China -  Chinese law firm

Measures on Strengthening Cooperation and Management of Cross-Strait Films

Q1. What is the promulgation date of the Measures on Strengthening Cooperation and Management of Cross-Strait Films?

A1. On January 17, 2013, the State Administration of Radio, Film, and Television of the People’s Republic of China (“SARFT”) promulgated the Measures to implement the commitments regarding Taiwanese access to the Mainland China film industry in the Economic Cooperation Framework Agreement (“ECFA”), which has been in effect since September 12, 2010.

Q2. What is the definition of “Taiwanese Film”?

A2. Taiwanese films refer to those films made by production entities that are set up or established in accordance with the relevant laws of Taiwan, and own more than 50% of the copyrights of the films concerned.

Q3. What kinds of restriction are provided in China for importing foreign films?

A3. Imported foreign films (including films produced in Hong Kong, Macau, and Taiwan) that may be exhibited in China are subject to a quota restriction, and only a limited number of foreign films are allowed to be imported and distributed per year. In addition, foreign films can only be imported by designated film importers (namely China Film Group Film Import & Export

Corporation), and be distributed by designated film distributors (namely China Film Group Film Distribution & Exhibition Corporation and Huaxia Film Distribution Co., Ltd.) in China.

Q4. What is the restriction circumstance of Taiwanese Film under the released measures?

A4. After the release of the Measures, Taiwanese films will be imported, approved, and distributed as foreign films, but on a quota-free basis.

Q5. What are the legal requirements regarding the Co-produced Film in China?

A5. Under PRC law, any organizations or individuals from abroad may not independently make films within China. Only cooperation between a foreign entity and a PRC entity in film production (including Joint Production, Co-production through synergy, and Co-production through commission) is allowed. Moreover, the employment of any foreign principal creative personnel1 shall be approved by SARFT, and the foreign leads shall not exceed two thirds of the total number of leads. The development and post-production of the negatives and samples of a Sino-foreign jointly produced film shall be completed in China.

Q6. What rules shall be applied to the Co-produced Films by Mainland China and Taiwan under the Measures when referring to the regulations related to Sino-foreign cooperation in film production?

A6. 1) In regards to Joint Production films, the plots and leading characters must be related to Mainland China or Taiwan;

2) In regards to Joint Production films, the employment of foreign principal creative personnel shall be approved by SARFT. Except for requiring at least one third of the leads to come from Mainland China, there is no restriction on the percentage of foreign principal creative personnel;

3) Subject to the approval of SARFT, the development and post-production of the negatives and samples of co-produced films may be completed in Taiwan, without being limited to only special technical requirements;

4) Films co-produced by Mainland China and Taiwan are treated as domestic films for the purpose of distribution in Mainland China pursuant to the applicable PRC laws.

Q7. What is the restriction for foreign investment (including Taiwanese investment) in movie industry?

A7. Under PRC law, foreign investments in movie exhibitions are restricted, and foreign investors may not hold more than 49% of the equity interests in any PRC movie theater company. In a Sino-foreign joint venture movie company established in one of the trial cities, Beijing,

Shanghai, Guangzhou, Chengdu, Xi’an, Wuhan, and Nanjing, the foreign investor shall not hold more than 75% of the equity interests. Notwithstanding the foregoing, “Hong Kong and Macau service providers” may construct or renovate movie theaters for film exhibition by taking the form of joint ventures or wholly owned enterprises.

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