China Owes Hollywood Millions

This site reported last month of the concerns that many have with Hollywood kow-towing to Chinese censors. In order to get the world’s largest cinema ticket buying audience in front of their latest efforts, movie makers were adding scenes, removing scenes with “director’s approval” and generally ingratiating themselves as much as possible with the Chinese government. It’s probably safe to say that they hadn’t reckoned with the latest wheeze that Beijing’s bean counters have come up with - not paying Hollywood it’ dues once it’s got it’s hands on the cash.

Under the WTO deal that was brokered, studios were expecting a 25% cut of all the profits, but the sate-run company that distributes the films in China has said that it intends to pay 2% VAT on the receipts. The upshot is that Hollywood studios are owed a lot of money - in fact they say they haven’t been paid since late 2012 because of the dispute. The Hollywood Reporter says that Warner Bros is owed $31million for Man of Steel, the first installment of The Hobbit, and Jack the Giant Slayer. For Iron Man 3 alone, the film that had specifically had extra scenes filmed to appease the censors and increase it’s audience friendly quotient, Disney is owed nearly $30million. Fox and Universal are owed for Oblivion and Life of Pi, and Paramount is owed another $30million for three of it’s releases.

Fearful of making too much of a scene that would upset the already highly strung mandarins at SARFT (the Chinese TV, radio and film administration), they won’t be anxious to take the case as far as the office of the US trade representative to the World Trade Organisation, but negotiations are in progress with Chris Dodd, chairman of the US film group the Motion Picture Association of America. Speaking to Variety, former U.S. Trade Representative Ronald Kirk said “Unfortunately it does not surprise me that China has come up with another creative way to cut into that revenue payment,It fits the pattern of their creative accounting at times…there are a number of ways that China has frustrated American interests.”

Delayed payment strains the already difficult relationship between American movie makers and Chinese censors. Frustrated with an organization not used to giving reasons as to why a film makes the blacklist, as happened with Despicable Me and Despicable Me 2, there’s no real way of making sure that a release is guaranteed, no matter how much soft power ass-kissing is involved. Adding to that are the problems of rampant and unregulated piracy in China, where pirate copies of the latest releases are available to buy for as little as a dollar a disc - often the illicit sellers set up shop outside the very cinema that the US battled so hard to get the film released into in the first place.

While the dispute doesn’t affect movie goers in any real sense, it does highlight the problems of the west trying it’s damnedest to get around a government that simply isn’t used to playing by the rules. Censorship laws and blacklists are more often used as an excuse to give inferior Chinese productions, unless there’s going to be a sequel to Crouching Tiger any time soon, Robert Downey, Jnr may want to to improve on his Tropic Thunder level of Mandarin just in case.