That, and Jungle Taitei.
‘People are very, very nervous’: $2.4 billion tax crackdown has paralysed China’s film industry
One day last July, Fan Bingbing, China’s highest-paid movie star, seemed to vanished from the face of the earth. Her disappearance occurred around the time the government opened an investigation into Chinese film industry tax practices. Both her fans and film executives feared the worst. But in October Fan reappeared as mysteriously as she had vanished. She made a public apology to her fans and agreed to pay more than $US100 million in back taxes .
The 37-year-old Fan’s public humiliation unleashed a deep chill in an industry that until recently had been humming along. Every week brought fresh reports of stars and companies under scrutiny. Industry tycoons coughed up a stunning $US1.7 billion ($2.4 billion) in back taxes after the government urged them to engage in “self-examination and self-correction.” That, in turn, has prompted a flurry of TV and movie cancellations and even the liquidation of entire companies.
"Some of the biggest stars and directors are being looked at very closely," says Albert Lee, a former executive at Hong Kong-based Emperor Motion Pictures.
“That makes people very, very nervous.”
For the most part, though, movie people have gone into hiding. Production companies cancelled or postponed projects while they audit their books and negotiate what they owe in back taxes. Many of the country’s biggest actors stopped working, afraid of becoming the next Fan Bingbing.
Financing dried up as banks shied away from an industry tainted by scandal. The crisis has exposed the shortcomings of China’s efforts to build an entertainment industry to rival Hollywood. The government views its domestic film business as an instrument of soft power, influencing how citizens view the country while curbing the influence of outsiders. Where the state once distributed propaganda movies and banned all Western cinema, in recent years the approach has been more sophisticated and ambitious: massive subsidies and state-sponsored bank loans to produce movies, open theaters and build new theme parks.
But along with the newfound riches came rampant tax evasion, prompting authorities to crack down. Chinese president Xi Jinping, who has spent much of the past decade purging corrupt government officials and political rivals, has found the movie business a rich new target with its famous faces and sky-high salaries. Fan is one of the most celebrated actresses in China. For years she’s also been the highest paid: $US44 million in 2017 alone. She rose to fame on the TV costume drama ``My Fair Princess,’’ which led to starring roles in hit local films, prizes at Asia’s biggest awards shows and cameos in Hollywood blockbusters “Iron Man 3” and "X-Men: Days of Future Past.’’
A TV newscaster leaked what he said was a copy of her contracts for the upcoming movie``Unbreakable Spirit’’ which prompted a government investigation. The contracts allegedly showed that Fan had employed a sham-dual contract system. Per one contract, Fan made $US1.6 million for her work one the movie, according to The Hollywood Reporter. Per another, she earned $US7.8 million. Authorities would receive – and tax her – for the first contract, while Fan pocketed the larger sum tax-free. Fan initially denied the accusation, but later confessed. Industry insiders say Fan’s behaviour is less than shocking: The use of these so-called yin-yang contracts is widespread, they say.
The industry-wide enforcement hits as the Chinese economy is slowing. China recently reported its worst January box office receipts since 2015, while the number of movies produced began to fall last September, a harbinger of leaner times ahead.
Box office sales over the Lunar New Year holiday, China’s busiest movie-going week, stagnated this year, climbing just 1 per cent. Overall attendance declined. Just last year, sales over the holiday week climbed by 69 per cent from the previous year. Chinese regulators blamed piracy for the slowdown.
Already dozens of smaller companies have gone out of business. Even mighty Huayi has had to buy back stock and take a loan from Chinese tech giant Alibaba to reassure investors. Wang Ran, chief executive officer of CEC Capital, predicted the number of Chinese companies in the entertainment business will shrink by as much as a third over the coming year.
Others see it differently, placing the blame squarely on Chinese authorities.
The government thinks the movie and TV industry made a lot of money in the past several years,'' says Albert Guo.When they need money, they go after us.’’ Guo was about to start production on a TV drama when his financiers’ bank account was frozen in the wake of the Fan Bingbang tax scandal. Short $15 million yuan, Guo had to call off production. "We are all very angry,’’ he says. "It’s unfair."
I think the UK could do with a business tax crackdown like this. (Without the shady disappearances )
It’s only my opinion, but I’m not sure that most UK producers are capable of this sort of thing.
I don’t mean they’re too moral, I mean they’re not that good at business.
The ones who are that good tend to connect to the USA very early and earn their money through that connection.
Actually I’d be ok with some disappearances.
It looks like this was a hard movie to market:
So why did Alita: Battle Angel get its wings clipped? (at least here in the states). We hear it was a challenge for Fox marketing. There was a constant push and pull of who Alita ‘s target audience was (teenage girls or older males?) and what it should be sold as, since it’s both a steampunk action sci-fi coupled with a YA romance/coming-of-age story. While that might sound like Hunger Games, understand that property already had its young females readership in the theater. We’re starting off new here with Alita. The fact that Alita was a female-action driven movie wasn’t the problem; rather, the optics: There was a lot of metal, futuristic mecha cyborg stuff, all of which appealed to older males. But at the pic’s core is a love story with a teenage robot girl, which is a tough sell. The one sheets displayed the message that the film is animated. More frustrating: The film didn’t have any stars with its main one being a mo-cap unknown girl.
And the “big eyes” didn’t help:
If there’s one complaint overall as to why some are scared by Alita : Those big kewpie doll eyes. RelishMix noticed the mixed reaction to the pic leaning toward negative on social media, reporting, “Moviegoers are actually complaining that Alita’s eyes are too big. That sentiment is truly one of the biggest complaints about the movie, that her very look makes the hero appear unreal, and takes the audience out of the experience a bit.”
Why the big eyes then? Essentially, the filmmakers were being true to Kishiro’s source material; that’s how she looks in the comics. While the feature adaptation of manga Ghost in the Shell suffered a whitewashing controversy in the casting of Scarlett Johansson, sources say that no one has greatly objected to Alita, as the title character is rendered in mo-cap.
Sounds like remaining true to the source material was not a plus.
Maybe it’s as simple as there just not being a big enough market for these quirky manga adaptations to justify the amount of money they cost to make.
As with many things, it probably a variety of factors and each movie has its on set.
Or it could be the movie didn’t look appealing to audiences.
All that bug-eye stuff always creeped me out. Pointy noses, too, if we’re being art-prejudiced.
I’m not sure I would call it steampunk (I know mileage varies on that stuff) but regardless, the “men don’t like romance, girls don’t like robots” angle seems pretty lame to me.
When I saw that $41 million number I thought it was pretty good for a movie based on an obscure-ish (in the US) manga and without a major star. That’s more than Ghost in the Shell made in North America in its entire run and that one was based on a much better-known property and starred Scarlett Johansson.
I think GITS was the rare case of Johansson counting against a movie - I don’t think it ever got out from under the ‘whitewashing’ controversy, and that still seems to be mostly what people mention when the film is brought up.
Alita is one that I’m kind of interested in and will watch eventually, but I don’t feel a real push to see it at the cinema, especially after the mixed responses here. I hope it does well though - apparently the budget was US$170m, so presumably if it hits that US$500-600m prediction then it will be seen as a sound success.
From the deadline article:
Fox contends breakeven is between $350M-$400M, while other finance film sources with knowledge of the budget say it’s significantly more.
Steampunk? This is post apocalyptic sci-fi. The writer of that article doesn’t have any clue about genre entertainment.
This blind item adds a particulatly dark twist to that story.
Here’s the reveal to that item:
Which is particularly silly as for one thing manga/anime characters are often depicted as not specifically Japanese, and secondly the plot of the film (I haven’t read the comic and don’t recall the anime from watching it when it was new) totally justifies the casting.
Interesting snippet on Box Office performance from that Soderbergh interview:
Sims: You tried [a simultaneous in-theaters and home release] with Bubble in 2005, back before anyone thought that was a thing you could do. You tried it with The Girlfriend Experience in 2009. Were you just inventing the wheel before there was a car to put it on? What’s changed in the past 15 years?
Soderbergh: Well, I ran into the problem that all platforms are having, which is that the big chains don’t want to engage with this. I know [the National Association of Theatre Owners president,] John Fithian well, and have had a lot of interaction with NATO, and I am sympathetic to this issue. What I don’t understand is why everyone in this business thinks there is one template that is gonna be the unified field theory of “windowing” [or how long a movie screens in theaters]. The minute that I knew, which is usually around Friday at noon, that Logan Lucky wasn’t going to work and that Unsane was definitely not gonna work—as soon as that happens, the studio should let me drop the movie on a platform the next week. There should be a mechanism for when something dies at the box office like that.
Sims: A backup option of, You know what, if it doesn’t hit this number on opening weekend, then release it online .
Soderbergh: I think in abject failures, they should let you do whatever the hell you want. If Unsane drops and doesn’t perform, who’s harmed exactly by me 10 days later putting this thing on a platform? You can’t prove to me that that’s hurting your business.
Well you can’t prove something that’s not thoroughly tested, and if this idea is tested you might to irreparable damage. Basically if you train consumers that movies will be on demand with 3 weeks of release then they’ll just wait for all but the most essential movies. If on demand and cinema we’re on the same day I’d bet cinema attendance would fall in half. Considering those cinemas need punters eating snacks to make money they’d quickly face their ruin.
I can think of worse ideas though… that might actually force studios to produce better movies
Also, they get money upfront, so I guess that at least offsets some of the losses… for some movies they might even make their budget back…