Following China’s failure to meet a WTO deadline on relaxing cultural import controls, The Guardian describes the Chinese film industry’s fears of “colonisation” if Hollywood movies flood in:

The 20 foreign titles that have previously been allowed in each year would compete with more than 500 domestic movies. Even so, they have accounted for around 45% of Chinese box-office revenues. Last year, Avatar alone grossed £125m, totally dwarfing the £65m made by China’s highest-grossing domestic film ever, Let the Bullets Fly.

Albert Lee, CEO of Emperor Motion Pictures, which co-produced Let the Bullets Fly, says: “Imagine if you had 30 Avatars a year. They’d completely take over the market. The quota system helps local producers better survive against the inevitable Hollywood invasion.” But Teng Jimeng, professor of film at the Beijing Language and Culture University, believes the quota is unlikely to be entirely removed this year, having discussed it with the State Film Bureau. “Any changes they introduce will be incremental,” he says. Most observers expect China to simply raise the import cap to 30 films this year, then a little more each year subsequently.

But the import quota is not just intended to protect Chinese films economically – it also has cultural ramifications, preserving a national film identity. Zhao Huili, the producer behind the 2007 low-budget hit Invisible Wings, says: “It’s about safeguarding local stories, not just local production companies.” Many in China look to the contrasting examples of Taiwan and South Korea. In 2001, Taiwan dropped its film-import restrictions as it joined the WTO. Today foreign movies take 97% of box office revenues. South Korea, by contrast, kept a quota – 73 days a year are reserved for the screening of Korean-only films – and has fostered a flourishing domestic industry; now Korean films regularly outsell Hollywood on home soil.

Another instructive case is that of Japan, where domestic films have outperformed imports for four of the last five years, after 21 years lagging behind. Japan’s quota system was abolished in 1945; the current resurgence has been fuelled by young appetites for TV tie-ins, and the proliferation of multiplex cinemas giving audiences greater opportunity to opt for homegrown films (PDF link, pp. 15-16):

In 2006, the market share of Japanese films exceeded that of the imported films for the first time in 21 years. One of the big factors for this recovery was none other than those films the TV networks were involved in. It is said that TV networks greatly contributed to the recovery of the Japanese film industry with their keen eyes for spotting what the audience is craving for and the effective use and influence of information distributed on their broadcasting networks ….

… In the past, imported film fans and Japanese film fans were clearly divided, mainly because the cinemas for the imported films and the Japanese films were separate … With the rise of multiplexes, imported films and Japanese films started to be screened in the same building, making the two easily available to the audience. Furthermore, films produced by the TV networks were favored by the younger viewers.