Mind the Gap

Does China’s buying spree of Hollywood studios project soft power? Not so easy

It’s easy to forget that China’s big problem in controlling films is that no one wants to watch such Chinese-themed films. With technology, the likes of Netflix and YouTube are content creators, not merely distributors

PUBLISHED : Sunday, 09 April, 2017, 3:23pm
UPDATED : Sunday, 09 April, 2017, 9:33pm

Controlling some medium or platform for communication is an important part of China’s soft power. Telling China’s story as a rising superpower to the world is a key part of its foreign policy.

But it is not as simple as owning a Hollywood studio. Rapidly shifting technology and tastes are reversing the roles of determining the content and message.

Joseph Goebbels, the reich minister of propaganda for Nazi Germany, once said that “future generations may conclude that the radio had as great an intellectual and spiritual impact on the masses as the printing press had before the beginning of the Reformation”.

He believed the Weimar Republic failed to understand the significance of the radio and was blind to the possibilities of this modern method of influencing the masses.

Today, it is not just the medium being the message, it is a conflation of technology that subjugates and bypasses an entire medium, like films, to allow many intended and unintended messages to either liberate or pervert a version of truth.

In light of this historical context and current dilemma, China’s foray into the Hollywood studio movie industry is strange for its overrated regard for the propaganda power of Chinese-themed films to attract or influence American audiences.

With currency fluctuations, two governments at the precipice of a trade war, capital restrictions on the yuan and shifting Chinese policies, it is easy to forget that China’s big problem in controlling films is that no one wants to watch such Chinese-themed films.

That became evident this year when not one, but two major Sino-American entertainment deals collapsed. Firstly, an investment in Paramount Pictures has yet to receive the first payment from a billion-dollar financing deal with partners Shanghai Film Group and Huahua Media.

Then, the owner of Dick Clark Productions, producer of the Golden Globes and other award telecasts, announced it had called off the proposed US$1 billion buyout by Chinese conglomerate Dalian Wanda Group and sued to recover a US$25 million breakup fee connected to the deal. Wanda also bought Legendary Entertainment.

Legendary’s Chinese-American co-production The Great Wall bombed at the US box office despite its US$150 million production budget, with Matt Damon as the leading man and Zhang Yimou in the director’s chair. Zhang’s 2011 East-West film The Flowers of War starring Christian Bale grossed a paltry US$300,000 in America.

Hollywood studios and Chinese investors have deceived themselves into believing that two almost antagonistic cultures with no shared political and social experiences and values can successfully execute film co-productions that attract each other. Instead, audiences have soundly rejected their stories.

Both audiences do not even share the same cultural heroes: Americans love American heroes, like Captain America, whether they are flawed comic book characters or existential losers.

The American audience has no empathy with the steady parade of Chinese kung fu movies based in some ancient dynasty. The overarching theme of the marshal glory of monolithic Han Chinese struggling against foreign oppressors only appeals to a domestic Chinese audience.

Chinese-American co-productions are doomed to disappoint because both parties seek contradictory goals.

Underlying this dynamic is the fact that the Chinese government favours more domestic rather than American productions.

Wanda is building a massive US$8.2 billion studio complex, housing 30 soundstages, in Qingdao. They have invited foreigners to shoot films there. However, producers have told me that few Western films or shows are suitable for shooting in China. For example, a film set in New York needs more Western rather than Chinese extras.

According to a PwC study on declining US box-office trends, more than half of US filmgoers said lower prices would motivate them to see more films in cinemas.

Yet 82 per cent of consumers will still pay up to US$20 more than the ticket price to watch a new movie at home. Technologies such as home theatres, notebook computers and tablets are enabling content choices worth paying more for.

Streaming services like Netflix and YouTube started as technology companies. Today they are wildly diverse content creators rather than distributors for studios.

Technology now enables viewers to drive diverse and individualised content choices.

China’s desire to control film studios may actually be out of step with technology.

Peter Guy is a financial writer and former international banker