Motion Picture Assn. chairman and CEO Jack Valenti reiterated his support for normalizing trade relations with China, saying the move — which Congress will debate and vote on in coming months — is a vital step in opening the potentially huge China market to the U.S. entertainment biz.
Valenti, speaking at a public roundtable discussion of China held at 20th Century Fox, said that annual U.S. entertainment revenues from China now average a meager $20 million. “We’re not going to be clothed in golden robes,” he said. “We’re looking down the road.”
Nevertheless, Valenti and U.S. Trade Representative Charlene Barshefsky asserted that provisions of the trade agreement the Clinton administration hammered out last year with China are a big step forward.
The informal quota of 10 films imported by China annually for theatrical exhibition would be doubled to 20 (pics from American studios have usually grabbed seven or eight of those slots in recent years). Import duties would also drop and new investment opportunities — such as the chance to invest up to 49% in joint ventures to build theaters — would be opened.
Up to Congress
But those concessions are contingent upon Congress voting to give China permanent normal trading status (currently, China’s status must be voted on annually). The move is highly controversial — with business generally in support and labor in opposition — and also charged with election year politics, as Republicans play up Vice President Al Gore’s involvement in campaign fund-raising linked to China.
Lawrence Kaplan, exec VP and general manager at Disney’s Buena Vista Intl., noted that stiff taxes make Disney’s profits in China among its slimmest, and also said only two pictures — Chinese or imported –have grossed more than $10 million at the Chinese box office since 1994. But he said the trade agreement could create a more inviting business atmosphere.
“Without the opportunity to bring in product,” Kaplan said, “no one wants to build theaters. It’s a chicken-and-egg thing.”
Tempest in teapot
“We’ve found it nearly impossible to do business in China,” agreed John Fithian, president of the National Assn. of Theater Owners. He noted that there are about 38,000 screens in the U.S., but only about 3,000 in China –despite the fact that China has roughly five times America’s population.
The trade agreement, Fithian said, “is a good thing for business, and a good thing for the Chinese consumer.”
Valenti, the film industry’s top lobbyist in Washington, said the group of studio chieftains he organized last month to press lawmakers about the China deal (Daily Variety, Feb. 10) continues to make contacts on an individual basis.