China – Film and Tech Industries

With over 1.3 billion people, one would think that China’s massive consumer base could easily support a wide range of domestic industries. However, it becomes clear very quickly that simply having the largest population in the world doesn’t guarantee that significant demand will exist within the marketplace. The best evidence for this is found in an analysis of China’s film industry, where the demand for Chinese movies—both domestic and international—is insignificant compared to China’s demand for American-made blockbusters.

It goes without saying that Hollywood is the world leader in the international film business. Movies produced in America consistently outperform Chinese films in gross annual revenue and they receive widespread international distribution. More importantly, the film industry was invented in Hollywood, and in these times of rapid economic change and globalization, movies remain one of America’s leading exports. From a political perspective, movies are also an invaluable tool for the promotion of soft power—is there a better way to make Western culture more attractive to foreign audiences than by showcasing it in an epic motion picture? Movies are far more important to the American economy than they seem to the casual observer, and Hollywood’s domination of the international film business cannot be understated.

By contrast, China’s movie studios produce far fewer movies annually. Only a handful of these films are considered international successes, and most Chinese releases do not receive widespread international distribution. In America and in other parts of the world, Asian cinema is generally considered somewhat avant-garde, and it appeals mostly to a niche market of movie buffs and industry insiders. Filmmakers and distributors realize that China’s domestic film industry—although critically acclaimed for the beautiful movies it produces—is an underdeveloped resource in a domestic market dominated by blockbuster American films. For China’s film industry to reach its full potential, it has to produce movies that appeal to the domestic consumer base, while simultaneously reaching a more diverse international audience.

China’s tech industry is facing a similar challenge, and it is worth mentioning here in order to gain a better understanding of China’s economic shortcomings (mostly because it has so few…). Jack Ma, the Chairman of China’s largest e-commerce company The Alibaba Group knows that his enterprise has reached a crossroads. Backed by heavyweight international investors such as Yahoo of America and Japan’s Softbank, Alibaba has millions of subscribers that utilize the site to trade and barter different products and services. The site’s primary source of revenue is advertising and most of its services are free. Although Alibaba’s business model has proven to be successful in driving traffic to the site and recruiting new users, it has done little to generate significant profits. Unlike other companies, the Alibaba philosophy is that consistent growth will eventually reap profits. This philosophy is intuitive albeit simple, but even Ma himself is questioning whether or not it is possible in China’s current marketplace. Most of the business transactions that occur on are from companies in Asia, specifically in China and India. In order to stimulate growth, companies like Ma’s need to appeal to consumers in the West. But what does this have to do with movies? Essentially, the problem is the same in both industries: growth in the technology and film industries will slow down significantly unless companies can establish themselves outside of the domestic marketplace. Quite simply, the film and technology industries in China are in desperate need of the same thing—a larger audience.

china's cinema

To overcome this challenge, both industries have developed plans to leverage American business models and adapt them to the demands of the Chinese market. The legendary Chinese filmmaker Zhang Yimou recently signed on to direct a film starring the acclaimed American actor Christian Bale. Zhang, formerly considered a subversive by the Chinese government for such films as Red Sorghum, To Live, Raise the Red Lantern, and Ju Dou, is now hailed as a national treasure. Most recently, he received significant notoriety for producing and directing the opening ceremonies for the 2008 Olympics in Beijing. Bale has agreed to star in Zhang’s latest film, Nanjing Heroes about Japan’s atrocities in China during World War II. The main point here is that this is a Chinese movie starring one of the biggest stars in Hollywood—according to The Hollywood Reporter, the film is being produced and distributed by EDKO films, a company based in Hong Kong. The dialogue will be about 40% in English, while the rest will be in Mandarin Chinese (source: The result should be exactly what China has been looking for, namely a broader international appeal for Chinese movies. Placing a renowned American star like Christian Bale in a major Chinese motion picture should give China the opportunity to snatch a larger share of the international distribution market. For the first time in the history of the film business, Hollywood could see increased competition in the industry that it created.

Jack Ma and The Alibaba Group are pursuing a similar strategy. Ma realizes that his company has to expand its operations in order to drive profits and compete in the international arena. His plan is to expand the “Ali-loan” system to offer consumer and small business loans to individuals and companies in China. Consumer credit is a sensitive issue in China, and it is customary to haggle with street merchants and shopkeepers in order to get a fair price for goods and services. The government fears extending credit to small business and individual consumers because of the potential for civil unrest in times of economic instability and credit crunches. Even under normal economic circumstances, the government doesn’t loosen its characteristically tight grip on consumer credit. Jack Ma is attempting to use the government’s skepticism towards consumer credit to his advantage. This could prove to be successful, and it is only possible because of the hybrid Capitalist-Communist economic system that is developing in China. This will give China the ability to gain a foothold in the film and technology industries the way it has in every other economic venue in the past two years. Visionaries such as Zhang Yimou and Jack Ma will help to perpetuate China’s rapid economic growth, and they will help to make China’s film and technology industries dominant players on the international stage.

China’s Economy

The world’s current economies are mired in the worst and most prolonged recession of all time. Led by the United States, countries worldwide have unsuccessfully tried to stimulate their free enterprise economies and grow their business sectors in a failed effort to relieve financial stress and induce new economic growth. However, in the midst of this economic free fall, one country is experiencing its fastest and most successful economic growth period ever. And, compared to the dying financial model of America and the rest of the world, that country, China, is looking at an economic future that is very rosy and bright.

America is saddled with economic woes. The land of the free, the home of the brave and the poster boy for deficit spending is watching its economy teetering on the brink of collapse due to its massive debt. The permanent residue of runaway governmental spending, wars on two fronts and the economic bailouts of the failing banking and auto industries has ravaged the American economy. Valuable jobs have disappeared and unemployment is skyrocketing throughout the country. The percentage of chronic unemployment is approximately ten percent of the nation’s population, a depressing and demoralizing figure indeed, and one that bodes bad news for any hopes of economic growth.

What does this bleak and hopeless picture of the American economy have to do with China? Why would China even be considered in a discussion of America’s economic status? The answer, surprising as it may be to some, is that America’s failing economy has everything to do with China. And as the U.S. financial dominance fades and its crushing debt grows, China’s economy explodes with growth so rapid and massive that it has surpassed Japan as the second largest economy in the world. In addition, to add insult to injury for the U.S., America finds itself drowning in foreign debt, with most of that debt owed to China.


Trends seem to indicate the decline of the Western economic model and the rise of that same model, albeit a redesigned and revitalized version, in the East. Indicative of these trends is South Korea, a free enterprise country which successfully patterned its economy directly after the American model and which rose to the twelfth largest economy in the world, no small achievement for one of the world’s smallest countries with a small population. However, due to the current economic climate throughout the world, South Korea finds itself in the same economic doldrums as the United States. China, on the other hand, has developed a version of the American free enterprise model that is contingent on active government involvement in economic growth and that has, thus far, been highly successful. It has allowed the country’s business sector to flourish and grow in a time of declining economic performance throughout the world. China’s “Communist Capitalism” financial model has dramatically altered the world’s economic picture.

America’s massive debt to China does not sit well with many U.S. citizens either. Fueled by controversial midterm election issues such as offshore jobs and foreign debt, many Americans have come to feel that China “owns” America. In a time when government influence on America’s businesses means “bailouts” without accountability, the Chinese government creates jobs and fuels the raging economy by commissioning new infrastructure and civil projects that precipitate continued economic growth. Business activity flourishes with the implementation of new highways, roads, bridges and communities. China considers their people the most important asset in economic development and that commitment to human resources has stimulated their economy beyond anyone’s reasonable expectations. This is not to say that China has improved their human rights record in order to fuel the economy, but they do treat the matter of human resources, manpower so to speak, with the utmost respect in order to accomplish the goal of successful business growth. Whereas in America, governmental involvement in business means “bailing out” failing and outdated automobile and banking industries without regards to accountability, to its Chinese counterpart, government involvement means fostering business innovation, creativity and entrepreneurship. Inherent in the Chinese model is a vibrancy, optimism and level of success that fuels the country’s financial growth.

In the meantime, the American economy flounders. Instead of creating jobs, the U.S. government spends valuable resources on its campaign to eradicate terrorism and on failed government initiatives such as the economic bailouts of the auto and banking industries. Without holding these industries to any standard of success or accountability, which the American government’s financial sector has not done, the economic benefits hoped to be derived from these bailouts are doomed to fail. Unlike the Chinese “Communist Capitalist” model, the American economic model seems to reward failure. In China, the auto industry flourishes and their banking sector is becoming one of the largest in the world. The U.S. has been slow to react, if they have reacted at all, to emerging manufacturing and service markets which are becoming the staple of the booming economic landscape in China. The bottom line, which is the main economic indicator in any model, is that in the current world economy, the sun in China seems to be rising brightly and powerfully in the Eastern horizon.