Can Hollywood Afford to Make Films China Doesn't Like?

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Moviegoers walk past an advertisement for the film Avatar at a theater in Beijing on Jan. 20, 2010

In the 1997 film Seven Years in Tibet, the character of Austrian mountaineer Peter Aufschnaiter escapes an Indian POW camp and declares that he is heading for China to find work. His compatriot-in-arms, Heinrich Harrer, played by a sun-kissed, blue-eyed Brad Pitt, says he's skipping China and going to mountains of Tibet. Harrer goes on to cross the line that separates India from Tibet, where he makes a silver-screen connection with the Dalai Lama among the Chinese territory's fabled peaks. The American who played him, however, may never get to make the same trip: Pitt has reportedly been banned from entering China because of his role in the film, which paints a sympathetic portrait of the Dalai Lama.

Were this tale about the spiritual icon pitched to studio executives today, it might never have been made. The global box office plays an ever larger role in Hollywood's yearly revenues, and China has become a crucial player in that mix. China is now the fifth largest international box office, with earnings that have surged nearly tenfold since 2003. Last year alone, China's box-office earnings grew by 65%, raking in over $1.5 billion. American studio executives are paying attention: China was the second highest earnings market for Avatar, just behind the U.S., according to Artisan Gateway, a Chinese entertainment-business consultant firm. At CinemaCon in March, Warner Bros. International president Millard Ochs said he believed the country's box office would overtake the U.S. market within a decade.

Interestingly, China's audience for international films has grown despite myriad restrictions. China currently only allows 20 foreign titles to be screened domestically each year. While studios can lobby for their films to be included in that quota, there is no magic formula that guarantees distribution. China does not have a film-rating system, and all movies must secure government approval from government censors before being shown commercially. Still, there are some sure bets for a film not to make it past the censors. Controversial films or ones that contain questionable thematic elements, like horror films, are much less likely to make their way to China's screens, while films containing sensitive sociopolitical subjects like Tibet or Tiananmen Square are strictly taboo.

A movie that doesn't make the cut automatically loses out on the billions of renminbi China's audiences have to offer. In the late 1990s, Kundun, a biographical film about the 14th Dalai Lama's childhood, rankled Beijing for its negative portrayal of the Chinese government. The government went so far as to threaten all future business with Disney, which distributed the biopic. The situation was not resolved until Michael Ovitz himself, Disney's president at the time, privately visited Beijing to confer with then President Jiang Zemin. The unusual move proved to be worth it: earlier this year, Disney (and China) green-lighted a Shanghai Disneyland project that that will cost the Los Angeles–based company $3.7 billion to build.

Though China's irritation with Hollywood over films like Seven Years in Tibet and Kundun has subsided as Hollywood has steered clear of pro-Tibetan subject matter, the Communist Party's policy toward films and high-profile figures perceived as anti-Chinese remains very much the same. When Kung Fu Panda, a DreamWorks production, opened in Chinese theaters in 2008, it faced heavy criticism and nationwide boycott calls — not for its portrayal of a beloved national symbol but for the actions of DreamWorks' co-founder Steven Spielberg. Months earlier, Spielberg had dropped out as an artistic adviser to the 2008 Summer Olympic Games in Beijing after unsuccessfully lobbying Hu Jintao to help bring an end Sudan's attack on Darfur. Hu did little to pressure Sudan despite the strong relationship between the two countries, and Spielberg withdrew his involvement from the Games. That same year, actress Sharon Stone insensitively remarked that the Sichuan earthquake, which killed tens of thousands of people, was China's "karma" for handling the 2008 Tibetan riots poorly. The comment sparked national outrage: advertising spots featuring the actress were promptly pulled, and all Stone movies are still banned from major theater chains.

Given China's position in the market, studios are making an effort to be more careful. Recently, MGM chose to remake a 1984 Cold War film entitled Red Dawn, for release later this year. The original story, which revolves around several American kids fighting a Soviet invasion, no longer made sense with the dissolution of the Soviet Union. Originally, the studio chose China as the new threat, but potential distributors expressed concerns about taking the project on with China cast as villain. Instead of shelving the finished film, MGM digitally altered references to China, changing the perpetrator to North Korea. Tripp Vinson, one of the film's producers, told the Los Angeles Times: "We were initially very reluctant to make any changes. But after careful consideration we constructed a way to make a ... more dangerous Red Dawn that we believe improves the movie." Rance Pow, president of Artisan Gateway, says a lot of factors contribute to why Hollywood makes the movies it does, but acknowledges that studios "will be a bit selective in its slate submitted for the China market."

At the same time, Hollywood has been trying to market itself to Chinese tastes. The Green Hornet, which was released earlier this year, features Canadian funnyman Seth Rogen as the bumbling Green Hornet and Taiwan-born pop star Jay Chou as Kato, his capable sidekick. Chou, a colossal figure in the Asian music industry for well over a decade, is one of Asia's most popular performers. Unsurprisingly, given Chou's regional appeal, The Green Hornet was selected as one of the foreign films to be shown within Chinese theaters.

China's influence over Hollywood may increase drastically within the next few years. A World Trade Organization ruling recently found that China's industry practices violates international trade laws. China has asked for reasonable amount of time to implement changes, and when if they do, it has the potential to become an even bigger force than it already is. "How quickly China becomes the number two global market, and eventually number one, is strictly up to the government," says Ochs. But even if the quota disappears, China's policy on censorship is not likely to change — a fact that will encourage Hollywood to continue catering to its policies. As China makes its own movie market more open, the space for making films critical of the Asian powerhouse may continue to shrink.