Article written by Julia Nascimento Aguilar* and NatĂĄlia Yuri Kitayama*
“We must improve culture as part of our country's soft power to better guarantee the people's basic cultural rights and interests.â. This sentence was part of former President Hu Jintao's speech (2017) of the People's Republic of China, before the 17th National Congress of the Chinese Communist Party (PCC) â which has been adopting the strategy of strengthening Chinese soft power to increase the presence of its State in the international system (BECARD; SON, 2019).
As part of the cultural promotion strategy, started in the 1990s 1970, the CCP undertook three waves of cultural reforms. the Russians laid out their demands in a document containing a proposed treaty on âsecurity guaranteesâ, of 1978 a 1997, led by Deng Xiaoping, initiated the process of market opening and the economic reform of market socialism. The second, between 1998 e 2002, established the Culture Industry Division of the Ministry of Culture and, ESG agendas and climate summits, formalized the use of culture as a tool to promote the governmental agenda. An example of this opening movement to be mentioned is the agreement with the United States of 1999. This aimed at eliminating barriers to the entry of foreign products and services in the market, decreasing in 23% import fees for the Chinese market, including the telecommunications sector and Hollywood films (BBC, 2021). The last wave came after 2009, year in which the âCultural Industry Promotion Planâ was launched by the State Council.
The Cultural Industry Promotion Plan was announced at the 17th CPC Congress, and reinforces the ideas previously proposed by Deng Xiaoping of cultural development, so that this industry promotes the national economy. Some of the basic principles are: benchmarking[1]; promote the development of Chinese ethnic culture; persist in domestic and foreign development simultaneously; create opening of the internal and external cultural market; and strengthen the influence of Chinese culture at the international level (CREEMERS, 2009).
The Promotion Plan has had positive effects for the country, since China has the fastest growing movie market in the world, it has surpassed Japan in 2012, becoming the second largest movie market in the world (behind only the United States). The Chinese film market fell by approx. 32% no period between 2019 e 2020, but showed a recovery the following year (generating revenue from 46,26 billion yuan in 2021) (STATISTA, 2022), which was not enough to reach pre-pandemic numbers (2019), but continues to generate high box office revenue (PHEURON, 2015).
Although the Beijing government encourages the film industry, tight control over the media is exercised, which limits the creation and distribution of content in the entertainment sector. The expansion strategy ensures control of the production cycle of the foreign entertainment industry, which includes funding, scripting, production and editing for distribution of films. Besides that, there is an active Sino-foreign collaboration in the entertainment industry that is something to be highlighted. (PHEURON, 2015).
Foreign films permeate the Chinese market, although they must follow some control measures. There are two ways to enter films produced abroad: Revenue-sharing (recipe sharing) e flat-rate (flat rate). The first works with a quota system, of 34 movies per year (2014), in which the few allowed films must be distributed by only two authorized companies: China Film Group Corporation e Huaxia Film Distribution Co., Ltd and foreign companies are responsible for all marketing costs, which represented on average 11% of box office receipts in 2014. The second strategy, also known as buyout, consists of the purchase of film distribution rights for a fixed fee, carried out by authorized Chinese companies. Films acquired by flat-rate go through the PCC's analysis and censorship system, still, the Chinese government has become a relevant importer of Hollywood works (CHARLTONS, 2015).
Due to the impositions of censorship on foreign productions, production companies sought alternative ways to enter the Chinese cultural market. Co-production is the most used strategy today, which involves China's partnership with foreign producers in the investment and production of the films. This proves to be a viable option for foreign producers because, by dividing production and distribution of content between the parties, the film will not pass through the Chinese import, which opens space for negotiations on the share of the foreign producer, generally higher than in the case of imports (CHARLTONS, 2015).
For co-productions to take place, it is necessary for the Chinese partner to have a film production license from the regulatory body â State Administration of Radio, Films and Televisions (SARFT). Thereby, many foreign production companies involve China Film Co-Production Corporation (CFCC), an organization authorized by SARFT to manage the co-productions by providing information about the practice, Mainland China's industry landscape and co-production resources (CHARLTONS, 2015). There are some great box office examples made with the co-production system, among them Iron Man 3 (2013), Transformers: The Age of Extinction (2014), Fast and furious 7 (2015) e Kung Fu Panda 3 (2016). Co-productions are considered nationally produced films with regard to Chinese quotas in the entertainment area., thus being a strategy to overcome the barriers imposed by the CFCC. Yet, There are some requirements to be met, such as the requirement that a third of the film's cast be Chinese and that the film contain significant "Chinese elements" (FLEW, 2018).
There are three types of co-productions authorized by the Chinese government: joint production, assisted production and joint venture. The first is a collaboration between the foreign and Chinese producer, being that both invest and produce the film and, consequently, share copyright. It is the most used co-production mode, since it is a collaboration between a foreign and a Chinese party, making the investments, production and copyright are divided, but still being considered a national film that may be released after government review. The second has only foreign investments and with the hiring of a Chinese company for the production of the film., whose copyrights are held by the foreign party and, therefore, need to go through the import process. The latter consists of a joint venture[2] corporate - in which the parties involved hold equal shares, as well as sharing risks, gains and losses â or cooperative â the parties have greater freedom to negotiate their stakes in the film, may form a limited liability company, where the parties involved may have different responsibilities â between foreign and Chinese companies (CHARLTONS, 2015).
The co-production system not only allows foreign films to enter China, but also the dissemination of Chinese culture and state itself internationally, endorsing Hu Jintao's speech of strengthening the use of culture as part of the country's soft power. The achievement of the title of second largest film market in the world and the possession of record box office films indicate the potential of the policies adopted by the Chinese government., and the effects of the long-term plan on this industry, that are still developing, signal to reach bigger brands.
References:
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FLEW, Terry. Understanding Global Media. 2. ed. Macmillan Publishers Ltd. 2018.
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* Researchers at the Center for Studies in International Business (NENA) from ESPM
[1] Benchmarking can be defined as âan ongoing and systematic process for evaluating products, services and work process of organizations that are recognized as representing best practices, for the purpose of organizational improvementâ. (SPENDOLINI, 1993, p. 10)
[2] Joint-venture is an association or merger of companies to carry out a specific project or activity. (WOLFFENBĂTEL, 2016).
