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China and Hollywood Are Ready to Become Global Partners

“Powerful magnetic forces” have brought Hollywood and the Chinese film industry together. And after a period of testing each other out, the relationship has entered a new paradigm, says U.S. entertainment lawyer Lindsay Conner.

China and the States are starting to become better partners in terms of discussing critical business issues and understanding each other’s needs. It has taken a while for the bridging of cultures and styles,” says Conner, partner and co-chair of the entertainment and media practice at L.A.-based law firm Manatt, Phelps & Phillips.

“From now on there will be more Chinese investment in Hollywood and more Hollywood investment in China. These investments will involve finance, distribution and co-production.”

The objective is clear from the U.S. side. “China is the newest market on earth and the biggest growth opportunity on Hollywood’s horizon – these days the opportunity spans distribution, financing and online video,” Conner says.

The Chinese point of view is more complex. “Hollywood is the heart of the U.S. cultural engine – it has story, production and distribution techniques that Chinese would like to adopt.” And it is interesting for its ability to project soft power and for its profitability.

“Chinese firms can make blockbusters for the Chinese domestic market, but they want to move to the next level and go global. Hollywood offers the fastest growth path to that goal,” Conner says.

Conner regards the deal between Lionsgate and Hunan TV as another piece of important evidence of the accelerating trend.

“We see a Chinese entity with capital seeking to broaden its stance within the film industry, matching up with an experienced U.S. partner with a need for capital,” says Conner. “Most Hollywood studios have regular co-financing partners. It helps expand budgets and slates, and aids risk management. The deal also offers the prospect that Lionsgate may get additional films into China. They may be seen as a friendlier party.”

Conner sees the Internet giants Baidu, Alibaba, Tencent and property group Wanda as “certain to have a major say in the industry for the next 10 years and beyond.” “They are major Chinese companies with very powerful positions in the businesses that help the market – spanning information about entertainment, and the selling of entertainment.”

“They will drive to create more content and give broader choices — of international and domestic content — to the Chinese consumer,” Conner says.

“And while we have not yet reached a point where the Chinese market is mature or fulfilled, all these companies are formulating plans beyond the border of China,” Conner adds. “We are at an interesting point on the road. Maybe a turning point. To date there has been more talk than action. Looking forward we will see more action with every passing year. We’ve moved from the looking stage to the consummation.”

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