China is currently the second largest movie market in the world, making it an enticing territory for Hollywood. (Photo : www.wantchinatimes.com)
China has announced that it will increase the cap for foreign film imports and allow for the auditing of its box office, according to a report by Chinese-language newspaper Want Daily.
Despite Hollywood blockbusters having performed tremendously well in China, having set multiply box-office records in the country, the U.S. film industry has been restricted by the limit placed by the government on the number of foreign films permitted to be released in theaters in the country.
The current cap is set at 34 films. This was set in 2012, when the film cap was increased from 20 films.
The Memorandum of Understanding between China and the U.S. that sets the cap is scheduled to expire in 2017. Beijing has expressed its intention to partially liberalize the system, especially to Hollywood films, once the memorandum expires.
However, it remains to be seen if Hollywood will significantly benefit from the new policy, as the cap will only be relaxed on films on a flat-fee basis.
American films make more of their profits in the Chinese market on a revenue-sharing basis, wherein the studio gets a portion of the revenue from the Chinese box office.
According to the Hollywood Reporter, China is planning to allow 44 foreign films to be released in China on a revenue-sharing basis between 2017 and 2018.
The aim of Hollywood studios is to have China, the second largest film market after the U.S., be completely open to foreign films with unrestricted access. However, China prefers to take a gradual approach in order to allow its domestic film industry to further develop.
A new agreement between the Motion Pictures Association of America and China Film Group will allow international companies like KPMG, PwC and Deloitte to audit the Chinese box office in order to prevent the skewing of ticket sales, something China has been accused of in the past.
