China is Dictating Terms to Hollywood

Op-ed column originally published at USAToday.com

By Richard Berman

This month, Disney sued three Chinese film production companies for “copyright infringement” and “unfair competition.” The lawsuit alleges that the Chinese firms incorporated elements of Disney’s hit movie Cars into China’s own animation Autobots.

It’s a natural outcome of China’s aggressive foray into the film industry, as the Asian superpower ramps up competition—and tensions—with Hollywood. U.S. companies are fighting in court to protect their intellectual property at the same time they are trying to please Chinese audiences and the censors who control what they see.

China, with its 1.4 billion people , is projected to become the largest movie market in the world as early as next year. The Chinese box office grew by almost 50% in 2015 and is on pace to surpass $9 billion in revenue by year’s end—a lucrative market for U.S. moviemakers.

But in order for American filmmakers to penetrate it, they first have to comply with Chinese censors. China currently allows only 34 non-Chinese movies into the mainland, all of them heavily edited by a state agency called the State Administration of Press, Publication, Radio, Film, and Television. SAPPRFT’s mission is to portray Chinese culture favorably—and in line with the Communist Party’s agenda.

Leading up to Iron Man 3’s China release, filmmakers inserted a scene of doctors discussing surgery on the superhero, all of whom were played by major Chinese movie stars. The 2006 release of Mission: Impossible III—partially shot in Shanghai—retroactively excluded a scene of the city featuring underwear hanging from a clothesline because SAPPRFT claimed it portrayed China as “a developing country.”

“The censorship always goes back to the Communist Party,” says T.J. Green, whose company, Apex Entertainment, builds movie theaters in China. “They’re in charge and they’re always looking at how China is portrayed.”

And as if that wasn’t enough, the Communist Party is now coming to our shores.

Dalian Wanda, China’s largest commercial property company and movie theater operator, is actively acquiring U.S. cinema assets to gain a firmer foothold in the movie market. In 2012, Wanda bought AMC Entertainment—the second largest movie theater chain in the country—for about $2.6 billion. Then in March of this year, AMC reached a $737 million purchase agreement for Carmike Cinemas, which would form the largest movie theater chain in the country with 8,380 screens in more than 600 theater locations (the deal is expected to close late this year).

Wanda also agreed in January to purchase Legendary Entertainment—the film production company behind The Dark Knight Trilogy—for about $3.5 billion and is interested in buying at least a portion of Lionsgate, producer of The Hunger Games.

Dalian Wanda isn’t just a private company with a lot of money. The firm’s founder and chairman, Wang Jianlin, is a former Communist deputy and boasts strong connections to Party elites. His firm has received at least $1.1 billion in government subsidies. Wanda also sold company stakes to various family members of elected officials, including the elder sister of President Xi Jinping and relatives of two members of the Politburo—China’s principal policymaking committee. A business partner of the daughter of former Prime Minister Wen Jiabao also supplied the firm with seed money.

These same elites are intent on expanding China’s “soft power” by acquiring cultural assets from foreign entities. President Xi Jinping has vowed to “strengthen China’s soft power” and “build its capacity in international communication.” China now spends about $10 billion annually on “external propaganda” alone—not to mention the country’s development and militarization of islands in the South China Sea. (The Chinese refer to non-military power accumulation as “political warfare,” aimed at influencing public opinion.)

And Wang has emerged as Xi’s foot soldier. When he acquired Legendary, Wang called it “China’s largest cross-border cultural acquisition to date.”

The control of both production and distribution channels allows him to censor movies in their development stage and after release. In theory, he could prevent his movie theaters from playing films unapproved by the Communist Party. As film producer Rob Cain noted, “China is going to be…the arbiter of what can get made and will get made.”

That’s not a stretch. The 2012 remake of Red Dawn originally featured Chinese soldiers invading an American town, but moviemakers changed the invaders into North Koreans after receiving complaints from China. Chinese diplomats, said film producer Peter Shiao, “were not interested in their country being perceived as a violent military threat.”

What comes next?