At a dinner with Jeffrey Katzenberg, Han Sanping once asked the DreamWorks CEO if he was any good at poker. According to Chinese media reports, the American smiled and shook his head. That led an enthusiastic Han – head of the China Film Group Corp (CFGC) – to then talk excitedly about poker and how the game is great for business networking.
What piqued media interest in the anecdote is that Katzenberg is well known in Hollywood circles for his poker expertise. At age 14, he was even booted out of summer camp for running games using chocolates as stakes.
But Katzenberg’s careful silence pretty much epitomises the working relationship between the Hollywood studios and state-owned CFGC. Given that China Film Group controls access to Chinese cinema screens, American producers know it’s wise to let its boss do most of the talking.
Indeed, the story of Han’s poker lecture went viral again last week when news broke that he is to retire.
The announcement caught many by surprise as Han is yet to celebrate his 61st birthday. Xinhua thought it unusual too: senior executives at large state-owned enterprises (SOEs) usually hang onto their positions until they are 63, the official news agency observed.
But Han is no ordinary SOE official and Hollywood has no direct equivalent: Chinafilmbiz.com once described him as “Jack Valenti, Lew Wassermen and Steven Spielberg rolled into one”. CFGC is a media conglomerate set up in 1999 as the governmental guardian of the film market. According to 21CN Business Herald, the company controls at least 70% of China’s movie distribution market. Of the six biggest cinema chains, CFGC owns or has stakes in three. It also has the final say on co-productions with foreign partners and dictates which foreign films are shown in cinemas and when. “Han can simply decide which movies hit how many screens at what times,” Southern Weekend says.
Han’s godfather status is best illustrated by his role in directing Founding of the Republic, a film celebrating the 60th anniversary of socialist China (see WiC24). More than 170 of the country’s stars were cast for the blockbuster, each averaging just 42 seconds of screen time. But they all waived their fees, meaning that production costs were only Rmb30 million ($4.88 million). Gross takings were Rmb420 million.
Much like other state-backed monopolies, CFGC has attracted criticism from the private sector. “If you don’t cooperate with Han, you will find your film jammed into a release window with two Hollywood blockbusters. He unleashes the dog to bite you,” the producer Zhang Weiping once complained to an audience at a domestic film gala, reports the Yangcheng Evening News.
CFGC’s influence has even drawn comparison with China’s oil titans. “It’s the movie industry equivalent of CNPC and Sinopec. Anyone with such a monopoly position could equal CFGC’s achievements comfortably,” a director told 21CN.
As WiC reported last week, one of the reform themes currently making headlines in China is the effort to dilute some of the strength of state capitalism with the introduction of more private capital. So is Han’s retirement another reflection of similar goals? 21CN obviously thinks a shake-up is imminent, noting that there isn’t a single successful moviemaker that is state-owned.
Enter Alibaba, an internet giant which is now disrupting a series of other state-dominated sectors, including banking. Could it play a role in movie industry reform too? On Wednesday the internet firm announced plan to launch a fund that allows smartphone users to invest in filmmaking. Anyone with a minimum of Rmb100 could become a movie investor through the crowd-funding scheme.
And could be a first step towards taking a stake in CFGC when it goes public in Shanghai in an IPO anticipated for later this year?
In Hollywood there will be mixed feelings about Han’s exit. If it does suggest a new era in which the state is less involved in CFGC, that will be welcomed. But for the moguls who have spent so much time cultivating Han, they’ll be mulling whether much of it was wasted effort.
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