Liz Shackleton argues that the Chinese film industry can’t overlook the usefulness of Hollywood and the international film business.

Last month’s Shanghai International Film Festival revealed some interesting developments in the relationship between Hollywood and the Chinese film industry.

Now that China’s box office is expanding at an astonishing rate, and local films routinely muster grosses of $30m, there’s a growing feeling that China doesn’t really need the West, and Hollywood is the one that should be doing all the courting. This came to the fore during the festival’s seminar programme when local director Feng Xiaogang launched a stinging attack on Harvey Weinstein’s dealings with Chinese producers, just minutes after the US movie mogul had left the room. Other participants complained that Hollywood is pushing for greater access to the China market without necessarily giving anything back.

The jibes can be understood in one sense – while local film production across Asia has been recovering of late, China’s commercial film industry is still in its infancy, and Hollywood has traditionally posed a threat to indigenous film output with its much bigger budgets and a global marketing machine that is second to none. India is the only territory in Asia, if not the world, to have resisted Hollywood to any large degree, although arguably that’s because US films were kept out during Bollywood’s formative years in the 1950s and ‘60s. And while China has produced box office smashes such as Feng’s If You Are The One and Founding Of A Republic, it’s a Hollywood film, James Cameron’s Avatar, that is currently the nation’s highest-grossing film ever with a breathtaking haul of $190m.

But what the Chinese filmmakers and executives were over-looking is the fact that Hollywood and the international film business can still be extremely useful to them, so long as they play them the right way. The West is not a big export market for Chinese movies, as it is for other Chinese-made goods, but it’s still a market that China needs to woo if it wants to realise its movie ambitions.

Due to DVD piracy and a state-owned television sector, the China market only offers one revenue stream for movies – theatrical – and while this is growing, it still has its limitations. Currently only movies made for under $10-15m can comfortably recoup in China alone, and with star fees and audience appetite for 3D and special effects rising, it’s going to be difficult to stay within that budget range. That means China needs to look beyond its borders, and with local productions taking a huge chunk of the Korean and Japanese markets, it would be unwise for China to turn its back on distribution in the West.

China also needs to collaborate with the West to build up its technical skills, particularly in the areas of 3D filmmaking and high-end special effects, which is the only way it can continue to compete effectively with Hollywood. Protectionism may have worked for India in the 1950s, but in this age of globalisation and the internet, it’s not possible to incubate a domestic film industry in isolation.

Indeed, the Chinese film industry may want to follow the example of its contemporary Indian counterparts, such as Reliance Big Entertainment, by ditching the siege mentality and starting to buy up Western technology companies, sales agents and cinema chains. Beijing-based Stellar Megamedia announced the acquisition of Australian effects house Photon during the Shanghai film festival, which is a step in the right direction. The local industry could also start making some bold moves in the distribution arena – say by acquiring a US-based studio or international sales agency, which could vastly improve the overseas distribution of Chinese movies by including them in package deals.

As the recent labour unrest in China demonstrates, the time is ripe for the country to move up the value chain from its low-cost manufacturing base. The government has also been talking about the importance of exporting “soft power” and cultural products, including movies, are expected to lead that charge. But if China really wants a world-beating film industry, it should be thinking about acquiring The Weinstein Company, rather than complaining about the negotiating tactics of its colourful co-founder.