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China's Crackdown on Entertainment Industry Has Outsiders Rethinking Market

Visitors walk past a display of posters for Chinese movie and television productions at the China International Fair for Trade in Services in Beijing, Sept. 3, 2021.

As Beijing cracks down on its entertainment industry, from storied stars to their fan clubs, some non-Chinese filmmakers are scaling back projects they hoped would attract audiences in what has been a lucrative market.

In February 2020, Chinese authorities released "Detailed Rules for Reviewing Internet Variety Program Content." Addressing TV and internet program makers, the guidelines say they "should not inappropriately use stars from Hong Kong, Macau, Taiwan or foreign countries."

Some Chinese celebrities interpreted the rules to mean they had to relinquish dual citizenships and demonstrate their loyalty to the Chinese Communist Party if they wanted to continue performing in China. Actor and singer Nicholas Tse, who moved from Hong Kong to Vancouver, British Columbia, as a child, said last week in an interview on state-controlled China Central Television (CCTV) that he was renouncing his Canadian citizenship. Other celebrities in the Chinese market who hold dual citizenships are reportedly considering following his lead.

For others in the entertainment business, the guidelines have prompted a decoupling with China, even as the film industry has been accused of pandering to the country that was the world's largest movie market in 2020, and China eyes the global film market.

'Netflix is not in China'

Adam Sandler, an American actor, screenwriter and producer, changed the setting of his forthcoming Netflix comedy "Hustle" from China to Spain because, as he said last month on "The Dan Patrick Show," "Netflix is not in China."

A description of "Hustle" can be found on the entertainment industry website IMDB: "A washed-up basketball scout discovers a phenomenal street ball player while in China and sees the prospect as his opportunity to get back into the NBA." IMDB has yet to identify the film's shooting location.

The movie is part of a four-film deal with Sandler that Netflix announced in January. Neither Netflix nor Sandler responded to VOA Mandarin's request for comment.

Clayton Dube, director of the University of Southern California's U.S.-China Institute, told VOA in an email, "Since Netflix is in Spain and other European or Spanish-speaking markets, it asked Sandler to change the setting of his film hoping that it might be able to use that to spark potential subscriber interest."

Like many American entertainment companies, Netflix didn't crack the Chinese market. In 2017, Netflix signed a content licensing agreement with iQiyi, a Chinese streaming platform, for a subset of Netflix's original series. Two years later, the partnership fell apart.

Founder and CEO of Netflix Reed Hastings smiles during an interview with The Associated Press in Barcelona, Spain, Feb. 28, 2017.
Founder and CEO of Netflix Reed Hastings smiles during an interview with The Associated Press in Barcelona, Spain, Feb. 28, 2017.

In an interview with CNBC last September, Netflix co-CEO Reed Hastings said the streaming company has been focusing on growth opportunities in the rest of the world but not in China. A year earlier, Hastings said the company had been spending more money on acquiring rights to Mandarin-language content and producing its own original works in Mandarin to appeal to Mandarin speakers outside China.

"Netflix tried for years to enter the Chinese market, but it understands now that China's government is not going to permit foreign entertainment platforms to compete with those it controls. Further, it has tightened rules governing foreign content on Chinese platforms," Dube said.

Aynne Kokas, assistant professor of media studies at the University of Virginia, told VOA Mandarin in a phone interview that celebrities in the U.S. and China are facing different types of pressure under the crackdown.

"I think that from a financial standpoint, U.S. firms are definitely examining their exposure in China and considering how much they invest and how much they depend on the Chinese market," she said. "But there isn't a requirement from the U.S. government — or even a tacit requirement from the U.S. government — that asks them to stop operating in China in the entertainment section."

On the other hand, China's laws covering entertainment can require the advancement of "China's national values, which puts a different type of pressure on Chinese celebrities," she added.

Ignoring China at a cost

But how much does the Western entertainment industry, especially Hollywood, stand to lose if it backs away from the Chinese market?

It's almost impossible to estimate because some films that flop in the U.S. may turn a profit after a Chinese market release, according to Wendy Su, an associate professor and expert in Chinese media studies at University of California-Riverside.

"Dwayne Johnson's 'Rampage' [2018] grossed $101 million in the United States but $156 million in China," she said.

Some in the entertainment business, however, have already opted out of trying to appease the Chinese government to gain access to the market, according to Su.

Margot Robbie and Quentin Tarantino pose on the red carpet during the Oscars arrivals at the 92nd Academy Awards in Hollywood, Feb. 9, 2020.
Margot Robbie and Quentin Tarantino pose on the red carpet during the Oscars arrivals at the 92nd Academy Awards in Hollywood, Feb. 9, 2020.

Director Quentin Tarantino "refused to observe China's censorship requirement and believed his movie 'Once Upon a Time … in Hollywood' could earn enough profits without the Chinese market," she said. Released in July 2019, the Oscar-winning film Tarantino wrote and directed earned $139 million domestically and $357.4 million worldwide by the end of October, according to Forbes.

Stanley Rosen, a political science professor at the University of Southern California, told VOA in a virtual interview that the loss for companies such as Netflix may be bearable.

For the Chinese film sector, Rosen said, "you have to also take into account that there is a quota system: 34 revenue-sharing films a year, 14 of which have to be IMAX and/or 3D. So that limits the market to begin with. Then all the studios are fighting to get their share of the quota."

In the TV industry, the main Chinese streaming services once showed more than 100 foreign TV series without censorship. Now that practice has been "very severely restricted after new regulations began to be introduced in 2014 that would make it even more difficult for Netflix [to get in]," Rosen said.

Today "you have to submit the whole season in advance with subtitles when censorship occurs if they allow you to show it," Rosen continued. "So Netflix is not losing what they might have lost when they first tried to get into China when the market was much more open."

What China needs from US

While many experts agree that the U.S. and China are mutually dependent in the entertainment sector, Katherine Chu, a lecturer at California State University-Dominguez Hills, whose research interests include Chinese/Asian film studies, emphasized that China, for now, needs the U.S. for its platform, established studios, talent and technology.

She said these U.S. resources could help China with its "aggressive plan to dominate the fair market in 2035."

In May 2019, Beijing called for the production of 100 movies a year that each would earn more than RMB 100 million ($15 million), according to Variety, an authoritative entertainment industry news outlet.

"A country's level of film development reflects its total national strength," said Wang Xiaohui, executive deputy director of the Central Propaganda Department and director of the National Film Bureau, when announcing the movie production goal, according to the state-controlled People's Daily.

The Chinese movie industry wants "maybe just a small thing, like a scriptwriter — how to write a film that you can target the world's audience," Chu said. "Because the Chinese, they try very hard to copy the Hollywood model and then to sell their Chinese films."