Hollywood Puts Out the Red Carpet for China

A billboard went up on the southern side of Kansas City recently. White letters on a red background proclaimed, “China’s Red Puppet? AMC Theaters.” The location was deliberate; just a mile down the road was the Kansas-Missouri border and Leawood, Kansas, the hometown of AMC Theaters. In 2012, AMC Theaters was purchased by the Dalian Wanda Group, a Chinese conglomerate.

The same billboard – which features a puppeteer’s hand with a red star on his cuff pulling the string controlling an AMC Theaters logo –  appeared on Sunset Boulevard in Hollywood, California, days before Wang Jianlin, the billionaire chairman of Dalian Wanda Group, was due to walk a red carpet.

Wang and Dalian Wanda have been on the receiving end of considerable criticism. The 2012 purchase of AMC marked a major movement by Chinese business into Hollywood’s orbit. AMC holds the second-largest share of the U.S. movie market and when the $1.1 billion acquisition of Carmike Cinemas closes, AMC is likely to catapult past Regal Entertainment Group.

The lobbyist who funded the billboards, Rick Berman, says he is on a mission against “the communist takeover of our movies.” Critics of Wang and Dalian Wanda say they are merely an extension of the Chinese government, intent on exerting influence through the silver screen.

In early October, the Government Accountability Office (GAO), a U.S. government auditing agency, agreed to a request from 16 members of Congress to review the Committee on Foreign Investment in the United States (CFIUS) to determine whether it has “effectively kept pace with the growing scope of foreign acquisitions in strategically important sectors in the U.S.” The request letter highlights several areas – telecommunications, media, and agriculture – in which foreign ownership “may pose a strategic rather than overt national security threat.”

There are dozens of instances demonstrating Chinese influence on predominantly American-made movies. In 2013, the Chinese version of Iron Man 3 featured additional scenes that upped the screen time for the film’s Chinese stars and provided a product placement for a milk drink manufactured by Yili (the company which notoriously had to withdraw tainted infant formula from markets in 2012). 2011’s Red Dawn swapped the usual Chinese villains for North Koreans so the film could make it past censors in Beijing. These examples, however, highlight what Hollywood is willing to do to gain access to the massive Chinese movie market rather than what the Chinese are willing to do to access Hollywood.

In January, Wang spent $3.5 billion to acquire Legendary Entertainment, a small studio known for blockbusters such as Jurassic World and Pacific Rim. Hollywood’s major studios, unsurprisingly, are now interested in Wang. As Tom Nunam, the founder of a Hollywood production studio, noted in a commentary in the Nikkei Asian Review, “If he was willing to pay $3.5 billion for Legendary, what would he be willing to pay for Paramount Pictures?”

Wang was welcomed warmly by Hollywood in October: he came bearing gifts big studios are keen to take advantage of. According to the LA Times, Wang announced plans to offer a 40 percent production rebate for movies and shows shot at the new Dalian Wanda studios in Qingdao, in partnership with the city. The rebate is exceedingly generous, but not wholly unprecedented. Various metropolitan areas and territories have long sought to lure moviemakers with rebates and incentives. Vancouver, Canada offered tax incentives and capitalized on a favorable exchange rate to surpass Los Angeles and New York in terms of production in the 1990s. But, as the Hollywood Reporter noted, such incentives “tend to be financed by regional governments – no private enterprise had ever attempted to jointly bankroll a major incentive.”

"This is an opportunity for Hollywood, not a competition for Hollywood," Wang said in Los Angeles, according to the BBC. Given China’s massive population and territory, American filmmakers are eager to gain access – presently blocked by a quota system in which the authorities in Beijing pick and choose which U.S.-made films to allow in. The fact that doing joint productions with Chinese studios can help U.S. films bypass the quota system is no small incentive for pursuing offers like Wang’s.

Hollywood has long dominated the global film industry and American films are a critical part of Washington's soft power arsenal. Chinese-made and influenced films do the same for Beijing.

“You cannot try to just make money in the Chinese market and disregard Chinese tastes,” Wang said.

Putting aside overly nationalistic rhetoric, there is nonetheless something to critiques of Wang’s consideration of the Chinese government’s preferences when it comes to movies. As put by VOA, Stanley Rosen, a professor at the University of Southern California and an expert on the Chinese film industry, says Wang “is balancing the sensibilities of Chinese viewers with the concerns of China’s authorities.”

But in the end, Hollywood has always been beholden to money. If Wang is willing to pay, Hollywood is willing to play.