China to Hollywood: Don’t Quit Your Day Job

Americaamp8217s favorite pastime has produced its share of baseball philosophers whose pronouncements have livened up a variety of subject matter albeit rarely international affairs Count Reggie Jackson the exception The allstar sluggeramp8217s 21year career yielded a unique insight into the iconic American sportamp8217s place in the world as well as 563 home runs Not known for his modesty Jackson put it this way quotI was reminded that when we lose and I strike out a billion people in China don39t carequotThe import of the Hall of Fameramp8217s rare selfdeprecation is worth pondering particularly if youamp8217re on the lengthening list of CEOs who once bragged about your companyamp8217s rosy future foreordained by its investments in China Hollywoodamp8217s movie moguls are the latest watching their touted bonanzas turn into busts In the Middle Kingdom this year Tinsel Townamp8217s big budget flicks are tanking A decade ago as Chinaamp8217s multiplexamp8217s multiplied the movie bosses bet big on winning a major share of the burgeoning screens selfcensoring scripts and inking joint production ventures to please the countryamp8217s communist mandarinsSo far in 2023 as the Wall Street Journal reported last week total box office sales for US films in China are faltering badly At 592 million they represent onethird of the 19 billion tally for the same sixmonth period in 2019 To date only one Hollywood movie has made Chinaamp8217s top ten An average of three did so annually from 20142018 In two of those years they accounted for five of the top ten In 2023 from Indiana Jones to Mission Impossible receipts are anemic as is enthusiasm among Chinese movie goers for their marquee name talentIt isnamp8217t because Hollywood is producing yawners Most obviously Chinese audiences are turning on to their own stories and stars and turning off on western narratives Credit in part Xi Jinping More than half of moviegoers are under 30 Theyamp8217ve grown up under Xi whose increasingly authoritarian regime has forcefed a diet of flagwaving propaganda not to mention quotguidancequot to moviemakers Their Chinese heroes and story lines in boxoffice smash epics on the Korean War for example play out scripts that sell patriotic daringdo that any Peopleamp8217s Liberation Army recruiter would loveThe success of Chinaamp8217s movies isnamp8217t just about their nationalistic narratives or local Chinese stars directors and animators catching up with Hollywoodamp8217s best The assumption that conforming to the regimeamp8217s censorship and collaborating with Chinese filmmakers would produce longterm access and a lucrative market share clearly reflected a misreading of Xiamp8217s authoritarian regime But Hollywoodamp8217s hubris also included a blind eye to a Chinese industrial policy purposed to advantage domestic competitors in every cuttingedge fieldLike the Hollywood studio big shots the carmakersamp8217 CEOs in the United States Europe and Asia are learning that lesson the hard way The headline news in the car business of course reflects Chinaamp8217s grip on the growing domestic EV market More than 80 percent of the electric cars sold in China in 2022 were Chinese manufactured China is expanding EV sales abroad with highly priced competitive models Itamp8217s not only EVs Chinese manufacturers last fall overtook western counterparts in the total number of gasoline powered cars as well as EVs soldJust like the tough market facing American movies the Chinese car competition didnamp8217t pop up yesterday In the last eight years Fordamp8217s sales in China have fallen 60 percent while Hyundaiamp8217s dropped 75 percent Fordamp8217s red ink totaled 572 million last year in China With earnings from China operations down 70 percent since 2014 General Motors has lost nearly half its sales Volkswagen including Porsche and Audi says its brands are holding their own while Tesla has cut prices to boost slowing salesNationalism propaganda and official subsidies underwriting the domestic competition however arenamp8217t the only reasons Hollywood and international car makers with a stake in China are seeing their Chinese rivals rise Both have done deals and collaborated including training and transferring knowhow to their erstwhile partners The relationships clearly produced profits on American bottom lines for a time Indeed taking a broader view arguably theyamp8217ve been a great success if youamp8217re ChineseThe business press is correct in pointing to the big wheels driving the smaller Chinaamp8217s pandemic shutdown and chaotic reopening insipid growth a crucial but weak real estate sector and rising unemployment the economy amp8216s struggle and Xi Jinpingamp8217s policy problems are affecting Chinese consumers and foreign companies movies and cars included in turn But none of these factors can explain away the fact that Chinese movie and carmakers have gotten good at what they do reshaping their customersamp8217 perceptions tastes and demand for domestic products in the processNotwithstanding quotas that limited their releases in China a shrinking slice of their moviesamp8217 revenues and the need to kowtow to the Communist Partyamp8217s commissars rewriting characters and movie plots even before their scripts hit the censorsamp8217 desks for a time Hollywood appeared willing to do anything for its share of Chinaamp8217s boxoffice take Meanwhile Chinaamp8217s moviegoers and moviemakers as well as the fare on their big screens simply changedIn fact when it comes to American movies Chinese audiences are sending a message Ask Reggie Jackson Whether a madeinHollywood blockbuster goes big or bombs in Boston Birmingham or Boise they couldnamp8217t care lessPosted at MediaVillage through the Thought Leadership selfpublishing platformClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillageorgMyersBizNet

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China to Hollywood: Don’t Quit Your Day Job

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Kent M. Harrington

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