The year 2004 will usher in a new era for China's film industry, bringing with it renewed vigour and diversity.

"Chinese filmmakers see a bright future ahead," said China Film Market senior editor Li Baojiang.

There will be more investment and an increasing number of participants, and competition will intensify, Li predicted. The result should be more, better and a greater diversity of domestic films for Chinese movie-goers.

Door opens wider

The optimism has been fueled mainly by the new government regulations that went into effect on New Year's Day.

The new rules have opened the door wider for private and overseas investors and film professionals to join together in film production and distribution on the Chinese mainland.

It is hoped that a lot more foreign and private investment will flow into the money-starved industry.

"Although some well known film artists such as Zhang Yimou and Chen Kaige do not have to worry about money when shooting a new movie, most Chinese film makers find themselves short of capital when it comes to shooting their new works," pointed out Sun Jiansan, a film historian with the China Film Group Corporation.

In the past, many investors found themselves caught between a rock and a hard place, according to Sun.

"They wanted to make a profit on their investments, but the narrow, unchartered waters of the film market were full of dangerous twists and turns."

Some of them lost their investments because the films they put money into failed to get licenses for distribution and showing in the Chinese mainland.

Now this situation is changing. The State Administration of Radio, Film and Television last month announced several new rules.

One deals with film production.

According to the administration, to get a license to make a new film with an ordinary theme, filmmakers need only submit an outline of the script with their application, instead of the full film script as was previously required.

The administration will only require close examination of the full script with films whose subject matter is connected with the military, police, the judiciary, religion, international affairs or Taiwan.

In such cases, screening of the full script is required to ensure, for example, that the script contains no classified material or pays due respect to the customs and ways of life of ethnic minorities or to religious beliefs, according to administration officials.

The new regulations have not only simplified screening procedures but also reduced investment risks.

They "draw a relatively clear line between what can be done and what cannot be done for both film artists and producers and the investors," said Yin Hong, a film and media professor at Tsinghua University.

Another new government regulation announced late last month welcomes more private and overseas investment in the film screening business.

Film showing

Private and overseas investors began to get involved in film screening in the Chinese mainland two years ago, but they could hold no more than a 49-per-cent share in the cinemas they were involved in.

There is going to be more competition among cinemas as, under the administration's new regulations, the percentage of private and overseas investment in film distribution and screening companies has been raised to 75 per cent in some pilot cities such as Beijing, Shanghai, Xi'an and Guangzhou.

The cinema business has a lot of room for growth. "One of the biggest obstacles facing China's film industry is the lack of money to upgrade cinemas," said Wu Ke, deputy chief of the State Film Bureau under the State Administration of Radio, Film and Television.

There are less than 1,100 cinemas and only about 2,000 screens on the Chinese mainland, according to Wu.

This is inadequate to meet the potential demand of 1.3 billion people, he said.

However, investors from the United States and Hong Kong have been making headway in this field.

Co-production

Under yet another set of new film administration's regulations, private film companies now have the green light to co-produce films with overseas partners without having to seek help from State-owned film studios to get a license.

"The new rules will force the State-owned film studios and other State-owned film companies to be more market-oriented," said Sun.

Previously, co-produced films had to be set mainly in the Chinese mainland. But now, this restriction has been lifted.

In the past, professionals from outside the Chinese mainland could not make up more than a third of the production team for any given film. Now, the quota is applied only to key production staff.

Also in the past, private and overseas investment was barred from involvement in post-production work and other related film technology developments and applications such as digital technologies.

Under the new regulations, private investors can control such companies and overseas investors are welcome to invest them, although they still cannot hold a controlling stake.

Over the past few years, many private companies have turned their eyes on the film and TV industries and set up their own film production and distribution companies.

Even some State-owned companies have set up their own film companies.

Analysts believe there will be more such film companies being set up as the film market warms up.

The newly established film production companies will also be joined by more film professionals from Hong Kong following the Closer Economic Partnership Arrangement (CEPA) signed between the central government and Hong Kong Special Administrative Region last July.

These days, Hong Kong-made films and Hong Kong-mainland co-produced films have joined the competition as domestic films instead of overseas films in the market on the Chinese mainland and more will follow.

With CEPA, analysts expect to see more film co-productions involving Hong Kong and mainland film professionals, predicted Yang Liqiong, a film critic with Shanghai-based Xinmin Evening News.

"They will bring more new ideas and expertise into the relatively backward and isolated mainland film industry," Yang said.

The past two years have already seen a large number of Hong Kong film artists and producers entering the mainland film market.

For example, mainland director Feng Xiaogang invited famous Hong Kong actress Rosamund Kwan to play the leading role in his Big Shot's Funeral (Da Wan're) .

Zhang Yimou's Hero (Yingxiong) featured Hong Kong film artists Tony Leung, Maggie Cheung and Jet Li.

Most recently, many festive films made for the Christmas, New Year and Spring Festival season involve both mainland and Hong Kong film professionals. They include, for example, Infernal Affairs III (Wujiandao III) and Sound of Colours (Dixiatie).

With more players in the film industry, competition will get fiercer. Film professionals and business people on the Chinese mainland are ready to take up the challenge.

Xiao Dong, a veteran TV and film producer from Xi'an in northwest China's Shaanxi Province, said: " Titanic made the industry people realize how much money a single high quality movie can bring in. Disney films Star Wars and the Harry Potter series, which have made money not only at the box office but also from tie-in products and film-related merchandising, taught them how to wring the last drop of profit out of a film. Matrix taught them how to effectively sell their film products."

Some local film marketers and distributors such as Beijing Xinyinglian Film Company and Beijing New Picture Film Investment Company have already proved they can do just as well.

The former did a superb job in selling Feng Xiaogang's comic films in recent years, while the latter's marketing of Zhang Yimou's Hero brought in bountiful economic returns.

Most recently, Beijing Bona Film Distribution Company (newly merged with Poly Group) also successfully marketed Hong Kong blockbuster Infernal Affairs III.

Even with such good prospects, analysts also express their caution.

For example, the distribution sector needs further reform to break the monopoly of regional power houses and tear down regional market barriers.

Some others call for the introduction of the eagerly anticipated film rating system, which is still in its gestation period.

(China Daily January 8, 2004)