Studios Still Bit Actors in China

For Hollywood, the road into China has become such a long march that film executives are rethinking their expectations for the elusive market.

The decision by Chinese officials this month to abruptly pull “The Da Vinci Code” from theaters, even though the thriller was a hit with moviegoers, marks the entertainment industry’s latest frustration with a communist government that critics see as wary of Western media, overprotective of its filmmakers and lax on rampant piracy.

China “is making a transition from insulated country to more openness,” said Jim Gianopulos, co-chairman of Fox Filmed Entertainment. “Anybody who thought China would be an overnight bonanza was wishfully hoping.”

With 1.3 billion people and a growing middle class, China is a market that has long made studio executives salivate, especially since officials in 2001 doubled the number of foreign films shown annually in its theaters, to 20. Hollywood’s take in China leaped from $24 million in 2000 to $67 million in 2005.

But that amount is relatively small for a country that size. The industry made about the same in Switzerland last year.

Veteran entertainment lawyer Peter Dekom, who advises clients on China, said it was impossible to forecast how much money could be made there.

“They will open up the doors wide and tell everybody to rush in, and six months later they’ll say, ‘That’s not what we want,’ ” Dekom said.

Many industry executives wonder whether they would be better off covering their bets by developing other overseas growth markets such as India and Russia. Walt Disney Co. recently hired a former Russian media executive to head a new office in Moscow. Sony Pictures Entertainment is planning its first Indian film, “Saawariya,” a collaboration with leading Bollywood director Sanjay Leela Bhansali.

Executives are especially disillusioned that China hasn’t done more to stop the sale of cheap bootlegged movies that proliferates on its streets.

On Friday, in front of the Beijing Friendship Store a few blocks from the U.S. Embassy, a man carrying a black shoulder bag was working the street. The 35-year-old man, who would identify himself only by his family name, Li, said he had been doing this for six years. Even though “The Da Vinci Code” is no longer in theaters, the man said, he sells five or six bootleg versions a day, making it his top seller.

His DVDs generally go for the equivalent of 70 cents to $1.10, depending on how aggressively customers bargain. He said he earned about $120 a month.

“If the police come, I can run away quickly,” he said. “But it’s all right now. The cops are all on lunch break.”

China had the highest piracy rate of any country in 2005, with 90% of potential revenue lost to copyright-violating DVDs, according to a study by the Motion Picture Assn. of America.

Although “The Da Vinci Code” was pulled from theaters, DVD versions remain widely available on the streets of Beijing and Shanghai. Along with costing Hollywood money -- an estimated $244 million last year -- the availability of cheap DVDs reduces pressure on the government to allow in more foreign films.

“If every movie that has ever been produced is available on the streets, sometimes before it’s in normal distribution, it just removes the desire and demand,” said Dan Glickman, chairman of the Motion Picture Assn. of America.

Pushed by Hollywood and the high-tech industry, which believes that the value of bootlegged software in China amounts to billions of dollars, the Bush administration is considering filing a formal complaint against China with the World Trade Organization for failure to protect copyrights. China’s decision to pull “The Da Vinci Code” could bolster the case.

But trying to read China’s film bureaucracy is a challenge, industry experts say.

On censorship matters, China’s National Board of Film Censorship and its National Commission of Film Reexamination review foreign films, demanding cuts or rejecting outright movies that members consider inappropriate. Some films are banned for running afoul of China’s mores, such as “Brokeback Mountain” with its gay love theme; but studio executives remain puzzled about why China nixed others, such as the popular action flick “Independence Day.”

This week, Paramount Pictures received permission to show “Mission: Impossible III” -- partly shot in Shanghai and nearby Xitang -- after agreeing to make editing changes, said producer Paula Wagner.

The cuts show that even the smallest details don’t escape China’s censors. Concerned about Shanghai’s image, they demanded trims in shots that showed laundry hung out to dry in the city.

As unpredictable as China may be, the “Da Vinci Code” decision stunned studio executives. It was the biggest Chinese rollout yet of a U.S. film. And government censors had approved it.

The Sony Pictures film, directed by Ron Howard and starring Tom Hanks, opened on a record 393 screens in China on May 17, 4 1/2 hours before its official premiere at the Cannes Film Festival.

By June 8, the movie had sold $13 million in tickets and was poised to overtake “Pearl Harbor” as China’s second-highest-grossing foreign film, behind “Titanic,” when the plug was pulled.

Although Catholic groups in China protested “Da Vinci,” the government’s decision appeared to be aimed primarily at protecting the domestic film industry from a blossoming blockbuster.

“The movie was doing too well, and they don’t want foreign films to compete with Chinese films,” said Stanley Rosen, director of USC’s East Asian Studies Center.

China often blocks foreign films from appearing in theaters during high-viewership periods, including Chinese New Year and summer. Commercial considerations and a desire to limit foreign influence are closely entwined. The “Da Vinci Code” ban was announced days before school break.

“Students are now out for summer vacation, and many might go to the movies,” said Yin Hong, a film professor at Tsinghua University in Beijing. “If there are too many foreign films, it’s not so balanced.”

Also contributing to the timing, some experts said, was the upcoming 85th anniversary of the founding of China’s Communist Party, celebrated July 1.

Anniversaries are very important in China, and several patriotic films are planned, including “Law as Great as Heaven,” the story of an intrepid policewoman, and “Touching 10,000 Households,” about a responsive government official helping hundreds of ordinary citizens.

Weng Li, a spokesman for China Film Group Corp., told the state-run newspaper China Daily that the abrupt withdrawal of “The Da Vinci Code” was aimed at clearing the field for domestic films after pressure from domestic trade associations. The company is one of two distributors of “The Da Vinci Code” in China.

“It’s not any government order but simply the distributor’s choice,” Weng said in a telephone interview. “We have so many movies, both domestic and foreign ones, waiting in line for the screen. We can’t let one single movie take all the time.”

The government faces a problem, analysts say. It wants to export Chinese culture, and dreams of one day creating a rival to Hollywood. But with censorship and other meddling in the creative process, many sanctioned movies aren’t all that interesting to Chinese viewers, let alone international audiences.

“I won’t go to see any of the propaganda films this summer,” said Song Xin, 28, a personnel consultant in Beijing. “I generally prefer to watch DVDs at home, and if I go to the theater, I’d probably watch a Hollywood blockbuster or local hit.”

Just a few years ago, Hollywood was bullish on China. The Motion Picture Assn. of America and studio chiefs formed the China Trade Relations Committee in 2000. After China promised to allow in more movies, the entertainment industry became an influential supporter of China’s 2001 entry into the World Trade Organization.

But China’s promise has yet to pan out.

“When you look at China, you see a market that is very, very fertile because of the huge population base, and you see an enormous desire for movies. They love movies,” Warner Bros. Entertainment Chairman Barry Meyer said. “What we always felt was it’s a long haul and they have customs and practices that are different than ours.”

Still, studio executives know they can’t ignore the world’s biggest market. “We’re going to hit bumps in the road, we may even crash the car once in a while, but there is no choice,” Dekom, the entertainment lawyer, said. “You have to be there.”

But, as the “Da Vinci” experience shows, Hollywood isn’t close to deciphering the China code.

“China is a very fickle mistress, a real seductress that promises much and doesn’t always deliver,” said Orville Schell, dean of UC Berkeley’s Graduate School of Journalism, who has written nine books on China.

He added that the enormous Chinese market “gets every sector of business drooling. But are they going to get anything?”

Puzzanghera reported from Los Angeles and Magnier from Beijing. Times staff writers Claudia Eller, Josh Friedman and Lorenza Munoz in Los Angeles and Yin Lijin in The Times’ Beijing Bureau contributed to this report.