Mulan’s problems preview a coming red scare for Hollywood. Disney was slammed for filming the $200 million movie based on Chinese folklore in the restive Xinjiang region, where Beijing is putting Muslim ethnic minorities in camps. The movie, released this month, has been largely panned by Chinese viewers anyway. It’s a prelude to a trade-war trial for studios.
China’s fast-growing film market is the largest outside North America, worth 64.3 billion yuan ($9.5 billion) in 2019 per the China Film Association. Thanks to a domestic industry distorted by censors, imported movies have historically enjoyed around 40% of the box office take in the People’s Republic – even though Beijing only allows 34 of them to be imported each year.
Tinseltown is far from printing money in China, however. U.S. studios’ take on their releases are limited to 25% of ticket revenue, and negotiations to increase the quota have stalled. A 2017 audit by PwC found that cinema sales for U.S. productions at mainland theatres were under-reported by 9% – translating into $40 million in lost revenue. Widespread merchandise counterfeiting and piracy suppresses business lines that generate more money than tickets in other markets.
Although Kung Fu Panda was rapturously received in the People’s Republic, American scripts tailored for local audiences can misfire too. The “Mulan” film’s wooden plot was littered with crass misunderstandings of Chinese culture. Local houses are getting more competitive, as well. The second-highest grossing movie so far this year is Chinese war epic The Eight Hundred, earning nearly $400 million per Box Office Mojo. And Hollywood’s pandering has gotten a bit revolting; Disney thanked Xinjiang propaganda bureaus in the credits.
Filmmaker Judd Apatow recently said China has “bought our silence.” There is more controversy to come, especially as U.S. studios form closer ties with their Chinese counterparts; co-productions are excluded from the quota and allow foreign studios a bigger revenue take. From Beijing’s perspective, grovelling Hollywood scripts have not noticeably helped its overseas reputation, and President Xi Jinping is pushing to lessen Western cultural influence. U.S. legislators have held hearings on Hollywood’s role in Chinese propaganda efforts.
Tinseltown has barely scratched the profit surface in China, but the golden era of American movies in the country may be drawing to a close.