The decline in market share for Chinese films, following the widening of China’s import quotas earlier this year, sparked heated discussions during the first two days of the 15th Shanghai International Film Festival (SIFF).

While the Chinese film market grew to around $1.14bn (RMB7.2bn) in the first five months of 2012, the box office of local films is declining.

The 81 Chinese films released between January and the beginning of June had a market share of around 38%, whereas the 34 foreign films, including Titanic 3D, Battleship, The Avengers and Men In Black 3, accounted for around 66% of the market. Chinese films usually end the year with a market share of more than 50%.

Panellists speaking at SIFF’s conference programme, SIFF Forum (June 17-21), observed that China’s industry infrastructure needs further development to fend off competition.

Mike Ellis, president and managing director of MPA Asia Pacific, pointed out that the revenue stream of Chinese films is too dependent on theatrical release, and that other parts of the film industry value chain are relatively weak.

As ancillary revenue streams, such as home entertainment and licensed products, are affected by piracy, theatrical release accounts for around 90% of Chinese films’ revenues. Ellis suggested that greater protection of copyright would help alleviate this problem.

Veteran Shanghai-based producer Andre Morgan said the Chinese film industry is now at a crossroads after China’s annual revenue-sharing quota was widened from 20 to 34 films in February this year.

He observed that with more Hollywood films coming to China, the environment will become tougher for young filmmakers, writers and actors. But that not enough was done to develop young filmmakers during the period they were protected by the quota.   

“It is time now to help Chinese filmmakers and distributors face real competition, otherwise China will become [like] Hong Kong in the last five years or Taiwan in the past ten years,” Morgan said. 

Danielle Dajani, senior vice president of US-based Raleigh Entertainment, agreed with Ellis, observing that if 90% of Chinese films’ revenue stream comes from theatrical release, it will be difficult for a co-production project to secure production funding.

SIFF opened on June 16 with Huayi Brothers’ Painted Skin: Resurrection and wraps on June 24 with Korean romantic drama Architecture 101

More than 400 film celebrities walked the red carpet at the opening including Aaron Eckhart, Heather Graham, Chow Yun Fat, Jackie Chan and Tony Leung. US producer Mike Medavoy picked up the Outstanding Film Achievement award, while Chow Yun-fat took the award for Outstanding Chinese Film Achievement and Chinese filmmaker Wu Yigong took the Lifetime Achievement award.