Echelon Studios is open to helping film producers develop co-productions between China and other countries. Here is a brief background on co-productions.
To start, let’s get back to that distinction of “official” versus “unofficial” co-production, and talk about why that is so important. An “official” co-production is one that is being co-produced by production companies located in countries that have negotiated and signed an official co-production treaty between them. “Unofficial” co-productions are projects created between companies in countries that do NOT already have a relevant treaty in place.
International co-production treaties define mutually agreed-upon conditions and procedures for creating productions that share resources between the countries involved, providing an outline of the rights and responsibilities of each party in the process. This helps to standardize how productions can be jointly developed, financed, produced, and then distributed in each territory, while complying with the laws of both countries. On a practical level, co-production treaties help the cooperating companies/countries to work together more efficiently, with less risk of misunderstanding, which saves time and money. This encourages more co-productions to be created, which is ultimately the reason treaties of any kind exist: to facilitate agreement, which increases trade.
Unlike an official co-production produced under the terms of a recognized treaty, an unofficial co-production agreement has to be created from scratch. This can complicate the process and increase costs and risk. Issues like identifying import/export restrictions related to moving money, production equipment, and/or key personnel (writers, directors, stars, producers) across borders of two non-treaty countries have to be figured out on a case by case basis by the production teams and their lawyers. Finding that common ground I mentioned between the laws and trade regulations of two countries who have not officially agreed to cooperate on such matters can cost significant amounts of time and money, which can break a deal.
It may surprise you to learn that the US has no official co-production treaties in place, with China or any other country. The reasons why would require another article, but by definition, any US co-production is technically “unofficial.” This is not meant to imply that unofficial co-productions are bad; it just means that co-productions that are created without an internationally recognized treaty in place to guide and protect the parties involved makes them riskier than official co-productions if disputes arise.
China, on the other hand, has negotiated and signed filmmaking co-production treaties with many countries. This reflects an increasing interest in extending Chinese cultural awareness internationally, via so-called “soft power” initiatives, which is a stated top priority for China’s leadership. China’s President Xi has spoken extensively about the importance of people in China developing a “Chinese Dream,” which has been summarized as promoting respect for Chinese cultural history and traditions while looking towards their own place in an evolving future. Accordingly, Chinese co-productions are encouraged by the government not only to increase trade, but also to facilitate a greater understanding of and appreciation for Chinese culture around the world.
Of course, in spite of the increasingly connected world we live in, there are still very real cultural differences that affect what we watch and how we want to watch it. For a growing number of people in the US, the abundance of affordable big-screen TVs and high-speed Internet connections have made watching content at home a more attractive alternative than going out to a theater to watch a movie. In China, though, although there is also a huge market for watching content at home, and the technical means to do, the opposite is true….
Thanks to a rapidly expanding middle class, the theatrical movie-going experience in China is increasing at a phenomenal rate. New theater screens are being built in China at a rate of around ten per day, Chinese box office revenues are currently #2 only to the US, and are projected to become #1 by the year 2020. In terms of money, the revenue from theatrical distribution now accounts for about 90% of the total profit of movies in China; the remainder comes mostly from television sales. Unfortunately, due to piracy and other factors, home video and online markets contribute very little to the financial success of a film project, so in the Chinese market, theatrical success is the make-or-break goal.
An additional challenge is that before a film can screen in theaters, a film must obtain two clearances. The first is a permit from the censorship authorities. This is an approval from China’s ratings board which certifies that a film’s content isn’t offensive according to local standards. The second is an actual distribution license. The rationale behind the distribution license is to help protect the business prospects of local Chinese films by maintaining a certain level of Chinese cultural focus in their market, and this is where the true value of creating an official Chinese co-production becomes clear….
Unlike local Chinese productions, whose release potential is technically unrestricted, theatrical distribution licenses for foreign films in China are currently limited to a total of just 34 per year. This means that a small indie film vying for a foreign distribution license in China is competing against Hollywood studio films with huge marketing budgets and influence.
On the other hand, projects that can obtain official co-production status by being shot under a treaty, such as the one between China and India which was just announced, are particularly attractive to Chinese companies and investors, for this reason: once a project has been certificated as an official co-production, then it is considered to be a “local” film in BOTH markets. And since “local” films are NOT subject to the licensing restrictions placed on “imported” films, they can therefore be assured that as long as they can clear any censorship hurdles, they are allowed to be theatrically distributed in China, which is understandably a key requirement for film investors in that market.