Chris Fenton was president of the China-based DMG Entertainment Motion Picture Group, General Manager of DMG North America (owners of Valiant Comics), and Senior Advisor to IDW Media Holdings. He has now written a book, Feeding The Dragon, looking at his career, getting American movies into Chinese markets, notably Looper and Iron Man 3. I recently read it, and it made for quite the page-turner, and there are so many nuggets to share. You can follow along with a few I wrote with this tag. But a lot of what he talks about in encapsulated in one meeting.
He talks about early meetings with Marvel about working with them on Iron Man 3. And in doing so explains Chinese motivation into engaging in co-productions with Hollywood studios at all. Fenton writes about a meeting he took with his DMG partner Daniel Mintz with Tim Connors, former Chief Operating Officer of Marvel Studios, later the COO of Legendary, QED International and current Senior Vice President at Blizzard, and Benjamin Hung, later CCO of DMG and currently Head of Content Strategy at Valence Media. And Fenton begins talking about the incident that China doesn't want to hear mention at all;
"The Tiananmen Square uprising in 1989 is a nightmare scenario that China's Communist Party never wants to face again. To combat that, they are trying to pull people out of poverty on a massive scale that the world has never witnessed before—to the tune of four hundred million and counting. That is how many Chinese have risen from poverty to a middle class—so far. That's insane!"
"Agree. Incredibly impressive," Tim agreed.
"That social elevation requires lots of resources and long-term initiatives. You can't just create skilled, middle-class jobs out of thin air to replace farming, mining, and dangerous low-skilled factory work. It takes time and money and strategy."
"And those have limits, I'd imagine," Tim butted in.
"Exactly. Keeping 1.4 billion people just happy enough so that they don't revolt is no easy task," I responded. "Especially when there are limits on resources and time. It's frankly why the government can't make them all happy. 'Just happy enough' is the best-case scenario, and even that's a stretch."
"I never thought about it that way," Ben interjected. "So how many more can get to the middle class?" "Not clear yet, but they're going to push the limits." I had their attention. "That's where we come in."
And Fenton looks to the actions of the Chinese government that followed the success of the Beijing Olympics, and their agenda that followed;
"So, when the festivities ended, the Chinese government took a sigh of relief and then started planning their next agenda item." "Which was?"
"Prioritize industries to build into the best-in-world status and use those industries to broaden the middle class. The film industry was one of those, and someday China wants to be number one at making movies. And they wanted to become the largest film market in the world!" I explained. "Both goals, if successful, would create skilled jobs and foster entertainment content for the masses. Think about that: a larger middle class and great entertainment. I'd say that helps keep people just happy enough that they don't revolt. Say so long to another Tiananmen Square incident! Mission accomplished!
"So that macro is really all you need to know. Deliver on that, and you put the wind-to-the-back of Marvel in China," Daniel explained. "Let's break it down. Hollywood studios are Western propaganda machines. Marvel is one of those. So, things are already working against you in a soft-power sense." I took a swig of water. "Then, even worse, the making of a typical Hollywood film uses nothing China-related, meaning no Chinese artists, no Chinese crew, no Chinese locations, no Chinese plot points, no Chinese investment, no Chinese anything. So, what does that do for the Chinese government agenda of building a robust middle class? Absolutely nothing! It has nothing to do with helping to create middle-class jobs in China, period. That's a big problem!
"Compounding that are Hollywood films because they harm job growth in China's film industry. Why? Because the actual Chinese local-language films that are using Chinese people to make them get crushed by Hollywood films. Chinese consumers like Hollywood movies way more than their own, so they aren't buying tickets for their own homemade product. That means lower revenues for local-language films, which means smaller budgets and shorter productions and less personnel. Or, in other words, fewer Chinese workers are used to make films."
"In the government's eyes, all Hollywood films do is spread Western culture, eat away at local-language product, suck revenue away from Chinese consumers which is then exported to the US, and contribute nothing to the government build-a-middle-class mandate," Daniel stressed.
"So why even let Hollywood films in?" Ben asked. "Because, remember, the Chinese government needs to make people just happy enough so they don't revolt. If letting their people see films from Hollywood helps to satisfy that objective, they'll let a few trickle in theatrically. Others, they'll let flow into the black market for DVDs," I responded. "In the first scenario, Hollywood monetized. In the second, Hollywood doesn't."
So it's going to happen anyway – might as well make some money out of it…