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HOLLYWOOD’S INVESTMENT BET ON INDIA OVER CHINA: DEMOCRACY MATTERS
SEP 17, 2008 - 11:03AM PDT
Posted by Neal Rosendorf
All posts by this author

In the aftermath of the Beijing Olympics, there's been much discussion about an increase in China's soft power, not least by Joseph Nye, the originator of the concept. [Link] Nye and others (this writer included) have evaluated China's film industry and U.S.-Chinese co-productions as a strategic asset for the Middle Kingdom. I was discussing the subject recently with a U.S. motion picture industry executive, who agreed that Hollywood production in China is an important soft power issue. Still, she told me, at least as important is that Hollywood is betting with its Asian production investments not primarily on China, but on the other regional behemoth: India. Sounding a bit like Hal Holbrook's Deep Throat in All the President's Men, she admonished me, "Follow the Money." And indeed, the money trail tells the tale. VarietyAsia reported in August 2008 that Hollywood's investment in China "is substantially smaller than once envisioned: Sony has scaled back, Warner's joint venture with state-owned China Film Group is not the force it set out to be and, after several years, Disney has recently greenlit only its second Chinese movie." [Link] In contrast, Hollywood studios are sharply increasing film production in India [Link], including an announcement by Twentieth Century Fox on 10 September 2008 that it's establishing a studio in Mumbai. [Link] Moreover, Indian business concerns are investing substantially in Hollywood itself, with the same eye on boosting the American studios' production presence in India. [Link] The stakes are great from a cultural diplomacy perspective between these two fiercely competitive nations. Both China and India are looking to reap soft power advantages from their cinema sectors. The American film industry possesses unique technical and marketing prowess. Thus, large-scale Hollywood production partnerships are likely to provide India with significant global image-enhancing benefits, even if the films themselves are aimed primarily, for now, at an Indian audience. So what's going on? Both India and China are fast-growing emerging economies, with burgeoning urban middle classes still dwarfed by a billion souls in each country living in rural poverty. Yet there is a key difference at the heart of Hollywood's investment tilt in Asia: India is a democracy—flawed, perhaps, but well-established and functioning; while China is a dictatorship, even if Chinese citizens have more personal liberty than at any time since the 1949 revolution that brought the communists to power there. I asked my film industry executive whether it would be accurate that Hollywood is betting on democracy over dictatorship. Her response, after a moment's reflection, was "Yes—but you didn't hear it from me." (Which is why she remains anonymous in this piece and in anything else I'll write on the subject, although I duly tip my hat to her for raising the issue in the first place). Now make no mistake, the U.S. entertainment industry's motivation is not a pious devotion to human or civil rights, although there are many individual industry players who are laudably high-minded. Hollywood is a business, as ruthlessly focused on The Bottom Line as any…... FULL TEXT
 
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Nick Cull on September 22, 2008 @ 2:40 pm:
This adjustment is long overdue. The US has long tended to overestimate China and underestimate India. I think the roots of this lie in a cultural attachment to the missionary links of the past and the sheer power of numbers. I wonder if the difference in intellectual property policy between the two countries is also a factor.

Neal Rosendorf on September 25, 2008 @ 10:47 am:
Nick, thanks for your typically thoughtful feedback on my piece. You're absolutely right that there is a significant gap concerning protection of intellectual property that is not lost on Hollywood. Both India and China have serious video piracy problems. But while Beijing is notoriously lax in enforcement (see e.g. http://articles.latimes.com/2007/nov/12/business/fi-dvd12), New Delhi is increasingly vigorous in its pursuit of movie pirates, including a special anti-piracy court (see http://www.hinduonnet.com/2008/01/03/stories/2008010350070100.htm), due in part to pressure from Bollywood studios that are losing several billion dollars per year to illegal DVD copying. (See http://www.realbollywood.com/news/2008/05/pirates-are-robbing-bollywood-of-a-billion-dollars-anually.html).

BTW, an additional factor in Bollywood's investment luster for Hollywood is that the US is the number-one export market for Bollywood films, worth some $2 billion per year in total sales (half of which is lost every year to video piracy in the US). As one recent report notes, there are some 200,000 Indian millionaires alone in the US, about 10 percent of the total number of Indian-Americans. (see http://law-wire.blogspot.com/2008/07/virtual-bites-digital-piracy-and.html)

I'll be looking more broadly and going into greater detail in a longer article I'm currently writing.

caroline Ostenberg on January 31, 2009 @ 4:46 pm:
Very interesting!

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