How China's "Cold Winter" Could Cast a Chill Over the Cannes Market

A perfect storm of adverse conditions — the U.S. trade war, censorship and plummeting stock prices — will lead to a noticeably smaller Chinese presence on the Croisette.

Over the past several editions of Cannes, robust market growth and diversifying tastes in China have created a rare bright spot for international sales agents. China was that almost singularly rare territory where both the volume and price of movie rights were rapidly on the rise. Since late 2018, though, market conditions in the Middle Kingdom have turned decidedly unruly, and much of the Beijing industry is now hunkered down and trying to weather the so-called "Cold Winter" that has engulfed the country's massive film sector. This dour mood will be keenly felt on the Croisette, says Yiran Song, an acquisitions executive for Chinese distributor Times Vision. "For sure, there won't be as many Chinese buyers in Cannes," she says. "And most of the people who come will have smaller budgets to play with."

The causes of China's industry doldrums are well established by now — an almost perfect storm of depressive forces, including: Beijing's continuing discouragement of investments in overseas entertainment; 2018's massive tax evasion crackdown, which torpedoed the career of Fan Bingbing, among others; a strict tightening of censorship in the lead-up to the politically sensitive 70th anniversary of the founding of the PRC in October; Trump's ongoing U.S.-China trade war; and the widespread perception among lay Chinese investors that the country's once booming entertainment sector has turned risky and politically vulnerable, which has sent the share prices of most publicly traded film companies plummeting.

The effects of these forces are already reverberating overseas. "We haven't sold movies to China for the same sort of prices over the last 12 months as we used to," says Nicolas Chartier, CEO of Voltage Pictures, whose recent titles includes Amy Schumer's I Feel Pretty and Jenny Gage's erotic drama After. "We've seen a real slowdown both in volume and prices," he adds.

"I think the Chinese marketplace is going through a leveling out and sorting out as we see where the market there should go," adds Glen Basner, CEO of FilmNation, which is selling Pedro Almodovar's Cannes competition title Pain and Glory.

Cai Gongming, CEO of Road Pictures, which last year acquired China rights to both Palme d'Or winner Shoplifters and Jury Prize winner Capernaum, believes the weeding-out process could prove a positive development for the industry over the long term. "The companies buying this year will be the more experienced guys who can actually get a release date and hopefully market your film well in China," Cai says, noting that most of the films picked up for China over the past several years in Cannes — many by cash-flush industry neophytes — never made it into Middle Kingdom cinemas. "You want a partner who can offer you some realistic hopes for backend, not only fast, minimum guarantee thinking."

“There are still plenty of healthy buyers in China but the process of negotiating and funding deals has become more drawn out and complex,” adds market veteran Stuart Ford, CEO of AGC. “Going into Cannes, we assume it will take a little longer to make meaningful Chinese sales.”

This story first appeared in the May 8 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.