"What makes the most profit? Risk does." China Film Group CEO interview with Southern Weekly

The Founding of a Republic: Zhang Guoli, Han Sanping, Tang Guoqiang

Most Chinese cinema-goers are buzzing about one film right now: Founding of a Republic (建国大业), which opened to the public last Thursday. The fact that it offers glimpses of some of the biggest stars in Asia is tantalizing even for those not interested in the Political Consultative Conference that takes up most of the film.

The producer and director of the film is Han Sanping (韩三平), who is also the CEO of the biggest film group in China, the State-owned China Film Group (中国电影集团). Han was interviewed by Southern Weekly (南方周末), who used the film as a penetration point into the film industry in China, asking him critical questions such as whether he thought China Film Group had more advantages than privately-run groups in China, and whether they had a monopoly on the industry.

A brief section of the introduction of Han from the Southern Weekly interview is below:

Including the films that only hit cinemas for a few days, in 2008 mainland cinemas only showed 77 Chinese-language films. Out of these, ten had the same name in the credits: Han Sanping. These ten films generated almost 8 hundred million in the box office, and made up a third of Chinese-language box office that month.

Han Sanping uses "tasks well accomplished" (功德圆满) to describe the contribution he has made to Chinese cinema. Neither he nor his secretary have given us a statistic about how often "Han Sanping" has appeared in the beginning credits of a film － but they can be sure that his name has appeared in the most number of Chinese films ever.

The full interview, translated below, touches on the films that China Film Group has produced, and on the investments that Han Sanping has made, good and bad, including Crazy Stone (疯狂的石头) and Mobile (手机), to the hundred million productions such as Red Cliff (赤壁) and Hero (英雄).

In the interview Han Sanping expresses some slightly disturbingly China-centric sentiment; he has been accused of having a "patriot complex" (爱国情结), investing in the film Tian'anmen as well as Founding of a Republic.

Commentary on the Internet, however, hasn't been wholly supportive, calling the film unwatchable and mocking its title. On the Independent Review blog, Xiao Han (萧瀚) wrote: "Han Sanping is good at making things, whether it's making a film or making compliments (kiss ass)" (韩三平还是挺会拍的， 无论影片还是马屁 suggestions at translating this welcome).

It's the overwhelming statics that makes the interview interesting, as well as Han's views on creating a "dialogue" with Americans and their film industry. In it, Han also talks about how the State apparatus supports the making of movies and fostering of young directors in China.

Southern Weekly: In 2004 China Film Group launched a series of high investment films, what did you go through to decide this?
Han Sanping: At the time privately-owned companies were very successful, and China Film had to solve a problem, which was how a State-owned enterprise could be successful in the commercial sphere. We were pained about this but knew that we had to solve it too. I have a complex, which is a making-State-owned-enterprises-commercial complex, and this is superior to my complex about film. I don't believe that State-owned enterprises can't be done properly, I don't believe that State-ownership will fail. Is American politics flawless? There is so much gun crime, extortion, drug abuse, murder and other crimes.

For the entire human race to be under one system is impossible. So to have the entire human race watch Hollywood films would make life very dry. If you ate McDonalds for breakfast every day, then there'd already be rebellion. But if the whole world was eating McDonalds every morning, you can choose not to eat it, and choose to make breakfast yourself. So you'd have to solve another problem: why do people want to eat your steamed buns; why would they watch your domestically produced films?

SW: But the reviews for Hero weren't good.
Han Sanping: The debate about highbrow and folk art (阳春白雪、下里巴人) has existed for one, two thousand years, everyday we are talking about these things, but does it become clearer? Deng Xiaoping has always said do more say less, and cross the river by feeling the stones (摸着石头过河). Saying that this isn't an artistic flick, but a slave of commercialism... Experts can talk, theorists can talk, you Southern Weekly people can also talk, but only I can't talk. If I did talk then I would have been finished years ago. Other people have made big commercial films, but your enterprise lagged behind, and will go bankrupt, because you don't have the products.

SW: In 2002 so much was invested at once into big-scale products, when you look back now, how much of it was a gamble, and how much was a winning ticket?
Han: I believe strongly that 5,000 years of Chinese culture won't be dissolved by a few Hollywood movies. There are 1.3 billion people in China. Westerners naively think that China is so great, if a film is watched by one percent of the population, then that's 13 million, if one person pays 10 yuan then that's 1.3 billion in tickets.

I firmly believe that 1.3 billion people won't all watch American movies, so in that year I brought out a lot of big films. Now, through real implementation, both the social benefits and economic interests have been fulfilled.

SW: What is your most satisfying decision?
Han: I was most satisfied with making the second part to Red Cliff (赤壁), and also for distributing Crazy Stone (疯狂的石头).

Crazy Stone was on my desk for almost a week. Apparently the director also looked for investment from other companies. I had scheduled to meet someone that day, and suddenly couldn't. So I had nothing to do that day, and I asked the secretary to show me a bit of the film. After 40 minutes, I met with the director. Perhaps it was because the Sichuanese dialect in the film got me. I said that I would buy his mainland rights, and he wanted 1.5 million. The secretary bargained and we got it for 1.3 million. We used 1.6 million to distribute it, and in total spent 3 million.

It doesn't have a huge production, a huge landscape, huge actors, but I firmly believed that it was right for modern young audiences and their desires for film, and what are big enterprises afraid of? It was only 3 million, so the risk wasn't huge, with this we distributed it. In those days the World Cup final was showing, so I was watching soccer everyday. I attended the premier of the film: there were about 200 people. After twenty minutes the whole room was bursting with laughter. When I came out I asked the manager of the cinema, did they buy their tickets or were they given to them, he said half half. I said this film is going to make it.

Later the film got 300 million in ticket sales, and we got back 9 million, which was a profit of about 200%. During Crazy Stone I said to Ning Hao (the director) that the money we make from this one will be the capital for his next film. So the one after was 100 million, which we then added 1 million. Silver Medalist (疯狂的赛车) got 1.2 hundred million. So I told him to make his third, No-Man's Land (无人区).

The significance of the three films making money isn't just that, but the fostering of a young director, because Ning Hao is already a brand － this is something that we smoothly completed.

SW: What were you proud of about Red Cliff?
Han: So much investment went into Red Cliff that I convinced John Woo to make two parts. We also kept to the decision of going to public on July 10, just before the Olympics. Many people were against this, thinking that no-one will go to the cinema just before the Olympics. I said distribute it. It made 3.2 hundred million, which equaled the investment. The distribution of the next one will basically come back as all profit, taking in 2.8 hundred million.

SW: You have been talking about the victories. Which movies were the wrong decisions?
Han: The big mistake was Postmen in the Mountains (那山那人那狗). I used 100,000 US Dollars to buy the rights from Japan. Developed countries have two groups of audiences: one group is aged between 15 and 35, and another is over 60. The Japanese wanted to split the profits, but I didn't agree. The film was very successful in the second group, and the Japanese made a lot of money, apparently 5 hundred million Hong Kong dollars. But I can proudly say that from the angle of commercial films, I haven't made a mistake yet. Whether big or small films.

SW: The Promise (无极) and Forever Enthralled (梅兰芳) were also correct decisions?
Han: In terms of large-scale commercial films, I still haven't made a mistake. I didn't see Forever Enthralled as a commercial film, but an art film, and at the moment it is making a loss. Of course you can't always expect to win in a business. We conclude the mistakes and correct them, looking for a bigger victory, these are the teachings of Chairman Mao. But in general we have managed to hold on to a very good development opportunity, and established the position of China Film Group in the distribution of domestically made films.

SW: How can you make sure that you always win?
Han Sanping: It's like when Deng Xiaoping borrowed the Americans' experience, which was called the market economics of capitalism; I am also borrowing the Americans' experience. First of all I firmly believe that Chinese people like watching Chinese films, but we need to solve what kind of film that Chinese people like to watch. What do Americans like to watch? It's big investment, big production, big stars, can it be used if we just moved it over here? You have to let audiences see in films what they can't see on TV and on their mobile phones. If it's all hand-made noodles － a few yuan under Lijiao bridge but 100 yuan in a five-star hotel, what are people buying? They're buying service. Chinese people don't like to buy service; service is empty. Flying first-class is 2,000 yuan, but economy class is 600 yuan, and I save 1,400 yuan, which I can buy a shirt to take back: these are the habits of Chinese people. These habits are changing slowly, especially on the young.

SW: Have you thought about what you would do if you failed?
Han: Of course you have to be courageous, and what makes the most profit? Risk does. Corruption is risky, it's also more risky because if they catch you they put a bullet through your head. My example isn't very good, but think about it carefully. You can hold money in your hand － that's not risky, but it also will not increase in value.

SW: But the problem is, all the profit for imported films belongs to the China Film Group, and they receive the most benefit. Why are you still taking the risk?
Han: You can go check but since becoming the CEO from just manager, I haven't been at any of the distribution ceremonies for a Western film, and I haven't even been a part of any of the negotiations about foreign films, and haven't attended the signing ceremonies of foreign films: this is something that I am persistent about.

Chinese films, the large ones are in the hundred millions － Red Cliff and the small ones are around 3 million － Crazy Stone, which I can sell to companies one by one. Ordinary people will say to me, Mr. Han, why are you wasting your time on that? Just wait by the big pictures, take some representative fee. You're just an authorization unit for the government, why are you so eager? I don't. This is why I think I have been successful. I do two kinds of films: commercial films and key films.

You should go check again, key films are also called mainstream films, from Emei Studios until now, I can proudly say that for 15 years the best key films in China: Jiaoyu Lu (焦裕禄), Hengkong Chushi (横空出世), 1919, Kong Fanlin (孔繁森), Ying Jia (赢家), The Knot (云水谣), Zhang Side (张思德), all the way to Founding of a Republic (建国大业) … If I were being modest I’d say that our company is responsible for 60% and 50% of commercial flicks over 100 million we are also responsible for, there are no two ways about it.

If we talk about supporting young directors, Call For Love (爱情呼叫转移) and Crossed Lines (命运呼叫转移)… In the past China Film did not know how to be commercial, they didn’t even know how to make a poster for the film, but now we are the best company because we have the best films. The best will become better and better. From 2005 until now, I have been very confident and pleased with myself, I think that I have made China Film successful.

SW: How is it reasonable that China Film has an outstanding advantage in the film business?
Han: When using the Chinese language, you have to be a little bit modest, and a little bit reserved. You can choose another expression: better than other enterprises. It has a certain influence over the entire industry, and has the effect of adjusting and directing the entire industry. “An outstanding advantage” is a little too much, “outstanding and strong” is more accurate.

SW: In that case, how is it reasonable that China Film is “outstanding and strong?”
Han: You want me to comment on this. I am Han Sanping, what can I say? Chairman Mao once said, “cadres are a decisive factor, once a political line has been established” (政治路线确定以后，干部就是决定因素). Applying this to an enterprise, you can say that its success is directly rated to the high-level leaders. It’s more accurate to say that all employees are working together to overcome difficulties. With the CPC’s rich resources for this enterprise, of course I have been the decisive factor and I don’t think I need to play this down.

SW: Therefore China Film only acts as a kind-of assistance?
Han: I will admit that I enjoy a certain amount of power, but with the power comes heavy responsibility. I am supporting 1,800 retired employees, 3,000 people are working over here; who supports the old comrades in a privately-run company? They have made a contribution to the Chinese film industry and have made a historical contribution to China – can you not take care of them? People say that every year one film makes 2, 3 million, and these old comrades’ lowest sustainability fee is 500 yuan, is this fair?

Can private-owned companies make children’s films? Can privately-owned companies do The Knot or Zhang Side? Everyone says that making a mainstream film will make a loss, but you need to make publicity for something that fits mainstream ideology, we need to make mainstream ideology mix well with commercial means. I think Founding of a Republic is an example of this. Jet Li (李连杰) is a patriotic general in the film. If we make more than one million, this shows that it didn’t rely on the government to make money, which means that the experiment has been a success.

SW: Are you sure that it is possible for this success to be copied?
Han: Some people say that it’s because Han Sanping gathered film stars. Yes, this is a test run, and after us you should also do this: you can’t say that you don’t like it before you’ve tried it. In the case of Crazy Stone, an investment of 3 million made 30 million, was that a coincidence? Aren’t many people regretting the fact that they didn’t invest in Crazy Stone? That’s called not being smart enough. In the end film is a highly intellectual endeavor, leather shoes that are size 42, one more inch means that it’s completely useless, and one inch less it is also useless.

What are movies? It’s nothing, cups are objective, think of what’s still left of Red Cliff, and if you make a building it’ll be there forever? Films are products for the mind, unlike clothes. You can sell clothes for 6 kuai, if not then you can sell it for 5, or donate it to a disaster stricken area, no matter what it’s useful. But if you gave a crap film to the disaster area, will they watch it?

SW: Do you have rights of speech on films?
Han: Only in China Film Group, not any others.

SW: Because you are “outstanding and strong” you have a lot of power in your hands. For example, Crazy Stone, if it wasn’t for the fact that the DVD was in your hands, and you just happen to have the time to see it, perhaps the film would still be sitting there.
Han: Buried? Yes, this is the problem. Strictly speaking, this kind of situation is not good for the industry’s future development. But first of all, we haven’t limited the development of other companies, and haven’t said to them, you can’t do Crazy Stone. Of course we want a few big companies to speed up the film industry’s development, and in the future this will happen, in the future it won’t just be China Film Group taking up 50%-60% of the box office. That would be a super monopoly. This is something that comes in stages.

SW: How can we get rid of the monopoly at this stage?
Han: Just from the angle of resources for domestic films, China Film Group hasn’t controlled more resources. China Film Group hasn’t signed any directors. Hua Yi Brothers (华谊兄弟) has Feng Xiaogang (冯小刚), New Pictures (新画面) has Zhang Yimou (张艺谋), but China Film doesn’t have anyone. This has actually been advantageous, any of the directors can work for us: we are all embracing.

SW: Apart from eagerly wanting to take part in Founding of a Republic, what other ways can one be “embraced” by China Film?
Han: This is then very much about chance, you can find me using all different kinds of ways, but relying on me alone is very hard. I once had a discussion with Spielberg, why is it that the works of Chinese directors aren’t always liked? He said, “You Chinese directors usually play the game using your own rules, not the rules of the public.” Spielberg’s first prize was for storytelling. Our new directors don’t want to tell stories but to express what’s in their hearts, but they use a big film to do this, and the audience won’t buy it. Kindergarten, dozy stuff on the screen, perhaps Spielberg or Bergman will get something from it, but you won’t be able to.

Some of our directors, after bringing home an international prize, choose increasingly narrow paths. Even 2 million yuan in box office can’t be achieved after an international prize. We allow you to go chase it, but you can’t complain, and can’t complain about how stupid the movie goers are, and how stupid the distribution is, and how bad the cinemas are, this is a complaining-woman complex and no-one will give a damn. The cinemas will say OK, if there are 100 seats in this cinema, and you only sold 10, then if you give me money for another 20 seats then I’ll distribute your film, would you sign this contract? This would be like Moscow Does Not Believe In Tears.

SW: What does China Film believe in?
Han: The direction for nurturing the growth of future talent, and the importance of production, make-up, costume, props, art design, sound, editing. This is my own reasoning.

Comrade Li Changchun (李长春 Propaganda chief of the CPC) put famous directors in the front of his speeches. If you are handling the industry, the most important people are the people managing it. What does managing it mean? Selling things. Every year there can be 500 films and if China was more liberal there could be 1,000 films. But to sell these to consumers, the process need to make a profit and to grow. This whole process is difficult.

Organizing a bunch of people, and after the film is shot sell it, this person is called a producer. We are lacking in these people. A team for planning the economics isn’t needed, everything being part of a State monopoly for purchase and marketing, it’s no longer like that. Whoever made the film can enjoy its profits, and also suffer the losses. In this process there has to be someone who will decide on the chain, and this is the producer. It’s not as easy as having the money and making the film, working a while losing money and then not doing it anymore. This would actually hurt the industry.

SW: So producers and investors should be chosen?
Han: For example 350 films out of 400 are making a loss. So it’s making a loss, then I won’t invest anymore. The consumer as well, if 350 films out of 400 are shoddily made, and they don’t want to watch any more, and starts to abuse it after walking out of the cinema, or after watching half leaves the cinema, then the entire industry will be harmed. If you don’t believe it just try it. If this is the end for domestic films, and when there are no Chinese films, then you won’t be qualified to interview a famous American director, and you will become dependent.

If you wanted to write a film script it’d need to be about America; how can this be done? You can watch films and then try to write them. Would that be fun? We will become the distributor for American films, and you become the cheerleaders for American films, our film market will become America’s film market, all the films in China will be colonized by America. Everyone would become second-in-command to America. Films from the UK and from Germany are so good. After the second world war they all became the audience for American films, and the money that they worked so hard to earn were all taken away by the Americans. Based on what! Therefore we have to make this industry good, in order to have a dialogue with them.

SW: What do you mean by dialogue?
Han: Dialogue is more powerful than confrontation. There is no strength in confrontation: I secretly plant a kick on you; terrorists can only confront, but cannot have a dialogue. Just like in Founding of a Republic, Chiang Kai-shek (蒋阶石) says with a sigh, “If you don’t have strength, what can you hope to do?” (你没有实力， 你谈什么啊) So you have to be strong yourself. If you don’t buy mine, then I won’t buy yours either. Why free trade? All you talk about is not being able to see American films but you don’t talk about surplus or deficit, and you don’t talk about trade. Why are the restrictions increased when our tires go over to where you are, free trade means that Chinese tires are cheap, our labor is cheap, then why are you imposing restrictions and increasing our border tax, then sorry …. We’ll do the same with film.

Therefore I think people in the profession should care about the industry, you can criticize, but we’re afraid of persecution. You look, there are countless articles criticizing Feng Xiaogang and Zhang Yimou, and none criticizing American film. Don’t American films have drawbacks? A couple of things fly about in Transformers, I think that’ shoddy, and tasteless. But the newspaper won’t print what I think. Why won’t they print it? They worship foreign things, and constantly compare China with America. When they criticize their own directors they’re full of reason, but as for American films they compliment and flatter. This is China’s sorrow.

SW: You are so confident about Chinese film, but can you see the crisis too?
Han: The most important question is how to secure people’s hearts. The style of our films will be based to what audiences like. Recently audiences like to watch action films, then we’ll make more action films. If audiences like love stories, then we’ll make more love stories. Who do you cater to apart from your audiences? Cater to the artists? Based on what? Every product is catering to the consumers. Why can’t we say the same thing?

Films won’t make prosperity, and it also cannot ruin a country; it’s just a consumer product. For hard indicators we can make rules, for example, two seconds for blue scenes and at the most five seconds. More than five seconds and we’ll call it pornographic. We can make boundaries.

SW: Peter Chan (陈可辛) has a question, which has been confusing him. Movies that cost tens of millions will make a loss if there is no investment. Do you agree?
Han: I agree with this phenomenon but not with this point of view. I think this phenomenon will undergo a process. Because the structure of the industry isn’t reasonable and there are too few cinemas, and there are so few good films in between, that “tens of millions” films are hard to make, it has to be enjoyable to the ear and the eyes and need a conflict of emotions, it’s very hard. But in the future it has to be like this.

SW: How do “tens of millions” make money?
Han: Most films that make a loss are less than ten million, actually.

China Film has to establish three pyramids. One is an investment pyramid, under the tens of thousands there should be 200 films, thirty or forty thousand there should be fifty or sixty, 100 million to 150 million there should be about ten, and 3 to 5 of the two hundred million. This structure has not been completely established. The second pyramid should be a system for the taking back of the box office and this hasn’t been established either. The last pyramid is related to the income from the industry, and this is also extremely lacking. The box office is the fundamentals, and the second industry is from TV stations, and the third industry are recorded products, income from adverts are at the fourth level, and the fifth level is toys.

Another thing that affects the pyramids are cinemas. Why did director Tong Gang (童刚, the head of the SARFT film bureau) say that he wanted to build 30,000 screens, at present we only have 4,000, which is not enough for films that cost thirty or forty thousand yuan. A film that cost more than a billion need to take a screen for 15 days, then this is 150 days; add on another 7 or 8 Western films, 10 days, this is 223 days; add on films that are presents or celebrations: May Day, Founding of the Republic, then that’s 300 days. What’s left in a year is then only 30 days. Don’t just talk about Beijing, but everywhere in China it’s about the big flicks, everywhere there is Curse of the Golden Flower (黄金甲).

SW: So it’s most important to take care of the problem of the screens?
Han: No, if we have money then the problem of the screen would be solved. Every screen costs 1 million, 10,000 screens would cost ten billion, and how much is that? A few kilometers of the subway in Beijing costs about ten billion. China has a lot of
money, if China Film wants a loan, and the bank gives me 5 billion, and I make 1,000 cinemas, it's just like playing a game. But mostly importantly there aren't enough talented managers in China.

Adding 50,000 screens is the same as increasing 6,000 cinemas, but where are we going to find the managers for the 6,000 cinemas? At present the managers and staff of the 4,000 cinemas, including the ticket sells system, all haven't been done well enough. Many of the cinemas belonging to China Film Group don't make money.

SW: You said that in 400 films, more than 300 are cost less than "tens of millions." How do you solve this? The integration of resources or you get rid of some films?
Han: Of course get rid of many using competition. This kind of phenomenon has already begun. Number two, according to the consumer habits of Chinese audiences and the market, construct more cinemas means, in fact, constructing stages. On this the government is still thinking, at the moment it's 4,000 screens. But we want to make it to 30,000.

SW: And build a few more kilometers of the subway?
Han: The CCTV building needed ten billion, if they built one less building then this can be solved. Now the central government has said that they want to increase the country's soft power － why didn't they say this earlier? When you had ten yuan, of course you would first eat well, then go and buy some pretty clothes, and if there is still some left, then you might buy a movie ticket. It won't go the other way. Film is the largest support in the culture industry in China, whereas in the US film is in league with the other industries.

SW The State wants to increase cultural soft power, is there real investment? And how much does China Film get?
Han: China Film is definitely the first pick, because it belongs to the State. But at the same time as receiving it, there are many responsibilities. For example, if I show a film in the countryside, and get from the State some money, then it's not enough. So if I showed films all day in the poor countryside, there won't be any income. Things of a non-profit nature has to be done by a State-owned enterprise, and the central government has clear rules about this. The government will offer some money and the enterprise will operate it. The ordinary folk will be benefited.

SW: China Film has developed the entire process of film-making in China, can privately-owned enterprises develop?
Han: Aren't privately owned companies doing pretty well right now? They are just classed on the second and third levels. But none of them have shut down, sometimes they don't even want to collaborate with State-owned enterprises. I don't think the problem of ownership is that serious, in France, Britain, Germany and Taiwan, what kind of system is that? They don't have State-ownership there, they don't even have censorship, but why are they finished?

SW: In Taiwan there’s funding, and most people from Hong Kong complain that it’s because they can’t enter the mainland market.
Han Sanping: Bullshit. Why do American films do better than Hong Kong films? If the treatment of Hong Kong films is the same as the treatment of mainland films, then Hong Kong would have ended in 2000. The workforce from the mainland enters Hong Kong, Hong Kong workers would all be unemployed; you want 200 yuan per day, I’ll do it for fifty.

Hong Kong movies don’t have any cultural roots. Mainland films at least have characters such as Yan Shou (严守) from Mobile (手机). Hong Kong movies are just commercial action on the surface, they want to jump higher and strike further: but will this work? You aren’t in the same league as The Matrix or Jurassic Park, if they don’t change they can only be eliminated at the end. Why do so many people immigrate to Beijing from other places (为什么现在大北漂出现), they have to first of all learn to speak Mandarin － we don’t understand your language. The mainland market has been opened up to the max, but your horror, pornographic and violent films can’t be given the green light, not only is this true in Hong Kong, but it’s also true in the mainland. This includes American films.

No-one should complain, they have to get it together: purely a Hong Kong film is not good enough, and they can’t bring over scary and pornographic films; I won’t let it through. A daughter and a father sitting in the same room watching a pornographic movie, is that right?