New Draft of Chinese Law Will Positively Influence Sino-foreign Film Production

24 August 2012

New Draft Will Direct Development of Chinese Film Market

Compared with the currently adopted Film Management Regulations, the new draft of Film Industry Promotion Law (the Draft) lowers standards for Chinese companies to cooperate with foreign companies.

Under the current Film Management Regulations, only qualified Chinese film production companies are permitted to work with foreign companies, whereas other companies or individuals are not. In order to produce films, Chinese film production companies must possess the License for Film Production, requiring a strict approval process. Given these conditions, foreign companies’ latitude is significantly limited in seeking Chinese production partners.

If the draft is approved, Chinese companies will not only have more opportunities to work with foreign companies, but foreign companies will also have more choices in selecting Chinese partners. This will undoubtedly stimulate the rapid development of the Chinese film market.

Taking into consideration the longterm development of the Chinese film industry, the Draft aims to establish the following new conditions for Chinese companies: 1) having previously legally released a film in China; 2) not having violated PRC law or administrative law in the past two years.

In effect, the Draft states that with the approval of the Administrative Department of Radio, Film, and Television, a legally-established Chinese company in possession of the License for Film Production (Single Film) can produce films with a foreign company if the Chinese company has previously legally released a film in China, and has not violated PRC law or administrative law in the past two years. The License for Film Production is no longer required. Because the SARFT Film Bureau is more likely to issue the License for Film Production (Single Film) than the License for Film Production, standards for film production have lowered.

In addition to meeting conditions for Sino-foreign film production, Chinese film production companies must still observe procedures established by the Film Management Regulations. The Chinese partner must first propose the project for approval, and only after obtaining the License for Sino- Foreign Film Cooperation from the Administrative Department of Radio, Film, and Television can production actually commence.

Heightened Anticipation for Better Films to Enter Market

Given the Chinese film market’s current pace of development with expanding industry models, everexpanding audience demand and a total output of Rmb13 billion (US$2.05 billion) in 2011 alone, even more room for growth lies ahead. However, from story to actor choice to production value, Chinese-made films are primarily directed towards domestic audiences and will not necessarily be welcomed abroad. Regardless, if this draft law is enacted, it will increase the quantity and quality of Sino-foreign film productions, give foreign investors more room to choose production partners and, most especially, open the door for small- to mid-size production companies with special resources to work with foreign partners.

We believe that capable foreign partners will be able not only help with investment capital, but also raise the level of Chinese production through multifaceted cooperation on technology, script development and management. Such cooperation will transform Chinese films to international films, heightening anticipation for new Chinese productions around the world.

Run Ming Law Office

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Chaoyang District, Beijing,

1000022 China

T: +86 10 6559 3511

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E: liux@runminglaw.com

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