A massive reshuffle in China's film distribution sector is slated to begin in June, creating more favorable market conditions for domestically made movies.

"Although the Chinese film industry achieved historic breakthroughs last year, much still remains to be done to revitalize the local industry that plays only a minor role in the national economy. At the top of the list is further reform in the cinema circuits business," Tong Gang, head of the State Administration of Radio, Film and Television's (SARFT's), Film Bureau, said at a press conference on Wednesday.

China's feature film output scored a historical high last year, totaling 212, of which 202 were in conventional film format and 10 in digital format. In 2002, just 100 films were made, rising to 140 in 2003.

But only about one-third of domestically produced movies show up in cinemas across the country each year. Many are sold to television film channels such as China Central Television's Film Channel (CCTV-6) and the Dragon TV Movie Channel of Shanghai Media Group.

Some films went directly to viewers via online screening or in DVD format, on which the low royalties make it impossible for investors to recoup their money.

The absence of powerful cinema circuits has severely bottlenecked growth in the industry, Tong said.

Since June 1, 2002, 37 cinema circuits have been set up across the nation.

Most were reconstructed from state-owned, provincial, or regional film distributors and cinema networks, except for the privately run Century Hero Cinema Circuits, China Film Star Cinema Chains, and Dalian Wanda Cinema Circuits, a joint venture between Dalian Wanda Group and Warner Bros. China.

The three-year contract between the former state-owned distributors and exhibitors expires on June 1, 2005, when distributors and cinemas will be permitted to reorganize or establish partnerships freely.

To prevent local protectionism and create a larger market for domestic films, SARFT is encouraging partnerships between distributors and exhibitors in different provinces or regions.

In 2003, a new policy gave private and overseas investors greater access to film production, distribution and construction and management of cinemas. Kodak and Warner Bros. of the United States are among the early birds teaming up with local film distributors and movie theatres.

(China Daily January 6, 2005)