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Crouching U.S. studios, hidden Chinese market

Major film companies prepare to pounce if the world's biggest market comes out from behind Communist rules and rampant piracy.

December 30, 2005|Bruce Wallace | Times Staff Writer

SHANGHAI — The Art Deco glory of the Cathay Theatre on Huaihai Zhong Road still beckons to those who love movies, a renovated bit of 1930s Americana in Shanghai that is a reminder of Hollywood's long history of building dream palaces in China. War, a communist revolution and a capitalist reawakening have roiled the country since then, and modern Shanghai's sky-piercing cityscape is more suited to Anakin Skywalker than to Clark Gable.

But this is still a movie town.

So it's no surprise that the Walt Disney Co. is also hanging out in this city of 17 million that is once again China's economic engine and its biggest film market.

In the week before Christmas, a Disney production crew was setting up on a Shanghai sound-stage to shoot the final scenes of "The Secret of the Magic Gourd." It is a modern fable about a magical fruit that bestows special powers -- and the moral burdens that come with them -- on a young boy.

Pure Disney.

What's unusual, however, is that the film is not just being made in China. It's being made for China. "The Secret of the Magic Gourd" is a Chinese story, shot by a Chinese director, with a Chinese cast and crew. In Chinese. For a Chinese audience. "We're not trying to make an American movie here," says Mark Zoradi, head of Buena Vista International, which distributes Disney's films worldwide. "We're making a Chinese movie."

That's a sharp creative departure for Disney, whose mouse ears have become synonymous with American cultural imperialism. Traditionally, Hollywood studios have tailored their films for showing in Los Angeles or Kansas City or Lubbock. Foreign markets were the icing on an American cake, a lucrative revenue stream for the cost of a few subtitles or some language dubbing. Then in recent years, as the cost of filming in Hollywood skyrocketed, foreign lands became the destination of choice for bargain-basement movie production -- with their offer of cheap labor, financial incentives and unspoiled landscapes. But American moviegoers were still the endgame.

Now, faced with shrinking, fragmenting audiences at home, the studios are rethinking how they operate in foreign markets. And markets don't come any bigger than China: 1.3 billion people -- a fifth of humanity -- with more of them becoming middle class every day. Just last week, Beijing acknowledged that it has been undercounting its real level of growth. The Chinese economy, it claimed, is now bigger than that of France or Britain.

You can hear the logic being exchanged between studio executives on their BlackBerrys: All those people (a fifth of humanity!). Ready to be entertained. Open to American culture. If just a fraction of them went to the movies -- once a month, say, and maybe bought a spinoff toy or video game ... well, do the math.

Every studio seems to have a China Project on the go. But, like the political class in Washington, there is no consensus in Hollywood on how to handle a country caught in the purgatory between one-party rule and go-go capitalism. About all the studios agree upon is that they need some kind of toehold. Set up a business here. Make connections. Be ready for the day it all blows open -- if it ever really does.

So Warner Bros. has found a Chinese partner to build state-of-the-art multiplexes in a country with still fewer than 2,400 screens (the U.S. has more than 36,000), figuring there is an audience prepared to pay for the sensory assault of a Peter Jackson film while slouched in a comfy seat that has a handy cup holder for their Coke.

The Burbank company also created Warner China Film in 2004, a joint venture with two Chinese partners that is the first full-service studio in China to produce, finance, market and distribute films in Chinese for the Chinese market. It now has 17 employees, a spot on the lot of Beijing Film Studios and a handful of films in development. The first planned release, "The Painted Veil," starring Edward Norton and Naomi Watts in the W. Somerset Maugham story of expatriate love in 1920 China, finished shooting in November.

"We wanted to invest in local production here, but only if we could have a company," says Ellen Eliasoph, vice president of Warner China Film, describing how the studio was created just before the Chinese shut down such joint ventures. "Things change fast in China: doors open, doors close. We just got in." Sony is widely acknowledged to have been the most aggressive Hollywood player in China and the first to reap rewards as co-producer of 2000's surprising global hit "Crouching Tiger, Hidden Dragon." Since then, it has stuck to its formula of co-producing, financing and distributing Chinese films, including this year's hit "Kung Fu Hustle." But Sony's primary focus is in producing shows for the booming Chinese television market, with plans to produce about 150 hours of new domestic programming over the next two years, following a model that has worked well for the company in parts of Latin America.

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