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Hollywood has a growing China problem—but it won’t admit it

After years of being awash in Chinese cash, the entertainment industry’s business with China has become more fraught. Is there a way out of this mess?

Hollywood has a growing China problem—but it won’t admit it
[Photo: Alex Litvin/Unsplash; NeONBRAND/Unsplash]

Chris Fenton has been getting a lot of calls and emails lately from people in the entertainment industry. Fenton, after all, is a former talent agent and film executive turned Chinese film industry expert who wrote the new book Feeding the Dragon: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA and American Business, so he knows a thing or two about Sino-Hollywood relations.

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Lately the relationship has been thorny, and a question looms: Is Hollywood doing anything about it?

Rising tensions

For anyone who hasn’t been keeping tabs on things, consider what went down in September alone. First a PR crisis erupted over the Disney film Mulan, when it was pointed out that the film’s end credits thanked a number of Chinese entities in Xinjiang for allowing the company to film in the area, a region where authorities have been accused of running “reeducation camps” that detain minority Muslim Uighurs. It was the film’s second comms crisis. The first came last year when star actress Yifei Liu posted her support of Hong Kong police on Weibo (loosely analogous to Twitter) despite their excessive force against pro-democracy protesters resisting the mainland Chinese government.

Feeding the Dragon: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA and American Business, by Chris Fenton

The end-credit scandal prompted Republican Senator Marco Rubio and a handful of his bipartisan peers to send a letter on September 11 to the Walt Disney Co. inquiring about the company’s decision to film in Xinjiang.

A week later, another letter was dashed off by five Republican Senators, this time directed to Netflix co-CEO and CCO Ted Sarandos. At issue was Netflix’s upcoming series based on Chinese author’s Liu Cixin’s popular sci-fi trilogy The Three-Body Problem, which is being adapted by Game of Thrones creators David Benioff and D.B. Weiss. The letter said that Liu had “parroted” China’s Communist Party talking points in regards to the Xinjiang region in a comment to The New Yorker.

Meanwhile, turmoil was intensifying over TikTok, the video-sharing app owned by the Chinese company ByteDance. (TikTok’s U.S. headquarters is in Culver City, California.) President Trump threatened to ban the app earlier this year, saying that ByteDance data-mines information on American users and hands it over to the Chinese government. (ByteDance has denied the accusation.) In late September a truce arrived when a deal was reached for Oracle to take over American operations for TikTok, but the deal still has to be formally approved by the U.S. government.

Even filmmaker Judd Apatow was stirring up tensions. In an interview with MSNBC’s Ari Melber, he criticized Hollywood studios for bowing down to Chinese censors in American film and TV content for fear of tainting bigger business ties with China. “A lot of these giant corporate entities have business with countries around the world—Saudi Arabia or China, and they’re just not going to criticize them,” Apatow said. “And they’re not going to let their shows criticize them or they’re not going to air documentaries that go deep into truthful areas because they make so much money.”

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He went on: “So while we’re going, ‘Can we say this joke, can we not say that joke?,’ on a much bigger level they have just completely shut down critical content about human rights abuses in China, and I think that’s much scarier.”

The capper came at the very end of September, when the Republican members of the House Foreign Affairs Committee published the China Task Force Report, which Fenton provided research for, and which included sections on the entertainment industry’s China-related controversies.

COVID-19 intensified the spotlight on Hollywood and China

In regular times, these flare-ups might have been less noteworthy. It’s no secret, after all, that China influences American content. In the upcoming Top Gun remake, Tom Cruise’s jacket will not have a Taiwanese flag, as it did in the original. (The Chinese tech giant Tencent is a coproducer on the film.) Disney films are regularly attacked for political and cultural insensitivities. Moana, for example, insulted many Pacific Islanders for cultural misappropriation.

Only these are hardly regular times. We’re in the midst of an election season in which relations with China have become a red-meat issue between President Trump and Joe Biden to show who is tougher on foreign policy. The movie industry has been severely crippled by COVID-19, making Hollywood’s foothold in China—an enormous market for American blockbusters—even more critical. Troubling to many in Hollywood is the fact that this trend already seems to be underway. Consider that Tenet, Christopher Nolan’s long-awaited opus turned pandemic theatergoing test case (it was the first U.S. blockbuster to be released theatrically in the midst of the pandemic) limped along to a $60 million gross in China last month, despite that fact that Nolan films traditionally do huge business in the region. Granted, Chinese movie theaters have been operating at less than full capacity due to COVID-19. And yet the Chinese-produced historical war drama The Eight Hundred has still managed to make $408 million in China alone so far, making it the highest-grossing film of 2020 to date.

Chris Fenton [Photo: Emma McIntyre/Getty Images]
Thus it’s no surprise that Fenton’s phone has been ringing off the hook. As he says, “If we don’t address this somehow, the boiling-over point is approaching quickly.” Though he adds that no one who calls him up is willing to say anything publicly about the issue. “It is almost impossible to find anyone to comment on the record in Hollywood,” he says. “I definitely would say I’m sacrificing my business by being a squeaky wheel.”

Case in point: When I asked one studio executive if there was any behind-the-scenes nervousness about China, the person says, “I think it would probably surprise people how little we actually talk about China.”

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As for the brouhaha over Disney and Netflix, this person adds: “Whether it’s political posturing or not, I think it’s hard to take seriously given what’s happening here. Between COVID and unemployment and how many people are out of work, and fires and hurricanes and an election—do you think Hollywood is really concerned about whether a Benioff and Weiss project gets made, or is it just a political distraction?”

This person also notes that because Hollywood gets closer to 35% of every dollar it makes at the Chinese box office, as opposed to almost twice that in the rest of the world, China is less of a box-office behemoth than people assume.

People such as Fenton feel that statements like that are their own form of posturing and a way to keep tensions from escalating. Because the bottom line is that China represents too much business for Hollywood to want to risk alienating the powerful nation. China’s ruling Communist Party has stepped up its crackdown on Hollywood content in recent years, and there have been very high-profile retaliatory measures against American entities. Last fall, after Houston Rockets general manager Daryl Morey tweeted his support of the protests in Hong Kong (Fenton calls it “the tweet heard ’round the world”), China’s state broadcaster canceled the airing of NBA games. NBA commissioner Adam Silver has called the financial damage to the league “substantial.” The Chinese e-commerce site Taobao (owned by tech giant Alibaba) even yanked all Rockets merchandise from its site.

Hollywood movie studios have further ties to China. Take Disney. Besides the fact that China is a sweet spot for its movies—Avengers: Endgame made $629 million in China, just shy of what the film made in North America ($858 million)—Shanghai Disney, the company’s $5.5 billion theme park, is even more of a money geyser.

In a testament to this closeness, in the wake of the Mulan end-credits debacle, Disney hedged with silence in response to the backlash before issuing a neither-here-nor-there response. “It’s common to acknowledge in a film’s credits the national and local governments that allowed you to film there,” Disney CFO Christine McCarthy told Variety. “It has generated a lot of publicity. Let’s leave it at that.” (Disney also stressed to reporters that the bulk of Mulan‘s filming took place in New Zealand.)

Netflix, which doesn’t operate in China and thus has much less to lose, has been more firm. In response to the senators’ letter regarding The Three-Body Problem, Netflix’s VP of global public policy wrote of the series’ author: “Mr. Liu is a Chinese citizen living in China—he is the author of the books, not the creator of this Netflix series. The creators are David Benioff and D.B. Weiss, the creators of Game of Thrones, and Alexander Woo, executive producer/writer on the series True Blood.”

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The streamer added that it “judges individual projects on their merits” and overall does not agree with Liu’s comments, “which are entirely unrelated to his book or this Netflix show.”

But for the most part, Netflix is an outlier. ESPN, which is owned by Disney, responded to the Morey tweet in a tepid fashion. However, Silver later followed up by saying that “we are not apologizing for Daryl exercising his freedom of expression.”

Has Hollywood checked out because Chinese money has slowed?

Alexis Garcia, EVP of the Film Group at Endeavor Content, who has long conducted business in China, is more measured when asked what the current mood in Hollywood is in regards to China. “Things have been so difficult in China in the run-up to where we are now that I think a lot of people are somewhat detached from it,” he says. “But you also don’t want to do anything that’s going to hurt you later on when things become actionable. As with everything, it’s important to look at the long term and the big picture.”

Garcia was referring to the lovefest between China and Hollywood that peaked around 2016 when the Chinese conglomerate Dalian Wanda bought Legendary, which helped produce Godzilla and Pacific Rim movies, for $3.5 billion. The price tag seemed bananas to insiders, but it was part of the wave of cash that China was funneling into Hollywood as it fixated on building up its own entertainment infrastructure. (The Wanda gala that was held at the Los Angeles County Museum of Art that year was a literal circus, with acrobats, magicians, women in ball gowns—and plenty of booze.)

Because that money flow has been dramatically staunched due to a cultural clampdown by China’s ruling party, there’s been less day-to-day interaction between Hollywood and China—Garcia said that back in 2016 he’d have two to three meetings a day with Chinese entities. “If we had a full market going on, these things wouldn’t get quite as much air as they’re getting. Back in peak deal making times, there was plenty of noise about all the activity between Hollywood and China, but the stories wouldn’t get much air beyond the somewhat simplistic idea that China may end up owning everything if it continued.”

But with less deal-making and the theatrical movie business on life support in the wake of COVID-19, China-Hollywood issues are very much getting airtime.

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As for Fenton, he believes the solution is for the Chinese to put up a firewall around American comments so that, for instance, if a company such as ESPN or Disney emphatically supported free speech, the Chinese could simply keep its citizens from hearing it. As he wrote in a recent op-ed in the South China Morning Post: “China’s ability to firewall such American speech inside its borders is fair reciprocity too. That is China’s right. The U.S. should accept and respect that.”

Fenton, who openly admits his “hawkish” sensibility, acknowledges that his solution may be “all rainbows and unicorns.” But it may be a much better alternative than anything else.

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About the author

Nicole LaPorte is an LA-based senior writer for Fast Company who writes about where technology and entertainment intersect. She previously was a columnist for The New York Times and a staff writer for Newsweek/The Daily Beast and Variety

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