Examination and Approval Procedures in Chinese-foreign Cooperative Filming

29 August 2012

The Chinese box office continues to enjoy strong growth after breaking Rmb10 billion (US$1.59 billion) in 2010, and reaching over Rmb13 billion in 2011. The great development potential in China’s film market constantly and gradually attracts more domestic and foreign investors who are willing to invest in various sectors of the industry. In terms of China’s current film production practices, the Chinese legal framework still forbids direct foreign investment through the establishment of movie production companies; only via co-production with Chinese companies can foreign investors gain entrance into the market. It is therefore necessary to give foreign investors an introduction to the basic examination and approval procedures in Chinese foreign cooperative filming.

China implements a licensing system for Chinese-foreign cooperative filming, and the system is broken down into joint venture production, cooperative production and entrusted production. Without getting into the specifics of the differences between the three types of licenses due to space constraints, we will only point out the key difference, which is that films produced by cooperative production and entrusted production shall not be considered domestic films and will only be introduced as imported movies if they are to be released locally in China. Based on this, in actual practice, foreign investors are more likely to co-produce a film with Chinese investors via joint venture, in which risks and interests are shared among both parties. To illustrate, we will briefly divide the entire film production process into two stages, before shooting and after shooting, and then summarize the main procedures for examination and approval in China under joint venture production:

Before shooting, the Chinese coproducer must be a movie production unit that holds a “Permit for Movie Production” or one of several kinds of film and TV culture units which have been registered with the industry and commerce departments above the prefecture level (hereinafter referred to as movie production unit). Next, the movie production unit should file a record of the proposed movie script (summary) and apply for project approval for the proposed shooting. All film and TV culture units must also apply for a “Permit for Movie Production (single)”. After reviewing the film script, the radio and television departments at the provincial level shall report to the State Administration of Radio, Film and Television according to the regulations for examination and approval. Movie filming can be started with approval granted by the State Administration of Radio, Film and Television and once the “Script (summary) Record Receipt” or the “Permit for Movie Production (single)” has been obtained.

After the shooting is complete, the finished film should be reported to the local provincial administrative departments of film and television broadcast to obtain a preliminary examination opinion, then the department will report the film to the film review committee of the State Administration of Radio, Film and Television for examination. After passing the examination and approval sections, the “Permit for Public Broadcasting” issued by the State Administration of Radio, Film and Television must be obtained before the film can be released in China.

We have also observed that in practice, overseas capital enters the domestic movie production market with flexible approaches, such as making use of the VIE structure, which is commonly found in the internet industry,or foreign investors get involved in technologies or related services in movie production through an investment company that provides the peripheral technological services involved in the movie industry, and so on. We believe that with the promotion of the industry under the national cultural industry policy, the lowering of the barriers to entry for private and foreign capital in the film industry of our country is possible, enabling more kinds of involvement of overseas capital in the movie production market of China.

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