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Tradeoffs may cripple reforms

New requirements would make it harder for H'wood pics

SYDNEY — China’s need to protect and nurture its ailing film industry is threatening to hobble plans to introduce competition among distribs handling foreign pictures.

Each distrib would be required to release up to five domestic films for every U.S. title, according to proposals being bandied around by the State Administration of Radio, Film and Television, Variety has learned.

That could make it economically unsound for distribs such as the Shanghai Film and TV Group to spend time and money on Hollywood films, since the profits likely would be chewed up in shouldering a hefty slate of Chinese product.

The Shanghai Group is widely expected to be granted the first license to distribute foreign films, ending China Film’s monopoly, under reforms China is undertaking to gain entry to the World Trade Organization ( Variety, July 30-Aug. 5).

Some U.S. execs believe the Shanghai Group will get the rights to handle six U.S. pictures next year — but that may mean the firm is obliged to release as many as 30 Chinese films.

“As we all know, 90% of domestic films lose money — not only on production costs, but also marketing money,” one Beijing producer tells Variety, underscoring the Chinese authorities’ desire to ensure that competition among distribs to secure U.S. films does not come at the expense of efforts devoted to national films.

Shanghai Group president/general manager Zhuo Wu says he has heard of proposals that would mandate distribs to handle a minimum number of domestic films for each U.S. title, but he has not been given any official notification.

Zhuo is waiting to find out when his group will receive its distrib license and hopes that will happen in time for it to launch “Lara Croft: Tomb Raider” in October.

Some U.S. reps are convinced that China Film will lose its exclusive hold on importing foreign films next year, and that entities like the Shanghai Group will be permitted to deal directly with U.S. and other foreign producers. Zhuo is not sure if that will transpire but says, “We hope so.”

Waiting for terms

The Beijing producer says provincial studios/distribs in regions such as Sichun and GuanZhou are anxiously waiting to see the terms of the distrib deal negotiated by the Shanghai Group before they press for distrib licenses.

The Shanghai Group was formed in 1996 from the merger of the Shanghai Film Studio, Shanghai Film Laboratory, Shanghai Film Industrial Co. and the city’s Holiday Inn. It has nearly 2,300 employees, and while it has a very active TV production division turning out series and telepics, it has only enough funds to make eight-10 feature films per year.

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