Tian Jin said today in Beijing. “This has brought handsome profits to the American film industry, but has also posed pressure and challenge to the Chinese film industry,” he commented at a press conference on the sidelines of the Communist Party’s 18th congress, AFP reports. “Domestic films are facing great pressure,” said Tian, who vice minister of China’s State Administration of Radio, Film and Television. “The objective reason is that more foreign films in the Chinese market have dealt a blow to domestic films, and the subjective reason is that the domestic film industry needs to be more competitive,” he said. Box office is up 40% on last year, Tian noted, at $2.1B as of the end of October. However, the local share of that pie was only 40%.
MONDAY AM UPDATE: The SEC probe into Hollywood’s China business practices was sparked by a whistle-blower, The New York Times reports today. Citing a person with knowledge of the investigation, the paper says the Hollywood companies involved were “told to freeze all files, e-mails and other data related to getting films made or distributed in China.” Meanwhile, Han Sanping, the China Film Group chairman whose name I noted yesterday keeps popping up, told the paper he was unaware of the SEC investigation. Regarding whether he’d ever seen evidence of improper payments involving US companies, he said, “How would I know about this? I don’t even have a clue.” Han further told the paper that his work is “not only going through the administrative process, but also a substantial amount of groundwork to make sure the shooting could go smoothly inside China…As the president of (China Film Group), I have this responsibility.”
SUNDAY: Now that the SEC has sent letters of inquiry to all the Hollywood majors regarding their China dealings, one name continues to come up: China Film Group chairman Han Sanping. He’s the “gatekeeper” between Hollywood and China, as one person calls him. The state-run China Film Group essentially controls distribution in the nation of 1.4 billion people. It takes 50% of distribution and also awards a license for the other half. Given CFG’s grip on distribution in China, I’ve been told that unless filmmakers work …