Film Business Moves from Hollywood to Asia

PHOTO: Audience members watch a movie through 3D glasses at a newly opened IMAX theatre on February 8, 2007 in Wuhan of Hubei Province, China in this file photo.

The movie industry is increasingly shifting toward Asia, especially China, striking fear in the hearts of Hollywood studio executives. The two cultures are about to clash at the Berlin International Film Festival, which opens with the Chinese epic film "The Grandmaster" by Wong Kar-wai.

Ms. Cheng is proud of how she bought a bottle of Bordeaux wine, a Château Lafite, at an auction in Hong Kong. At some point, she says, she lost patience, around when the bidding had reached 700,000 Hong Kong dollars (€67,000, or $91,000). "Suddenly I shouted '1.5 million!' and the bottle was mine."

Kelly Cheng is one of several very wealthy Chinese wine enthusiasts portrayed in the documentary film "Red Obsession." One of the characters in the film, which will be shown at the Berlin International Film Festival, or Berlinale, which opens on Thursday, says: "The Chinese love to swallow Western civilization."

The film tells the story of how the wine business is shifting to the East. It depicts French winemakers bravely defending their wine cellars against the greed of their Asian customers. "Red Obsession" gives the viewer a foretaste of what could also happen in the film industry.

A study by the management-consulting firm Ernst & Young predicts that China will replace North America as the world's largest film market by 2020. "I think it'll happen before that," says Berlinale director Dieter Kosslick. "If the Chinese open up their market, there will be no holding back."

This year Kosslick is showing the Chinese epic "The Grandmaster" as the opening film. The director, Wong Kar-wai, is the jury president at this year's Berlinale. "The Grandmaster" tells the love story of martial arts master Ip Man, who trained Bruce Lee.

The Chinese firm Tesiro, as one of the festival's main sponsors, will provide jewelry for the stars on the red carpet. At the Berlinale film market, where dealers from around the world come together to buy and sell films, Kosslick is registering significantly more Asian companies than in the previous year.

Asian Film Market Gains Financial Weight

Not just China, but also South Korea and Russia have become more important in the film business in recent years. The Russian market grew by almost 20 percent in 2012, with a film like "Ice Age 4" earning $50 million there, or more than half of its budget.

"We can no longer risk making an expensive film with a star who isn't popular in Asia," says Hollywood producer Jerry Bruckheimer ("Pirates of the Caribbean"). While American films earned up to two-thirds of their revenues in North America in the 1980s, today it averages only about one third.

Hollywood has been beset by fears of a sellout, ever since Indian investment firm Reliance acquired the majority of the DreamWorks film studio and a Chinese company bought the second-largest movie theater chain in the United States. Finally, in mid-January the Chinese electronics company TLC bought the naming rights to Grauman's Chinese Theater in the heart of Hollywood, one of the most famous movie theaters in the United States. It seems only a matter of time before the Chinese buy their first Hollywood studio.

It's happened once before, now more than 20 years ago, that Asians, specifically Japanese companies like Sony, acquired a number of studios. "China wants something different from Hollywood than what Japan wanted at the time," says American industry expert Thomas Plate. "It isn't as much about money as it is about know-how."

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