China-only Iron Man 3: whatever it takes to profit

China-only Iron Man 3: whatever it takes to profit

Staff Reporter

2013-05-06

The special edition of Hollywood blockbuster Iron Man 3 made exclusively for Chinese audiences reflects the compromises that movie producers are willing to make to crack the lucrative Chinese film market, reports the Commercial Times, our Chinese-language sister paper.

Iron Man 3, co-produced by US Marvel Studios and China’s DMG Entertainment Group, debuted in China last week with four minutes of additional footage and featuring the so-called “Chinese elements” required by Beijing to satisfy tight controls designed to protect the domestic film industry. This highly anticipated China-exclusive version, however, has been widely panned for coming across as awkward and adding nothing to advance the flow and plot points of the film.

According to Chinese viewers, the extra four minutes of footage were dominated by domestic product placement, including the milk product Guo Li Duo and domestic electronics makers TCL and Zoomlion. Veteran Chinese actor Wang Xueqi, who made a five-second cameo in the international version of the film, was given more screen time as a doctor prescribing Chinese medicine to aid Iron Man, while Chinese superstar Fan Bingbing, who did not appear at all in the international version, played Wang’s nameless assistant. Iron Man is also seen on a television screen with cheering Chinese school children.Industry analysts say the poorly-conceived Chinese version of Iron Man, of which director Shane Black did not participate in the editing process, was essentially Hollywood kowtowing to the Chinese film market.

Jeffrey Katzenberg, CEO of Dreamworks Animation, says if the Chinese film market keeps growing at its present rate, the country’s box office receipts could match or even exceed that of the American market within the next five to seven years.

The Chinese government loosened some of its control over foreign films last year, expanding its foreign film quota from 20 to 34 films per year. But the additional 14 films must be enhanced films made in 3D, IMAX or animations.

Collaborations with Chinese producers have also become more lucrative. As long as the film contains specific Chinese elements approved by Beijing, foreign producers can earn up to 50% of box office receipts in China and will not be restricted by the 25% revenue sharing limit applied to other foreign films. Marvel Studios, for example, was able to expand its earning potential by allowing DMG Entertainment to invest an unspecified sum of money into Iron Man 3 for marketing and distribution rights.

Chinese audiences might not be happy with such arrangements, but this is the only way to really enter the film market, said Li Ruigang, the chairman of investment management company China Media Capital.

Beijing might consider further opening up the film market so that more foreign films can be imported into China and more domestic films can be exported to international markets, Li said. It will likely require a bit of time, however, because the Chinese government will need to allow foreign films to compete with the highly protected domestic market, he said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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