Declaration of Independent Films: China’s Arthouse Market

How China’s film industry is maturing, diversifying, and embracing arthouse films.

Big-budget spectacle films are no longer guaranteed successes at China’s box office. The failure of Asura, an action-fantasy epic that was touted as the most expensive domestic Chinese production ever made, suggests that Chinese audiences are looking for more than just heart-pounding action sequences and flashy CGI—they want quality stories too. South China Morning Post posits that Asura flopped because it lacked a compelling storyline.

Instead, lower-budget and foreign films that touch the heart or tap into the cultural zeitgeist have gained in popularity—and success—in China. Locally produced Dying to Survive, a socially relevant dark comedy that critiques the prohibitive costs of cancer drugs in China, raked in more than $450 million at the box office. Foreign-made family dramas like Bollywood’s Secret Superstar, which has themes of female empowerment and domestic abuse, have also done exceptionally well at the box office (Secret Superstar took in nearly $120 million in China). Even domestic action films like Wolf Warrior 2, which is the highest-grossing film in China of all time and boasts plenty of action scenes, tapped into audiences’ growing sense of patriotism to achieve success. All these things suggest that, as China’s entertainment industry rapidly matures, so do the tastes of its moviegoers.

China’s shift to independent and arthouse films

Although action and fantasy movies aren’t going anywhere, China’s domestic film industry has been broadening its focus to include less commercial films. Three of China’s biggest entertainment companies—Perfect Village Entertainment, Edko Films, and Huaxia Film Distribution—announced a joint initiative to invest $16 million in China’s domestic arthouse industry. Titled A.R.T. Project, the venture aims to promote low-budget but high-quality films from emerging Chinese directors.

However, the focus isn’t entirely on domestic arthouse movies: China’s Nationwide Alliance of Arthouse Cinemas, established in 2016, aims to bring independent foreign films to broader Chinese audiences by establishing a circuit of cinemas to play them. Last year, online film ticketing company Beijing Weying Technology secured the distribution rights to eight titles from the Cannes Film Festival’s Official Selection; this year, another Chinese distributor, Road Pictures, acquired the China rights to two of the most lauded films at Cannes, including Palme d’Or winner Shoplifters.

“The market has been largely saturated with mainstream genres, such as romantic melodramas, broad comedies, big action, etc.,” says Elaine Chin, senior vice president of narrative film at Participant Media and former vice president of production at Walt Disney Studios’s China division. “With the growing success and interest in these smaller but impactful films, it was just a matter a time for the industry to respond with a collective strategy to lean into this emerging market.”

“For the industry to become sustainable, it needs to find ways to support innovation and creative expression. Creating an arthouse/independent cinema ecosystem is an important step towards that goal.”

-Elaine Chin

Zuolong Shan, producer of award-winning Chinese film Kaili Blues, says that the maturation of the Chinese film industry has allowed major companies more breathing room for experimentation, making space for more niche players. “In recent years, small and medium-sized film companies have sprung up,” he shares. “Some of these ‘small’ companies have very good taste and also very clear company positioning, and the sharp growth of China’s new media platforms, whether on the investment side or in the market, has brought low-budget art films many fresh opportunities.”

Chin adds that the Chinese market is an important one for independent filmmakers and distributors because of the country’s size. “Niche and specialty markets in China are somewhat misleading, because due to the sheer population size, these markets could yield substantial box office results, compared to the North American specialty market,” she points out.

U.S.-China arthouse content streaming partnerships

The main barrier to entry for independent filmmakers isn’t production costs but rather distribution (film distributors are responsible for the marketing of the film, as well as the costs of getting film “prints” to theaters). “It costs so much to bring a movie to theatrical—I think you have to have a good reason,” says Jean Su, founder and producer at Broadvision Pictures. She adds that films with more spectacle make more sense to show on big screens than quiet, narrative stories.

Digital platforms have made it much easier for independent filmmakers to get their films to a broader audience, domestically and abroad. In the United States, streaming services like Netflix and Amazon have been touted as the “saviors” of independent filmmakers, who traditionally have had difficulty finding funding and distributors for their movies. However, with the digital revolution and such tech companies’ deep pockets, films that would’ve only had a limited theatrical release can now be seen by millions worldwide.

Shan believes that digital streaming can offer U.S.-China partnership opportunities in content creation and sharing. “Netflix and several other new media platforms in China are now prospering,” he shares. “Perhaps online content will be a fertile ground for Sino-U.S. cooperation in the development of high-quality film and TV shows.”

Digital platforms have also made it much easier for independent filmmakers to get their films to a broader audience, domestically and abroad.

– Jean Su

Already, there are Hollywood-China partnerships in the making. FilmNation, a leading distributor of independent films, and China’s largest video streaming platform, iQiyi, have already struck a deal for iQiyi to have exclusive access to FilmNation’s content. Considering that iQiyi has about 421 million monthly active users and 51 million paid subscribers (iQiyi offers a paid version and a free version, which supports ads), that marks a significant boon for independent filmmakers. For comparison, Netflix has about 125 million subscribers worldwide.

Su has high hopes for the future of partnerships between digital streaming and independent films. She views streaming platforms as a boon to get her films out in the U.S. and in China. “I think it’s particularly helpful for indie producers and indie moviemakers like us, because we don’t have deep pockets—but we do have very good stories,” Su says. And, ultimately, it will be the focus on great stories that will get movies seen by broader audiences.

Independent films as a pipeline for talent

Chin believes that the biggest benefit of China embracing more arthouse films is the influx of new talent, but that the current intense focus in China on commercial success could end up hurting the industry. “The heavy focus on box office earnings as a marker of success is a definite risk in burning out a generation of potential talent,” she believes. “For the industry to become sustainable, it needs to find ways to support innovation and creative expression. Creating an arthouse/independent cinema ecosystem is an important step towards that goal.”

She points to critically acclaimed Chinese filmmakers like Zhang Yimou (House of Flying Daggers) and Chen Kaige (Farewell My Concubine) as examples of the benefits of a diversified film market. “There are legendary Chinese filmmakers who have achieved critical and commercial success by creating both small and large-scale films,” she explains. “However, they came up at a time before the Chinese commercial film industry became the juggernaut that it is now, and it’s a blessing that they had the ability to grow as artists and storytellers without the pressure of generating high box office returns.”

The promotion of new talent isn’t limited to just China—it can also extend into the United States. Chin states that any overseas screen time can be hugely beneficial to emerging filmmakers, in both reputation and box office receipts. “This arthouse pipeline in China could create a ‘bounce’ for Western films that may have had limited success in their U.S. run,” Chin says. Any positive press or box office results can “substantially boost their profile and financing prospects for future projects.”


–This article first appeared on Reach Further, East West Bank’s digital news magazine covering U.S.-China Business.