U.S. Assistant Attorney General John Demers discussed the China Initiative and the process for assessing risks posed by Chinese acquisitions or the business operations of Chinese companies in America.
Asst. Sec. Charles H. Rivkin, “Building a Dynamic U.S.-China Film Relationship,” September 5, 2014
With more than 20 years of experience in the entertainment industry, I am acutely aware of the power of film to build connections across cultures – none more so than in the important relationship between the United States and China.
Movies have already become a medium for a growing number of professional and creative collaborations between our nations. Our potential to build ever deeper cultural ties, create more jobs and mutually beneficial economic growth underwritten by an atmosphere of artistic and business protection is enormous.
China’s love of movies is clear: It has just become the first international movie market to exceed $3 billion in box office revenue, according to the Motion Picture Association of America. This figure of $3.6 billion marked an increase of 27 percent from the previous year. Such a boom in business has been wonderful for Chinese filmmakers and the industry as a whole, and China is further developing a successful and self-sustaining economic and creative industry.
It is exciting to see our two countries’ industries combine their creative talents to blur the lines between Hollywood and Chinese productions with an increasing number of American studios partnering with their Chinese counterparts. Most recently, the making of the enormously successful Transformers: Age of Extinction, demonstrated an innovative collaboration between the U.S.-based Paramount Pictures and producers in China and Hong Kong to better represent the Chinese aspects of the story.
Other examples from the industry give us every reason to believe that these cultural and business collaborations will continue to succeed and grow. The creation of Oriental DreamWorks, a joint venture with DreamWorks, Shanghai Media Group, and two other Chinese firms, is an example of a partnership between the U.S. and Chinese movie industries that leverages cross-cultural talent to make movies for both Chinese and Western audiences.
Among the first projects Oriental DreamWorks is slated to create is a historical period piece. It’s based on a screenplay by Wang Huiling, the writer behind the hugely successful Crouching Tiger Hidden Dragon. Another is an English-language version of the classic Chinese epic, Journey to the West, designed to introduce, Sun Wu Kong, China’s folkloric Monkey King, to the world. These collaborations not only bring Hollywood technology, marketing, and distribution together with the best Chinese producers, directors, casts, and crews. They help expand the cultural reach of great stories being created in China, sharing them with a truly global audience.
As the U.S.-China film relationship deepens, these partnerships will expand across important areas such as film financing, cinema exhibition, studio theme park development, and merchandising. These are just some of the ways movies can create jobs and spur economic growth. In 2011, China’s film and television industry directly contributed $15.5 billion and more than 900,000 jobs to China’s economy, according to a report by the Motion Picture Association and the China Film Distributors and Exhibitors Association.
Chinese companies are also becoming increasingly involved in the U.S. film industry, as demonstrated by Dalian Wanda’s acquisition of cinema operator AMC Theatres in May 2012 for $2.6 billion. We have also seen movies such as Zhang Yimou’s Hero gross more than $50 million in the U.S. I look forward to seeing more of these partnerships contributing to economic growth and cultural exchange in both countries.
Strong intellectual property rights are not only important to creators and all those who work in the industry, they help create prosperous, open markets that generate additional opportunities for Chinese and U.S. companies throughout global value chains. For example, Dawn of the Planet of the Apes features breakthroughs in movie technology that have developed a computer-generated sense of realism through creative research and large investments. The patents and licenses for these novel technologies, as well as the trademarks and copyrights vital to creating thrilling and enduring movies, are critical for creating incentives and unlocking investment that spur innovation in technologies, stories, and other creative endeavors. This is as much of a problem for Chinese companies and creators, as it is for their American counterparts.
Digital piracy remains a real threat to U.S. and Chinese content creators alike. The International Intellectual Property Association has reported that approximately 90 percent of pirated new releases stem from recordings made in movie theaters. Many films lose tremendous revenue when pirated versions are made available prior to the films’ official opening, decreasing the number of potential moviegoers, as seen in the recent case of The Expendables 3. We hope to work closely with China over the coming years in improving the market for legitimate sales of movies, including through enhanced enforcement for pre-releases, which occurred on an experimental basis some years ago in Nanjing.
Earnings lost from the illegal distribution of films reduce the number of movies produced, and in turn, limit the number of investments made by studios globally. This can affect the potential for co-productions and partnerships along the global value chain—in cinematography, animation, computer-generated imagery (CGI), marketing, sound engineering, and post production. These partnerships are important means to transfer knowledge and skills that build up local movie industries.
Can we create a new environment for doing business that allows for continued prosperity but also respects intellectual property rights? Of course we can. We have already seen positive actions in the last year with China’s “Sword Network Campaign,” which was highlighted by the National Copyright Administration of China (NCAC) taking actions against two companies that Chinese and other rights holders have regarded as major sources of video piracy in China. By utilizing strong deterrent penalties for unauthorized recordings and collaborations between law enforcement officials, theater owners, and distribution partners, our governments can prevent many illegal recordings and further bolster our countries’ entertainment industries.
I look forward to continued cooperation among our governments, industries and creative sectors to develop our film industries and protect intellectual property. After all, if we want to continue to see the movies we love, we need to reward those who create them.
As the dance over control of TikTok gets more complicated, last week it came out that the U.S. government has asked American-based video gaming companies where China’s Tencent is an owner or investor to detail how they handle the data of American players.
Please join the USC U.S.-China Institute for a book talk with author David Lampton. His new book examines China’s effort to create an intercountry railway system connecting China and its seven Southeast Asian neighbors.