M: Business 3rd Edition by O. C. Ferrell, Geoffrey Hirt, Linda Ferrell

Exercise 1

China and Hollywood are forging a deepening bond thanks to money and market demand. Hollywood, which relies heavily on investors, has recently discovered the deep pockets of both the Chinese government and individual Chinese investors. At the same time, China, determined to grow its own film industry, is looking toward Hollywood for knowledge and audience expansion.

China’s economy is booming, creating a new market heavy on capital and enthusiasm for film. Recent endeavors include government-backed China Film’s $5 million investment in The Karate Kid remake and Orange Sky Golden Harvest Entertainment’s $25 million investment in Legendary Pictures (known for The Dark Knight and other blockbusters) for a 3.3 percent stake in the company. In addition, China’s movie audience is growing, up 80 percent from 2009, and the government is driving a large expansion in movie theater construction. With China getting more in-depth knowledge of the moviemaking industry and Hollywood receiving more capital to make its movies, the situation appears to be a win-win for both parties.

However, as with any partnership, there is often a certain degree of conflict. The Chinese government, for instance, prefers to show Chinese-made movies within China and currently permits only 20 foreign films into the country each year. This makes co-producing more ideal as co-produced films do not fall under this ruling and give Chinese filmmakers more international exposure. Yet with China gaining more expertise in filmmaking, is there a possibility that China could one day become a competitor with Hollywood? Rumor has it that China may be looking into direct investment by purchasing a Hollywood film studio to solidify the partnership. Time will tell whether the increased knowledge that Chinese filmmakers will receive from coproduction will one day lead to the creation of China’s own Hollywood.

Why are the Chinese investing in Hollywood films?

Step 1 of 2

Country C’s rapid economic growth has necessitated a global push towards investing in HW. Country C has the world’ largest film market and hence its government is using its investment power as a tool for self promotion.