Trends in Chinese Film Law and Regulation

shutterstock_189183176

As China’s movie business continues to grow and its market stands poised surpass the United States as the world’s largest in terms of gross ticket sales, old challenges still abound even as new issues emerge—many requiring legal or regulatory attention. Below are some of the trends we expect to hear more about in 2016.

Film Industry Promotion Law

A draft of this long-awaited law was released for public comment in November. If and when it passes, it will mark a shift towards the development of a comprehensive legal framework to govern the industry from the top down. Still, implementation of more regulations and associated policy documents would be needed at both the national and local levels, with many areas of regulation delegated to government departments at the provincial level and below. The current draft sets out guidelines for film production, distribution, screening, and financing. But the draft makes no major changes to the status quo around the participation of international players. Non-Chinese companies still are banned from working independently in China and an annual import cap limits to 34 a year the number of international films that can play in Chinese movie theaters and send a share of their ticket sales revenue back home.

Development of a Ratings System

The latest draft of China’s Film Industry Promotion Law points towards the establishment of standards for evaluation of movies, the likes of which were first adopted in Hollywood in 1922 and further codified in 1968. In theory, the current lack of any type of film content ratings in China means that all films shown must be suitable for all audiences. In practice, however, young children are frequently found in Chinese theaters watching the films that would be rated PG-13, R, and even NC-17 in the U.S., leaving some observers wondering about the inconsistency of the censors’ standards, especially as more diverse and complex films hit the theaters. Most recently, the hit contemporary drama Mr. Six, starring Feng Xiaogang as a salty-mouthed aging gangster, stirred up controversy among Chinese moviegoers over its foul language and violence and led to renewed calls for ratings. For a long time, the lack of a transparent ratings system also has allowed censors to bar certain imports without having to cite specific reasons. Occasionally, reports leak out that a particular import was barred on particular grounds, as in the case of the rejection this week of Marvel’s Deadpool for graphic violence, but for the most part international studios are left scratching their heads.

Plagiarism and copyright infringement cases

In the mad dash to develop stories and scripts for China’s big and small screens, some writers have taken shortcuts by relying heavily upon the work of others. China has a long tradition of copycat culture, but nowadays more and more writers are taking to the courts to protect their rights. In the first major case in this area, Taiwanese romance novelist Chiung Yao successfully sued Hunan TV and writer Yu Zheng for producing a series with a storyline that closely paralleled that of one her books. The verdict—payment of RMB 5 million ($760,000) in compensation and an apology—was recently upheld on appeal, and several other major cases are currently working their way through the legal system.

Cracking down on box office fraud

Allegations of fraudulent practices aimed at boosting the appearance of ticket sales have cast doubt on some of the success enjoyed by last year’s homegrown blockbusters Monster Hunt and Lost in Hong Kong, the two most-successful Chinese language films of all time. Despite the launch of a new state-run online box-office reporting platform in October, the U.S.-based site Box Office Mojo has stopped including Chinese box office figures, citing the unreliability of available data. But China’s regulators continue to promise to bear down on shady practices: The draft Film Industry Promotion Law sets out specific penalties for inaccuracies in the reporting of ticket sales, while the latest Hollywood-China agreement on film distribution will allow foreign studios to audit the receipts for their films. That agreement may provide an incentive for domestic regulators to clean up at home before international parties get involved, with a new a new crackdown launching this week.

State-run television

China’s State Administration of Press, Publications, Radio, Film, and Television (SAPPRFT) launched TVOS, its smart TV operating system in 2014, and plans to upgrade it to enable the hosting of third-party applications on set-top boxes. This would allow greater control over illegal apps such as the 81 that were shut down in November, which were popular sources of illegally imported content. While SAPPRFT plans to heavily promote TVOS2.0, it remains to be seen whether the regulator will mandate its use by smart TV and set-top box manufacturers, a move that could be seen as consistent with Beijing’s drive to collect data on China’s citizens in the name of surveillance.

Gray-area marketing practices

The “New Year” period from early December to early January was a prime time for Chinese releases, with more than 30 domestic films debuting and no new competition from imports allowed. The packed release calendar is raising some concerns about how Chinese studios are collaborating to promote competing films. This year the heavyweights Enlight Pictures, Huayi Brothers, and Wanda created a single trailer for three of their December releases: Mojin—The Lost Legend, Mr. Six, and Devil and Angel to get their films to stand out from the pack, and perhaps allowing them better positioning at theaters owned by Wanda, the nation’s largest cinema chain.

Bootlegging of domestic films

As China touts its homegrown blockbusters, piracy of domestic films is becoming a side-effect of successful marketing and cutting into theatrical grosses. Pirated versions of Mojin—The Lost Legend were available online the day after it opened in theaters. Cheap DVDs and even free online copies proliferated, and an unauthorized screening was even recorded at a branch of a major electronics retailer. In the midst of the recent new year release period, China’s Film Bureau issued an anti-piracy appeal citing several recent cases, including tracking piracy of Mojin to a university in eastern China.

Regulation of actors’ behavior and endorsements

Fame and attendant wealth do not necessarily mean freedom in China, where celebrities have been called upon by the government to uphold a media self-discipline pledge, and face being blacklisted for moral failings such as drug use.  Beyond controlling behavior, authorities are putting a damper on the moneymaking activities of popular actors. Under the new Advertising Law that took effect on September 1, 2015, anyone who endorses a product can be held liable if the advertisements in which they appear violate the law. Violators face fines and can be blacklisted from all endorsements for up to three years if found guilty.