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H’w’d gets wider road to China

BEIJING – China is considering allowing its studios a greater role in distributing Hollywood blockbusters on a percentage rental basis, industry sources say.

The main loser in this scenario would be China Film, which until early this year was the sole authorized importer and distributor of foreign films.

That monopoly on distribution was ended in order to help China’s struggling studios, whose no-audience films are stockpiling as they seek to make the transition from state-run behemoths to businesses with a more free-market bent.

China maintains a quota of 10 Hollywood films that can be distributed each year, with the U.S. majors sharing in the box office revenue. Three of these films were distributed by studios this year: “Jumanji” by Beijing Film Studio, “Waterworld” by Changchun Film Studio and “Toy Story” by Shanghai Film Studio.

The further break-up of China Film’s monopoly is likely to be viewed in Hollywood with part enthusiasm and part wariness. On the one hand, Chinese studios are willing to allow their U.S. partners a greater hand in the distribution process, such as marketing and promotion. On the other, they lack the relative efficiency and established distribution channels of China Film.

Even if China Film is left with only four Hollywood films to distribute, it will still play an important role in deciding what movies get into the country, since it retains its position as China’s only sanctioned importer. China Film is still responsible for screening foreign films and deciding which ones should be submitted for government approval.

Meanwhile, China continues to maintain its cap on foreign films. Earlier this year, it instituted new film regulations which require two-thirds of all films screened in theaters to be Chinese. The new rules also require theaters to set aside a portion of peak timeslots and national holidays for domestic movies.

China also requires 15% of all films distributed and exhibited to be “priority” films, or movies that the ruling Communist Party deems are beneficial to socialism and national spirit.

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