“"There's
no reason we should have Chinese films and American films anymore. There should
be global films," Ryan Kavanaugh, the chief executive of Relativity Media,
said when unveiling his independent studio's joint venture in Beijing this month”
(Fritz & Horn, 2011, ¶ 3). This quote came from an article I read this week called "Reel China: U.S. film producers are engaging
the Chinese."
With the rapidly emerging dominance of China as an economic power, it only seems natural to see American film companies looking to cash in on this economic opportunity. Joint ventures between American and Chinese companies, such as Legendary East and Nu Image, are unveiling plans or looking to produce films in collaboration with each other (Fritz & Horn, 2011). With profits on once lucrative DVD sales in the US dwindling, the timing could not be more ripe for US companies to break into the $1.5 billion dollar plus Chinese film market (Fritz & Horn, 2011).
With the rapidly emerging dominance of China as an economic power, it only seems natural to see American film companies looking to cash in on this economic opportunity. Joint ventures between American and Chinese companies, such as Legendary East and Nu Image, are unveiling plans or looking to produce films in collaboration with each other (Fritz & Horn, 2011). With profits on once lucrative DVD sales in the US dwindling, the timing could not be more ripe for US companies to break into the $1.5 billion dollar plus Chinese film market (Fritz & Horn, 2011).
The
challenge for American filmmakers has been Chinese governments restrictions on
imported films (Fritz & Horn, 2011).
To get past this, American companies are looking to joint ventures to
give them “access to the lucrative Chinese market” (Fritz & Horn, 2011, ¶ 5). But as Gomes-Casseres
(1993) noted in this week’s reading, “[c]ross-border alliances usually encounter many
more pressures from government, and sometimes are shaped by public policies”
(p. 14). However, what is important for
filmmaking companies is knowing how governmental policies can shape alliances
(Gomes-Casseres, 1993). Here, it appears
that American production companies are getting past a lot of the governmental
red-tape by “cutting
ambitious deals with Chinese firms that provide alternative routes into the
country’s exploding movie market” (Fritz & Horn, 2011, ¶ 2). However, American
companies will have to face a less transparent government in China, and a
challenging approval market, where only as little as 54 films from outside
China were let in last year (Fritz & Horn, 2011).
What will be interesting is to see how American and Chinese companies will
work together. The American film
industry is second to none in the world.
However, it is unlikely that Chinese counterparts are going to acquiesce
to American companies calling the shots in their country. Everyone is going to have to learn to work
together. In particular, Kanter (2010) notes
that Chinese company executives in particular expect to receive “”face” (honor
and respect)” (p. 9). In other words,
the Chinese are not going to sit back and let American companies run the
show.
References:
Gomes-Casseres, (1993). "Managing
International Alliances: A Conceptual Framework." Harvard Business School. pp. 1-20. (Full
Article)
Kanter, R. (2010). "Collaborative
Advantage: The Art of Alliances."Harvard
Business Review. pp. 1-16. (Full Article)
Fritz,
B. & Horn, J. (2011, August 24). Reel China: U.S. film producers are engaging
the Chinese. Los Angeles Times. Retrieved from http://articles.latimes.com/2011/aug/24/entertainment/la-et-china-film-quota-20110824.
Joshua,
ReplyDeleteThis is a fascinating summary. It is interesting to see the benefits of companies when they form joint ventures. While there are benefits to both companies, I do wonder if all of the possible issues have been explored. As you mentioned it seems unlikely that the Chinese companies will allow the Americans to call the shots. Will this cause problems with the alliance? Were the levels of trustworthiness explored before this joint venture was formed? From the readings this week, it was clear that international alliances can be tricky to accomplish. The article you read was from 2011, I would be interested to know how this alliance is doing in the early part of 2012.
Megan,
ReplyDeleteIt is difficult to tell whether these partnership with ultimately succeed. But, in this global economy working with other countries and cultures is a fact of doing business. Companies need to abide by the rules of the host country. And with business partnerships in those foreign countries, American companies will have to learn to work with their Chinese counterparts. You are right, international alliances can be tricky. I just hope that the movies coming out of China are going to be better than a lot of what's been hitting the box office lately.
Joshua,
ReplyDeleteDo you see other potential problems between the Chinese and Americans because of their cultural differences? Did the author of the article say anything about the cost of making films in China versus making them in the U.S.? Is it cheaper to make movies in China? I guess I don't understand why American film makers are seeking partnerships with the Chinese just because DVD sales are down or do other reasons exist?
I think that the American film makers will have a terrible time with the Chinese government laws and I hope that they are doing their research and weighing all the pros and cons about a partnership before they commit to one. As Kantar implies in her article, both sides need to know what they are getting themselves into before they say "I DO" (2010).
Thank you for the comment Xiomara.
ReplyDeleteThe author did not mention the costs of producing movies in China. But, certainly costs are less there, i.e., labor, etc. Similar to the Wal-Mart/Bharti case, American filmmakers are looking to capitalize on a growing market with a lot of disposable income. With declining DVD sales and a less than stellar economy in the US, China does present an economic opportunity for businesses. But, your right, it is not going to be easy to handle the complex laws in China. But, companies like Nike have done well in China, so, in my opinion, American film makers should take the risk/opportunity and "Just do it."
Joshua, you explore a very timely issue. It seems very clear what US companies stand to gain from access to the Chinese market. However, what do you see as the main benefits the Chinese would derive from partnering with US filmmakers and production companies?
ReplyDeleteYou note that Chinese executives expect to receive honor and respect, and are not likely to sit back and let Americans run the show. Do you think there are any other challenges that might arise from cultural differences among? Could they influence the degree of trust that companies have in one another?
Dr. Gould,
ReplyDeleteI feel the Chinese would greatly benefit from the knowledge and experience that the American filmmakers bring. While China may be an old country in terms of rich history, it is relatively young in many ways, including its emergence into large scale film production. Countries such as India with its "Bollywood," have learned a lot from American film making. And, you can see a lot of similarities, except maybe all the dancing. It would not surprise me to see such a development in China.
Personally, I have watched a great deal of Chinese film. Movie's such as IP Man 2 and even some of the Chinese Dramas are quite good. Much is available on sites like Netflix. And, lets not forget mega-stars Jet Li and Jackie Chan hail from China. The demand in China is there for good films, and China is starting to produce them.
Honor and respect is something that runs deep in Asian history and culture, and it is no different in China. China sees itself as a Superpower. China may now be the second largest economy in the world, but they do not see themselves as second in the world stage. I think American film makers are only truly going to be successful in China if they approach partnerships on equal footing. Just as other American companies have learned to respect and work with the Chinese government and businesses, so to will American film makers. As far as trust goes, well, that is certainly a challenge in many partnerships. As long as both sides respect each other and are able to make a healthy profit, the partnership should stand a better chance of succeeding.