China sez it can’t handle 20 U.S. pix

American majors had lobbied hard for liberalization of cap

China’s assurances that 20 imported films will be allowed to be released in that vast market each year on a revenue-sharing basis — doubling the previous unofficial quota — suddenly appear far from certain.

The Beijing government agreed to increase the cap to 20 titles last year as one of the concessions to persuade the U.S. Senate to grant China normalized trade status — a major step toward China gaining admission to the World Trade Organization.

U.S. majors had lobbied hard for that liberalization, which was intended partly to encourage Western exhibs such as Warner Bros. Intl. Theaters to enter the market and start to redress the lack of modern, comfortable cinemas.

And Chinese theater operators have been begging for more U.S. product to help drive business at a time when Chinese films often struggle to find audiences on the mainland.

Now, two officials at China Film Import & Export Corp. have cast doubt on whether the country can absorb 20 films annually (in addition to the 30-40 indie titles bought on a flat sales basis).

The execs, interviewed separately, decline to be named but agree to be quoted as spokespersons for China Film. They make it clear China has agreed to release up to 20 U.S. films a year on a rev-sharing basis, but say there’s no obligation to handle as many as 20.

Moreover, both question whether the Chinese exhibition industry wouldn’t be overburdened by 20 U.S. films a year, after normally handling eight or nine U.S. pics annually.

“I don’t think the market can digest 20 a year,” one of the China Film officials says. “It’s up to the market (to determine what is sustainable), but I think the number may be less than 15.”

The exec also emphasizes the agency has to import films that cater to minority audiences, such as Bollywood fare, implying Hollywood films can’t always expect to take precedence in the import market.

A colleague at China Film, the nation’s only licensed film importer-exporter, says China’s capacity to absorb U.S. films is limited by a scarcity of modern, well-equipped cinemas. He calculates only about 1,000 of the nation’s estimated 10,000 screens are of sufficiently good standards to play films imported on a revenue-sharing basis.

The prospect that China will pull back on the volume of rev-sharing films from the 20 that is widely understood to be the new cap will dismay Hollywood.

Thus far this year, only “Charlie’s Angels” (which launched Feb. 8 and grossed a reasonable $2.3 million in the first two weeks) and “Chicken Run” have been released in China. “Vertical Limit,” “The 6th Day,” “Meet the Parents, “The Mask of Zorro” and “Step Mom” have been approved for later in the year.

Some China Film execs had assured U.S. major reps the intention is to release two U.S. titles per month — but that notion now seems out of reach.

“That would be 24 in a year, which is impossible,” one of the China Film execs says. “That would make the Film Bureau (which oversees the film industry) extremely unhappy.”

One U.S. exec who deals with China, who asks not to be identified, argues that it’s wrong to blame the market for not being able to cope with 20 films a year. The exec cites China Film’s shortcomings as a distributor as the problem, contending the agency lacks the manpower, expertise and resources to efficiently market and distribute films nationwide.

It’s an issue that won’t be resolved until China Film loses its monopoly, including sovereignty over distribution, sometime after China joins the WTO, the U.S. exec says.

Some tradesters in Beijing are certain at least one other import-export license will be handed out, and they say Shanghai Film and Shanghai Paradise jointly are lobbing quite animatedly for it.

Meantime, China Film continues to buys indie films for a flat fee, usually in the range of $35,000-$50,000. Miramax recently sold “Life Is Beautiful,” “The Cider House Rules” and “Music of the Heart” to China Film on that basis.

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