China Moves To Protect Domestically Produced Movies
Movie theater chains in China that ensure Hollywood films take no more than 33% of total box office will be granted a sizable tax rebate.
China introduced more protection to give its domestically produced movies the edge over Hollywood imports.
Last week, state regulators announced that Chinese theater chains that generate at least 67% of their box office receipts from local Chinese films will be able to keep 50% of a 5% tax paid on ticket sales.
The China Film Bureau normally collects a five percent tax on all box-office revenue. The funds are channeled towards various government grants and initiatives designed to aid the development of the Chinese film sector.
The new rules
To qualify for the rebate Chinese theater groups must ensure that imported movies take no more than 33% of the box office for the full year, and the exhibitor must have a clean regulatory record, with no history of box office under-reporting or fraud.
Throughout its expansion, the Chinese film industry has been dogged by cases of box office embezzlement and manipulation (2 sets of books), and Chinese regulators have vowed to crack down on offenders.
China employs a number of measures to protect its fast-growing domestic film industry.
The country’s quota system restricts foreign film imports to just 34 titles per year on revenue-sharing terms. The quota was raised from 20 titles to 34 in Y 2012, in a landmark deal that temporarily resolved a bitter dispute that had led the United States to file an official complaint with the World Trade Organization (WTO) alleging that China was unfairly restricting access to its market.
It is not clear how much of an effect the new tax break will have on exhibition patterns, given how successful the existing methods are.
Over the past 2 years, Chinese blockbusters have made impressive gains.
For example: Stephen Chow’s Hong Kong-China co-production The Mermaid grossed a record $520-M since its debut in mid February.
In Y 2015, Chinese films claimed 61.6% of the $6.78-B box office total. So far this year, their share has risen to about 70%, while Hollywood has dipped to a record low. As recently as Y 2014, Hollywood claimed some 45.5% of the Chinese cinema box office market.
China is a rapidly growing market for the US studios, due to the strong growth of the Chinese box office which expanded by 48% last year. The country is on course to pass North America as the world’s largest theatrical territory in Y 2017.
Stay tuned…
HeffX-LTN
Paul Ebeling
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