This is the second part of a three-part essay by Zhang Xianmin on the state of contemporary Chinese cinema. Read Part One. Part Three will be posted tomorrow.
Translation by Yuqian Yan
II. Long Live Capital: Non-stop Financing
Red Cliff (dir. John Woo)
The highest level of capital operations, where form and power converge, is to stack stars. The strategy is to stretch the shooting period so that new capital can be accumulated throughout the entire shooting and post-production period, new stars can keep on joining the film during the entire shooting period, the film can be revised over and over again to satisfy new investors, and new plotlines can be added to accommodate newly joined starts. Red Cliff is the first film that is close to this strategy. Its shooting period was so long that they had to make the film into two parts otherwise there would be no chance to make any money. But the version released in the States only has one part.
In 2009, apart from Founding of the Republic, another prominent example of commercial blockbusters using such open strategy during production is Bodyguards and Assassins. Even after the shooting was started, it continued to attract huge capital and film starts from Hong Kong and Taiwan. This is the third stage of financing.
The first stage is that traditionally one film only has one definite copyright owner. The second stage is comprehensive financing, but the ownership has already been divided before the shooting starts. We are now on the third stage, where ownership division and profit share probably will not be determined until distribution.
This requires skill to pull off, and certainly increases the instability of work, the so-called “experiencing the excitement of one’s heartbeat.” Last year, audiences didn’t like John Woo’s film to be released in two parts, so this year, I assume that Peter Chan won’t take the risk to endlessly extend the shooting period or frequently change the plan for Bodyguards and Assassins. Some mainland Chinese TV institute invested huge money in the film. Audiences can count how many starts appear for only several seconds.
III. To be Listed on the Market
Another high-end of capital operation is the listing of Huayi Brothers Media Group on the market. Although the company’s performance hasn’t been very stable since the listing, it temporarily revitalized the capital market. Businessmen from Zhejiang who were formally turned down by the coal market in Shanxi seem to enjoy spreading the news of Huayi’s performance more than making a fortune themselves. It’s rather similar to the situation in 2008 when a cultural company in Taiyuan (the capital of Shanxi province) organized coal mine owners to massively purchase art works from the 798 art district in Beijing for cultural purposes.
Private investment in film production can also be roughly divided into three steps. The first step was the participation of local brands or enterprises through advertising, such as water pipe commercials for gunfighting films, Hainan real estate investment commercials for art films set on the beach. This also marked the beginning of the collapse of the big studio system. The phase when private investors insisted on their status as the exclusive copyright owner of films ended in 1995. Nowadays, no one does that any more except for the purpose of promoting an actress, and these kind of investors typically retire after their first film.
The second step is seeking cooperation. Everyone, including CEPA, is talking about overseas financing. The prevalence of overseas capital and money-laundering means that capital will follow abroad before it circles back. This kind of investor normally makes two to four films. The first one might be a small production, just to see how deep the water is. Once they get enough investment to test the water, they’ll cautiously assess the chance of losing money. This phase is still going on. This is a process of transforming hot money into calm decisions.
The third step appears to be the combination of “Confucian merchants” and “MBAs”. Financial experts rich in cultural capital enjoy great popularity these days. Although counterfeit experts are unavoidable, there are also real MBAs, or PhDs from the States, or intellectuals from the 80s. These people intend to work in the industry for ten years or half of their life, and aim to accumulate as least twenty, or even fifty film titles with their name listed as partial copyright owners.
The landmark event of two years ago was the super-entrepreneur Dong Ping’s transfer of his entire assets and withdrawal from the film industry. This year’s climax is Huayi’s listing on the market.
There are two obvious psychological effects about the listing.
Ning Hao (director of Crazy Stone)
The first is to buy at a cheap price. Everyone is looking for rising box office stars like Ning Hao. Typical traditional investors are still expecting him to make a profitable film. Others reply on such contract and copyrights to raise the price tag for shares or asset transfers. What investors are discussing this year is that such people can make the profit ratio curve of their company’s annual report look more pleasing than a beach girl.
Secondly, many people, including those investors who were cheated through money laundering, start to consider film as something that can make them a shareholder. Meanwhile, financial and private investors are interested in investing in several major film companies, comparable to buying shares at a high price.
Such beliefs by investors mark an end to primitive methods of capital accumulation in the film industry. It has been twenty years, a whole generation, since the late ’80s when private capital first entered the Chinese film industry, which means that in several years, the red third generation and rich second generation will have a greater say in film. Nowadays, if a loser still has a pair of pants left, there’s no complete victory for the winner. On the other hand, even the poor won’t be satisfied if the winner does not defeat others completely. Take a look at which film has the longest queue, and you’ll know what I mean.
Tomorrow, Part Three: New Theaters vs. The New Grassroots Movement
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