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Chinese films have won a shelf-full of top prizes at major festivals in the past few years. And the country is now making major movies that increasingly top global box office charts – Chinese sci-fi title “The Wandering Earth” is by far the highest- grossing movie in the world so far in 2019, grossing more than $676 million in China alone – but none of that is helping shore up the business of independent Chinese sales agents.

“It is a tough business, we may not be doing it after Cannes,” says Yang Ying, head of sales at Movie View Intl. The company, which represented the stunning 2017 experimental film “Dragonfly Eyes” and star-studded drama “Forever Young,” may instead fall back to its magazine publishing and local marketing strengths.

The problems are multifold: Chinese films have little recent record of scoring with international audiences; China’s sales companies are mostly small and fragile; and recent turmoil within the Chinese film industry creates market instability.

“The last three years has seen the emergence of several (mainland) Chinese sales companies, and the past three to five years has seen more Chinese films in major film festivals,” says Clement Magar, who previously represented IM Global in Beijing and who now heads the revived Fortissimo Films. “But Chinese film sales over the past three years have not been strong.” Magar suggests that 2014 Berlin Golden Bear-winner “Black Coal, Thin Ice,” sold by the old, pre-bankruptcy Fortissimo, was the last Chinese arthouse title to score a meaningful volume of international sales.

The example is telling of the narrow range that Chinese sales agents are able to operate within. “Black Coal” director Diao Yinan’s next title, “Wild Goose Lake,” stands a realistic chance of finding a berth at Cannes this year. It is not represented by a Chinese company, but rather France’s Memento.

European institutional finance and privileged access to major festivals mean that French and German sales agents have often been able to cherry-pick films by China’s best-known auteurs. MK2 finances and represents the films of Jia Zhangke. Wang Xiaoshuai’s double Berlin winner “So Long, My Son” is handled by Germany’s Match Factory, while France’s Wild Bunch has handled Lou Ye’s “Mystery” and “Love and Bruises,” Bi Gan’s “Long Day’s Journey Into Night,” Wong Kar-wai’s “The Grandmaster,” Zhang Yimou’s “Coming Home” and Hou Hsiao-hsien’s “The Assassin.” At the other end of the scale, Hong Kong studios and indie sales agents have traditionally handled most of China’s more commercial output.

The new crop of mainland China-based sales companies, which include Chinese Shadows, Rediance, Parallax, Movie View, and the new Fortissimo (under the ownership of China’s Hehe Pictures), almost of necessity must instead focus on smaller festival titles and take on a talent discovery role.

“The aim is to make Chinese films travel now, and hope that revenues follow,” says one seller, who requested anonymity. “Fortunately, if we stick to an agency business, not taking on finance or production roles, the financial risk is quite limited.”

Cao Liuying, who heads sales at Parallax Films (aka Midnight Blur), describes her recent trip to Berlin’s European Film Market as “quite fruitful.” She succeeded in booking multiple festival dates for her film slate, but only expects to close rights sales deals at FilMart.

“We are frustrated by Western audiences’ stereotype images of what Chinese films should be about. They expect them to be critical, depict recent history and show scenes based on real-life situations,” says Cao. “Our ‘Vanishing Days’ struggled because it doesn’t fit that mold, it is so personal.” “Vanishing Days” has a market screening in FilMart and plays the youth film competition at the Hong Kong Intl. Film Festival.

Admitting that most Chinese films are made primarily with Chinese audience tastes in mind, Cao sees limited upside in the short-term. “If the scope of the market is festivalgoers, then to play a film three times at an overseas festival means exhausting the entire potential audience,” she says.

CMC Pictures, part of Li Ruigang’s sprawling China Media Capital group, is taking a different approach. While CMC Pictures handles sales for its own productions as well as some acquisitions, the company is increasingly pursuing a direct distribution model.
“The overseas market for Chinese films is going down. And prices are lower than before,” says Julia Zhu at CMC Pictures. “But more Chinese films are able to get day-and-date releases, and in more markets.”

This is an expansion of an approach pioneered in recent years in by China Lion, WellGo USA and Asia Releasing (now part of Australian-Chinese Tangren Cultural Film Group0. Having learned the painful lesson that Chinese films are not being picked up by Hollywood majors and given wide outings, these companies have instead targeted the Chinese diaspora markets with releases of commercial Chinese-language films in only a few dozen theaters.

The day-and-date strategy gets movies in theaters ahead of pirated versions and before overseas Chinese audiences can access them via mainland Chinese VOD platforms. CMC Pictures earned an astonishing $5.7 million in North America with its pickup “Wandering Earth.”
Australia, New Zealand, the U.S. and Canada have been the pioneer markets, but Zhu says more are catching on. “We are increasingly seeing it happen in the U.K., Singapore, Malaysia and Germany too,” she says.

The other uncertainty dogging the sector flows from last year’s regulatory interventions into the film sector, which led to a sharp slowdown in film production. But the sales executives cannot be sure how that will play out for their businesses.
“[The lower volume of production] could be good for the films that are completed, as there is less competition, or worse because everybody is acting so cautiously,” says Cao.

The big commercial titles targeting holiday releases are still being made, says Zhu. “But the smaller ones are coming to us less well-financed than before.”