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U.S. and China reach deal to allow more movies into China

February 17, 2012 |  9:00 pm

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This post has been corrected. See the note at the bottom for details.

Addressing a long-standing concern among major studios, China has agreed to ease restrictions on the number of foreign movies it allows into China and the amount of revenue that studios can collect from box-office ticket sales there.

Under a deal announced Friday by the White House, China has agreed to allow an additional 14 so-called enhanced format foreign films -- those that are in 3-D or in IMAX -- into the country each year.

The current quota limits the number of foreign films allowed into the country under a revenue-sharing agreement to about 20 a year, most of which are U.S. movies. The agreement also increases the amount of revenue that foreign studios collect from movies distributed in China from about 13% to 25% of ticket sales.

The agreement was finalized on Friday in negotiations between Vice President Joe Biden and Chinese Vice President Xi Jinping, who was visiting Los Angeles on a trip to promote more trade between the countries.

Easing China's restrictions on access to its vast market has been a top priority for the Motion Picture Assn. of America and its chief executive, Chris Dodd, who has been working with U.S. trade officials on a compromise with the Chinese government. During his visit to Los Angeles on Friday, Xi met with studio executives, including Walt Disney Co. Chief Executive Bob Iger and DreamWorks Animation Chief Executive Jeffrey Katzenberg, who just announced a deal to build a new animation studio in Shanghai with two state-owned Chinese media companies.

China has faced heavy pressure to comply with a World Trade Organization ruling in 2009. In a decision hailed as a big victory for the U.S. entertainment industry, the WTO ruled that China had violated international trade rules by restricting imports of foreign movies and other media. But China disagreed with the ruling, which stemmed from a complaint the U.S. filed with the world body in 2007.

The rapid growth of the theater industry in China has made the market that much more appealing to studios, which can generate $20 million to $40 million in ticket sales per film, compared with about $1 million a decade ago. Popular movies released in China include the blockbusters “Avatar,” “Alice in Wonderland” and “Harry Potter and the Deathly Hallows.”

The agreement was quickly praised in the movie industry.

"This is a major step forward in spurring the growth of U.S. exports to China," Dodd said in a statement. "It is tremendous news for the millions of American workers and businesses whose jobs depend on the entertainment industry."

Disney's Iger added: "China is one of the most populous countries in the world, and this agreement represents a significant opportunity to provide Chinese audiences increased access to our films."

For the record, 8:00 a.m. Feb.18: An earlier version of this post incorrectly said that Dodd had met with Xi in Los Angeles on Friday. Dodd met Xi at a luncheon in Washington on Tuesday.

RELATED:

DreamWorks Animation unveils China studio plans

Imax expanding rapidly in emerging economies

China is on a cinema building binge

-- Richard Verrier

Photo: A poster for the movie "Avatar" at a Beijing cinema on Jan. 21, 2010. Credit: Liu Jin / AFP / Getty Images

 

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