As trade war looms over Hollywood, can Bollywood script a China fairy tale?

3 Idiots marked the beginning of the love affair between Bollywood and China. Since then, Dangal and a couple of other films have been successful in the Chinese box office

Footfall in theatres has decreased by 80 million in the US and Canada over the past decade, according to a Fortune.com report.

During this time, China has emerged as Hollywood's major patron. So much so that movies which fail to rake in big box office numbers in the US make up for it in the Chinese market on many occasions, reports Newsweek. For example, Warcraft flopped in the US but made more than half of its $433 million total earnings in China.

Hollywood caught in trade war?

China's quota system allows 34 imported movies a year to be shown in theatres, while overseas producers get a 25 per cent share of box office takings, which is less than that in other international markets.

Negotiations to raise the Chinese quota on imported films and boost the share of overseas producers are now being discussed within the broader framework of a US-China trade stand-off, four industry sources told Reuters.

The shift from earlier talks is a double-edged sword for US producers looking at China's $8.6 billion cinema market. It could be bad news if broader talks go sour, but it could offer a potential path forward if the two countries find common ground.

China has become a key market for US studios from Walt Disney Co to Universal Pictures. "The Fate of the Furious", the latest instalment of Universal's "The Fast and the Furious" franchise, was the second top-grossing film in China last year while "Avengers: Infinity War" grossed 1.6 billion yuan ($251.23 million) as of May 2018.

China's box office revenue rose 13.45 per cent last year to 55.91 billion yuan, accelerating after a sharp slowdown in 2016.

Jacob Parker, vice president of China operations at the US-China Business Council, told Reuters that firms were more concerned about the revenue split for films they brought to China, though higher quotas would be well received too.

"Profit sharing is a higher priority," he said, and studios "would like to see 45 per cent as opposed to 25 per cent." He added: "Forty-five per cent is what companies receive in most other markets where they operate."

It's in China's interest to resolve the issues as the biggest local blockbusters in recent times have been financed by Amercian money, according to the Newsweek report quoted earlier. 

Xin Zhang—a senior film and cinema analyst at IHS Markit, a global information provider based in London—told South China Morning Post that this is “a big issue for China and Hollywood.”

China's love affair with Bollywood 

A Global Times article says that the Industry could benefit from the trade tensions between the US and China. In the past three years, Indian films have made a total of 2.79 billion yuan (approximately Rs 28.5 billion) in China, according to EntGroup data. 

Aamir Khan-starrer 3 Idiots was the first Hindi movie to have prised open the Chinese market even though it made a measly Rs 160 million. The movie achieved a cult status in the country as the youth identified with the travails of a hyper-competitive education system.

That was the beginning of China's love affair with Bollywood. Since then, Dangal, Secret Superstar and Hindi Medium have found huge acceptance in the country, grossing Rs 12 billion, Rs 7 billion respectively, according to a Livemint report. 

"Given the US-China trade friction and Chinese audience's aesthetic fatigue toward American films, the Indian film industry will have greater opportunities," Chinese daily Global Times quoted Tian Guangqiang, an assistant research fellow with the National Institute of International Strategy at the Chinese Academy of Social Sciences, as saying.

However, he cautioned that it won't be easy for the Indian film industry to become a dominant force in China as the two countries are quite different culturally.