Chinese film industry slumps after opening up to Hollywood

China's domestic film industry has hit a five-year low despite robust growth in box office sales across the country in the first half of this year, filmmakers said.

The industry is going through a rough patch as ticket sales of domestic films started to fall in the first six months, a time when the country's total box office revenues gained by over 40 percent from a year ago.

The box office for domestic films dropped by 4.3 percent year on year to 2.8 billion yuan (444 billion U.S. dollars), according to the latest data from the State Administration of Radio, Film and Television (SARFT).

The slump came just months after China amended rules in February to import more Hollywood movies for national distribution.

In the meantime, ticket sales of foreign films jumped by 90.4 percent year on year to 5.27 billion yuan.

China's rapidly expanding movie market collected 8.07 billion yuan in the first six months -- up by around 41.7 percent from a year ago.

In the January-June period, 14 blockbusters hit Chinese theaters among the 38 imported films screened in the country, and only two of them failed to bring in more than 100 million yuan.

In contrast, among the 141 China-made movies screened in the same period, only 5 percent managed to break even and the rest lost money, industry insiders said.

China had previously allowed only 20 American films -- mostly big-budget Hollywood fare -- to be distributed nationally each year. In February, the country agreed to allow an additional 14 U.S. films to be distributed each year as long as they are made in the 3D or IMAX formats.

China represents one of the most attractive growth opportunities for the U.S. film industry, which is facing declining theater revenues and slumping DVD sales in North America.

The deal has greatly affected the country's movie market, because movie tickets are relatively expensive in China and audiences are more likely to choose cost-efficient Hollywood blockbusters which are better made and have bigger budgets, said Wang Changtian, president of Enlight Media, the largest independent production firm in China.

Moreover, driven by greater economic gains, cinemas tend not to grant golden time periods to domestic films. Many Chinese filmmakers complain that less popular domestic movies are given fewer screenings.

The decline in sales will have an adverse impact on investors, and many investment companies have already become cautious and slowed their pace.

"Once the capital chain ruptures, both the quantity and quality of domestic movies will all fall. The competitiveness of Chinese films will weaken," Wang said.

At Hengdian World Studios, the country's largest shooting base, located in east China's Zhejiang province, only 20 films were being shot in June, down from 50 last June.

According to forecasts from industrial insiders, films produced in China will decrease by 30 percent year on year to 500 this year, and the industry is expected to continue to shrink next year.

The SARFT is mulling a set of policies to help the industry pull through this tough transitional period, Zhang Hongsen, deputy director of the administration, had previously said without elaborating.

Current policies include a "domestic film month" that often lasts from June 20 to July 20, during which almost only Chinese films are shown in cinemas across the country.

In just three weeks after the "month" started, homemade films raked in 1 billion yuan, according to incomplete statistics.

"Painted Skin: The Resurrection," a Chinese fantasy-action film released on June 28, had grossed 516.6 million yuan by July 8.

It looks like this year's "domestic film month" will be extended through August, as Hollywood blockbusters that were set to be shown in Chinese theaters next month have been pushed off the August schedule.

However, protective measures are only temporary solutions. Film directors believe that China's film concept has lagged far behind that of Hollywood, according to a meeting held in April by the SARFT's film bureau to discuss how to cope with the impact of Hollywood blockbusters.

It is a phase that is inevitable for China's film industry, which needs some time to gradually grow and mature, said film director Wan Li.