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CEPA Opens Way for HK Film Industry

The Closer Economic Partnership Arrangement (CEPA) between the Chinese mainland and Hong Kong is generally seen in film communities as a great hope for the future on the mainland-Hong Kong markets.

"An open market and a thriving economy in the mainland as well as the implementation of CEPA have provided great chances for Hong Kong's film development. The mainland is the back of Hong Kong films," said famous Hong Kong film director Ng See Yuen.

Ng, president of Federation of Hong Kong Film Workers, said that during Hong Kong International Film Festival, which lasted from March 22 to April 6, 2005, that Hong Kong film was originally an important part of mainland film.

Hong Kong's audio-visual industry would benefit significantly under the two phases of CEPA liberalization measures. Under CEPA I, Chinese-language films produced by Hong Kong companies could enjoy quota-free access to the mainland market. China maintains a global quota of 20 foreign films per year to be imported for distribution on a revenue-sharing basis. Requirements for Hong Kong-mainland co-productions have also been relaxed significantly under CEPA.

Mainland-Hong Kong co-produced television programmes will be given wide access to the mainland market under CEPA II, as they will not be subject to any quantity and broadcasting time restrictions.

Under CEPA II, Hong Kong companies, on a wholly owned basis, will be given access to the distribution of mainland-produced or Hong Kong-mainland co-productions in pilot areas of the mainland and will be allowed to construct and renovate cinemas. These measures will enhance the channels for co-produced films and screening Hong Kong-produced films on the mainland.

Since CEPA took effect on 1 January 2004, Hong Kong companies can hold up to 75 percent of joint ventures in renovating and building cinemas on the mainland. Under the CEPA II liberalization measures, Hong Kong companies will be allowed to construct and renovate cinema theatres on a wholly owned basis.

In contrast, other foreign investors can form joint ventures to construct or renovate cinemas in China with ownership of up to 49 percent. More recently, in seven pilot cities, namely, Shanghai, Beijing, Guangzhou, Chengdu, Xian, Wuhan and Nanjing, foreign companies have been allowed to hold up to 75 percent of cinema joint ventures.

Since the implementation of CEPA, many co-productions can be emitted and put on screens in the mainland, and post products of films such as VCDs or DVDs are also available. Therefore, the space for the development of Hong Kong film is becoming larger and larger. The huge volume of audiences in mainland is the biggest attraction to Hong Kong filmmakers.

The ways of film production and marketing in Hong Kong have great impact on the mainland. Film shooting methods and techniques, especially those used in making kung fu films, have given inspiration to mainland producers. At the same time, mainland filmmakers' horizons, thoughts, as well as the unlimited natural landscape have also largely benefited Hong Kong filmmakers.

Ng believes the huge volume of audiences on the mainland is the biggest attraction to Hong Kong filmmakers.

"As long as there are good films, the box office can be guaranteed." For example, Ng said, Seoul Raiders grossed only HK$7 million (US$886,000) in Hong Kong, but on the mainland, 30 million yuan (US$3.65 million) was gained.

"Films directed by famous directors like Zhang Yimou and Feng Xiaogang could sometimes make profits over 100 million yuan (US$12.1 million), showing that there is a great potential in the market," said Ng.

On January 1, 2005, the second CEPA phase took effect. Hong Kong film production companies are now able to establish solely owned companies on the mainland. A new chapter of cooperation is unveiling.

"Hong Kong film needs to develop and change, while the entertaining and interesting elements should be kept," Ng said. "But mainland audiences' appetite may change, which is a challenge to Hong Kong film."

At the same time, Hong Kong audiences will not only be satisfied with superficial or purely entertaining stuff; they also want to see artistic, thoughtful films. The change in the tastes of audiences can indeed help enhance the quality of films, explained Ng.

"I hope very much to see entertaining, thoughtful and inspiring productions, which is the common goal of Hong Kong filmmakers," Ng said. "The outstanding box office profit of Infernal Affairs in the mainland and Hong Kong is a good example which shows both Hong Kong and mainland should acquire each other's advantages to make films that fit the audiences' interest."

With the first film produced in 1905, China celebrates 100 years of moviemaking in 2005. During the past 100 years, at least 7,000 movies have been produced in China, some deeply affecting people's lives and views. At one time, movie watching was the most common form of entertainment for Chinese people, with 30 billion cinema visits a year. But in recent years, numbers have dwindled. Efforts are being made to develop the film industry, with more international cooperation on projects and new operational mechanisms that cater to a more open market. The future of the both sides' film markets is bright and flourishing. The close relationship under CEPA is bound to generate win-win results.

Notes:

1. Supplement to CEPA (signed on 27 October 2004) (CEPA II)

2. CEPA Main Text and Six Annexes (signed on 29 June 2003 and 29 September 2003 respectively) (CEPA II)